Public Welfare

45 Parts 1 to 199 Revised as of October 1, 2007

Public Welfare

Containing a codification of documents of general applicability and future effect

As of October 1, 2007

With Ancillaries

Published by Office of the Federal Register National Archives and Records Administration

A Special Edition of the Federal Register

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Legal Status and Use of Seals and Logos The seal of the National Archives and Records Administration (NARA) authenticates the Code of Federal Regulations (CFR) as the official codification of Federal regulations established under the Federal Register Act. Under the provisions of 44 U.S.C. 1507, the contents of the CFR, a special edition of the Federal Register, shall be judicially noticed. The CFR is prima facie evidence of the original documents published in the Federal Register (44 U.S.C. 1510). It is prohibited to use NARA’s official seal and the stylized Code of Federal Regulations logo on any republication of this material without the express, written permission of the Archivist of the United States or the Archivist’s designee. Any person using NARA’s official seals and logos in a manner inconsistent with the provisions of 36 CFR part 1200 is subject to the penalties specified in 18 U.S.C. 506, 701, and 1017.

Use of ISBN Prefix This is the Official U.S. Government edition of this publication and is herein identified to certify its authenticity. Use of the 0–16 ISBN prefix is for U.S. Government Printing Office Official Edi- tions only. The Superintendent of Documents of the U.S. Govern- ment Printing Office requests that any reprinted edition clearly be labeled as a copy of the authentic work with a new ISBN.

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Page Explanation ...... v

Title 45:

Subtitle A—Department of Health and Human Services ...... 3

Finding Aids:

Material Approved for Incorporation by Reference ...... 789

Table of CFR Titles and Chapters ...... 791

Alphabetical List of Agencies Appearing in the CFR ...... 809

List of CFR Sections Affected ...... 819

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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.

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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, 2007), 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 Reg- ister 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 cutoff 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.

VerDate Aug<31>2005 15:32 Oct 23, 2007 Jkt 211184 PO 00000 Frm 00005 Fmt 8008 Sfmt 8092 Y:\SGML\211184.XXX 211184 ycherry on PRODPC75 with CFR 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. OBSOLETE PROVISIONS Provisions that become obsolete before the revision date stated on the cover of each volume are not carried. Code users may find the text of provisions in effect on a given date in the past by using the appropriate numerical list of sections affected. For the period before January 1, 2001, consult either the List of CFR Sections Affected, 1949–1963, 1964–1972, 1973–1985, or 1986–2000, published in 11 separate volumes. For the period beginning January 1, 2001, a ‘‘List of CFR Sections Affected’’ is published at the end of each CFR volume. 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. Properly approved incorporations by reference in this volume are listed in the Finding Aids at the end of this volume. What if the material incorporated by reference cannot be found? If you have any problem locating or obtaining a copy of material listed in the Finding Aids of this volume 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 Records Administration, Washington DC 20408, 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 Statutory Authorities and Agency Rules (Table I). A list of CFR titles, chapters, 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. 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 Reg- ister. A List of CFR Sections Affected (LSA) is published monthly, keyed to the revision dates of the 50 CFR titles.

VerDate Aug<31>2005 15:32 Oct 23, 2007 Jkt 211184 PO 00000 Frm 00006 Fmt 8008 Sfmt 8092 Y:\SGML\211184.XXX 211184 ycherry on PRODPC75 with CFR REPUBLICATION OF MATERIAL There are no restrictions on the republication of textual material appearing 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 Archives and Records Administration, Washington, DC 20408 or e-mail [email protected]. SALES The Government Printing Office (GPO) processes all sales and distribution of the CFR. For payment by credit card, call toll-free, 866-512-1800, or DC area, 202- 512-1800, M-F 8 a.m. to 4 p.m. e.s.t. or fax your order to 202-512-2250, 24 hours a day. For payment by check, write to: US Government Printing Office – New Orders, P.O. Box 979050, St. Louis, MO 63197-9000. For GPO Customer Service call 202-512-1803. ELECTRONIC SERVICES The full text of the Code of Federal Regulations, the LSA (List of CFR Sections Affected), The United States Government Manual, the Federal Register, Public Laws, Public Papers, Weekly Compilation of Presidential Documents and the Pri- vacy Act Compilation are available in electronic format at www.gpoaccess.gov/ nara (‘‘GPO Access’’). For more information, contact Electronic Information Dis- semination Services, U.S. Government Printing Office. Phone 202-512-1530, or 888- 293-6498 (toll-free). E-mail, [email protected]. The Office of the Federal Register also offers a free service on the National Archives and Records Administration’s (NARA) World Wide Web site for public law numbers, Federal Register finding aids, and related information. Connect to NARA’s web site at www.archives.gov/federal-register. The NARA site also contains links to GPO Access.

RAYMOND A. MOSLEY, Director, Office of the Federal Register. October 1, 2007.

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Title 45—PUBLIC WELFARE is composed of four volumes. The parts in these volumes are arranged in the following order: Parts 1–199, 200–499, 500–1199, and 1200 to end. Volume one (parts 1–199) contains all current regulations issued under subtitle A—Department of Health and Human Services. Volume two (parts 200– 499) contains all current regulations issued under subtitle B—Regulations Relat- ing to Public Welfare, chapter II—Office of Family Assistance (Assistance Pro- grams), 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 three (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 X—Office of Community Services, Administration for Children and Fami- lies, Department of Health and Human Services, and chapter XI—National Foun- dation on the Arts and the Humanities. Volume four (part 1200 to end) contains all current regulations issued under chapter XII—Corporation for National and Community Service, chapter XIII—Office of Human Development Services, De- partment of Health and Human Services, chapter XVI—Legal Services Corpora- tion, chapter XVII—National Commission on Libraries and Information Science, chapter XVIII—Harry S Truman Scholarship Foundation, chapter XXI—Commis- sion of Fine Arts, chapter XXIII—Artic 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, 2006.

Amendments to part 801—Voting Rights Program, Appendixes A, B, and D, which apply to Texas also appear in Spanish following Appendix D.

For this volume, Jonn V. Lilyea was Chief Editor. The Code of Federal Regula- tions publication program is under the direction of Michael L. White, assisted by Ann Worley.

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(This book contains parts 1 to 199)

Part

SUBTITLE A—DEPARTMENT OF HEALTH AND HUMAN SERV- ICES ...... 1

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

SUBCHAPTER A—GENERAL ADMINISTRATION

Part Page 1 HHS’s regulations...... 7 2 Testimony by employees and production of documents in proceedings where the United States is not a party ...... 7 3 Conduct of persons and traffic on the National In- stitutes of Health Federal enclave ...... 10 4 Service of process ...... 16 5 Freedom of Information Regulations ...... 17 5a [Reserved] 5b Privacy Act regulations ...... 31 6 [Reserved] 7 Employee inventions...... 44 8 [Reserved] 9 Use of HHS research facilities by academic scientists, engineers, and students ...... 46 12 Disposal and utilization of surplus real property for public health purposes ...... 47 12a Use of Federal real property to assist the homeless 56 13 Implementation of the Equal Access to Justice Act in agency proceedings ...... 64 15 Uniform relocation assistance and real property acquisition for Federal and federally assisted programs ...... 73 16 Procedures of the Departmental Grant Appeals Board ...... 74 17 Release of adverse information to news media ...... 81 30 Claims collection...... 83 31 Tax refund offset ...... 101 32 Administrative wage garnishment ...... 105 33 Salary offset...... 110 34 Claims Filed Under the Military Personnel and Ci- vilian Employees Act ...... 120 3

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Part Page 35 Tort Claims against the government ...... 123 36 Indemnification of HHS Employees ...... 127 46 Protection of human subjects ...... 127 50 U.S. Exchange Visitor Program—request for waiver of the two-year foreign residence requirement 146 51 Criteria for evaluating comprehensive plan to reduce reliance on alien physicians ...... 150 57 Volunteer services...... 152 60 National Practitioner Data Bank for adverse information on physicians and other health care practitioners ...... 152 61 Healthcare integrity and protection data bank for final adverse information on health care providers, suppliers and practitioners ...... 160 63 Grant programs administered by the Office of the Assistant Secretary for Planning and Evaluation 171 73 Standards of conduct ...... 179 73a Standards of conduct: Food and Drug Administra- tion supplement ...... 212 73b Debarment or suspension of former employees ...... 217 74 Uniform administrative requirements for awards and subawards to institutions of higher education, hospitals, other nonprofit organizations, and commercial organizations ...... 220 77 Remedial actions applicable to letter of credit administration ...... 268 78 Conditions for waiver of denial of Federal benefits 269 79 Program fraud civil remedies ...... 270 80 Nondiscrimination under programs receiving Fed- eral assistance through the Department of Health and Human Services effectuation of Title VI of the Civil Rights Act of 1964 ...... 286 81 Practice and procedure for hearings under Part 80 of this title ...... 311 82 Governmentwide requirements for drug-free workplace (financial assistance) ...... 322 83 Regulation for the administration and enforcement of sections 799A and 845 of the Public Health Service Act ...... 327 84 Nondiscrimination on the basis of handicap in programs or activities receiving Federal financial assistance ...... 333 85 Enforcement of nondiscrimination on the basis of handicap in programs or activities conducted by the Department of Health and Human Services ... 374

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Part Page 86 Nondiscrimination on the basis of sex in education programs or activities receiving Federal financial assistance ...... 390 87 Equal treatment for faith-based organizations ...... 409 90 Nondiscrimination on the basis of age in programs or activities receiving Federal financial assistance ...... 413 91 Nondiscrimination on the basis of age in programs or activities receiving Federal financial assistance from HHS ...... 421 92 Uniform administrative requirements for grants and cooperative agreements to State, local, and tribal governments ...... 428 93 New restrictions on lobbying ...... 455 94 Responsible prospective contractors ...... 466 95 General administration—grant programs (public assistance, medical assistance and state children’s health insurance programs) ...... 469 96 Block grants...... 488 97 Consolidation of grants to the insular areas ...... 545 98 Child care and development fund ...... 546 99 Procedure for hearings for the child care and development fund ...... 578 100 Intergovernmental review of Department of Health and Human Services programs and activities ...... 583

SUBCHAPTER B—REQUIREMENTS RELATING TO HEALTH CARE ACCESS 140–143 [Reserved] 144 Requirements relating to health insurance coverage ...... 587 145 [Reserved] 146 Requirements for the group health insurace market ...... 592 147 [Reserved] 148 Requirements for the individual health insurance market ...... 658 149 [Reserved] 150 CMS enforcement in group and individual insurance markets ...... 680 151–159 [Reserved]

SUBCHAPTER C—ADMINISTRATIVE DATA STANDARDS AND RELATED REQUIREMENTS 160 General administrative requirements ...... 696 162 Administrative requirements...... 719 163 [Reserved] 164 Security and privacy ...... 732

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Part Page 165–199 [Reserved]

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PART 1—HHS’S REGULATIONS • Miscellaneous: Parts 3, 4, 9, 67. (5 U.S.C. 301) Sec. 1.1 Location of HHS regulations. [50 FR 781, Jan. 7, 1985, as amended at 52 FR 1.2 Subject matter of Office of the Sec- 28658, July 31, 1987] retary regulations in parts 1–99. PART 2—TESTIMONY BY EMPLOYEES § 1.1 Location of HHS regulations. AND PRODUCTION OF DOCU- Regulations for HHS’s programs and MENTS IN PROCEEDINGS WHERE activities are located in several dif- THE UNITED STATES IS NOT A ferent titles of the Code of Federal PARTY Regulations: • Regulations having HHS-wide applica- Sec. tion or which the Office of the Secretary ad- 2.1 Scope, purpose, and applicability. ministers are located in Parts 1–99 of Title 2.2 Definitions. 45. 2.3 Policy on presentation of testimony and • Health regulations are located at Parts production of documents. 1–399 of Title 42. 2.4 Procedures when voluntary testimony is • Health care financing regulations are lo- requested or when an employee is sub- cated at Parts 400–499 of Title 42. These in- poenaed. clude regulations for Medicare and Medicaid. • Human development services regulations 2.5 Subpoenas duces tecum. are located at Parts 200–299 and 1300–1399 of 2.6 Certification and authentication of Title 45. These include regulations for Head records. Start, social services, social and nutrition AUTHORITY: 5 U.S.C. 301, 5 U.S.C. 552. services for older persons, rehabilitative services, developmental disabilities services, SOURCE: 52 FR 37146, Oct. 5, 1987, unless Native American programs, and various pro- otherwise noted. grams relating to families and children. • Social Security regulations are located § 2.1 Scope, purpose, and applicability. at Parts 400–499 of Title 20. • Food and Drug regulations are located at (a) This part sets forth rules to be Parts 1–1299 of Title 21. followed when an employee or former • Procurement (contract) regulations are employee of the Department of Health located at Chapter 3 of Title 41. and Human Services (‘‘DHHS’’ or ‘‘De- partment’’), other than an employee of Each volume of the Code contains an the Food and Drug Administration, is index of its parts. requested or subpoenaed to provide tes- (5 U.S.C. 301) timony in a deposition, trial, or other [44 FR 61598, Oct. 26, 1979, as amended at 48 similar proceeding concerning informa- FR 35099, Aug. 3, 1983] tion acquired in the course of performing official duties or because of § 1.2 Subject matter of Office of the such person’s official capacity with Secretary regulations in parts 1–99. DHHS. This part also sets forth proce- This subject matter of the regula- dures for the handling of subpoenas tions in Parts 1–99 of this title in- duces tecum and other requests for any cludes: document in the possession of DHHS, other than the Food and Drug Adminis- • Civil rights/nondiscrimination: Parts 80, 81, 83, 84, 86, 90. tration, and for the processing of re- • Protection of human subjects: Part 46. quests for certification of copies of doc- • Day care requirements: Part 71. uments. Separate regulations, 21 CFR • Information, privacy, advisory committees: part 20, govern the Food and Drug Ad- Parts 5, 5a, 5b, 11, 17, 99. ministration, and those regulations are • Personnel: Parts 50, 57, 73, 73a. not affected by this part. • Grants and letter of credit administration, property, hearing rights: Parts 10, 12, 15, 16, 74, (b) It is the policy of the DHHS to 75, 77, 95. provide information, data, and records • Claims: Parts 30, 35. to non-federal litigants to the same ex- • Inventions and patents: Parts 6, 7, 8. tent and in the same manner that they

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are made available to the general pub- Example (1): While on duty, an employee of lic and, when subject to the jurisdic- the Department witnesses an incident in tion of a court or other tribunal pre- which a fellow employee trips on a loose siding over non-federal party litiga- piece of carpeting and sustains an injury. tion, to follow all applicable procedural The injured employee brings a private tort action against the contractor installing the and substantive rules relating to the carpeting and the private landlord maintain- production of information, data, and ing the building. The employee/witness is records by a non-party. The avail- served with a subpoena to appear at a deposi- ability of Department employees to tion to testify about the incident. The per- testify in litigation not involving fed- son seeking the testimony would not be re- eral parties is governed by the Depart- quired to obtain Agency head approval prior ment’s policy to maintain strict impar- to requesting the testimony, because the tiality with respect to private litigants subject of the testimony does not ‘‘relate to’’ and to minimize the disruption of offi- the Department, within the meaning of cial duties. § 2.1(d)(5). (c) This part applies to state, local Example (2): While on duty, an employee of the Department witnesses a mugging while and tribal judicial, administrative, and looking out the window to check the weath- legislative proceedings, and to federal er, and then notifies the local police of what judicial and administrative pro- she observed. She is subsequently subpoe- ceedings. naed to testify in a criminal proceeding. The (d) This part does not apply to: local prosecutor would not be required to ob- (1) Any civil or criminal proceedings tain Agency head approval prior to requiring where the United States, the Depart- the employee to testify, because the subject ment of Health and Human Services, of the testimony does not ‘‘relate to’’ the De- and any agency thereof, or any other partment, within the meaning of § 2.1(d)(5). Federal agency is a party. Example (3): A nurse on duty at an Indian Health Service hospital emergency room (2) Congressional requests or sub- treats a child who is brought in following a poenas for testimony or documents. report of domestic violence. The nurse is (3) Consultative services and tech- subsequently served with a subpoena to tes- nical assistance provided by the De- tify in a criminal proceeding against one of partment of Health and Human Serv- the child’s parents concerning the injuries to ices, or any agency thereof, in carrying the child which he observed. The local pros- out its normal program activities. ecutor would be required to obtain Agency (4) Employees serving as expert wit- head approval prior to requiring the nurse to nesses in connection with professional testify, because the subject of the testimony involves ‘‘information acquired in the course and consultative services as approved of performing official duties or because of outside activities in accordance with 5 the person’s official capacity,’’ within the CFR 2635.805 and 5 CFR 5501.106. (In meaning of § 2.1(a). cases where employees are providing Example (4): A personnel specialist working such outside services, they must state for the Department is subpoenaed to testify for the record that the testimony rep- concerning the meaning of entries on time resents their own views and does not and attendance records of an employee, necessarily represent the official posi- which the requesting party received from the tion of the DHHS.) employee pursuant to discovery in a personal (5) Employees making appearances in injury action brought by the employee. The party requesting the personnel specialist to their private capacity in legal or ad- appear would be required to obtain Agency ministrative proceedings that do not head approval prior to compelling the per- relate to the Department of Health and sonnel specialist to testify, because the tes- Human Services (such as cases arising timony sought involves ‘‘information ac- out of traffic accidents, crimes, domes- quired in the course of performing official tic relations, etc.) and not involving duties or because of the person’s official ca- professional and consultative services. pacity,’’ within the meaning of § 2.1(a). (6) Any matters covered in 21 CFR Example (5): A National Institutes of part 20-,involving the Food and Drug Health physician is subpoenaed in a private medical malpractice action to provide expert Administration. testimony in her specialty. The party re- (7) Any civil or criminal proceedings questing her testimony would be required to in State court brought on behalf of the obtain Agency head approval prior to her Department of Health and Human testifying in response to the subpoena, be- Services. cause the expert testimony sought involves

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‘‘information acquired in the course of per- (3) Current and former employees and forming official duties or because of the per- contractors of entities covered under son’s official capacity,’’ within the meaning the Federally Supported Health Cen- of § 2.1(a). ters Assistance Act of 1992, as amend- [52 FR 37146, Oct. 5, 1987, as amended at 55 FR ed, 42 U.S.C § 233 (FSHCAA), provided 4611, Feb. 9, 1990; 68 FR 25838, May 14, 2003] that the requested testimony or information relates to the performance of § 2.2 Definitions. medical, surgical, dental or related Agency head refers to the head of the functions which were performed at a relevant operating division or other time when the DHHS deemed the enti- major component of the DHHS, or his ty to be covered by the FSHCAA. or her delegatee. Agency head for the Certify means to authenticate under purposes of this part means the fol- seal, pursuant to 42 U.S.C 3505, official lowing officials for the components in- documents of the Department. dicated: Testify and testimony includes both in- (1) Office of the Secretary—Assistant person, oral statements before a court, Secretary for Administration and Man- legislative or administrative body and agement; statements made pursuant to deposi- (2) Administration on Aging—Assist- tions, interrogatories, declarations, af- ant Secretary for Aging; fidavits, or other formal participation. (3) Administration for Children and [68 FR 25839, May 14, 2003] Families—Assistant Secretary for Chil- dren and Families; § 2.3 Policy on Presentation of testi- (4) Agency for Healthcare Research mony and production of documents. and Quality—Administrator; No employee or former employee of (5) Agency for Toxic Substances and the DHHS may provide testimony or Disease Registry—Administrator; produce documents in any proceedings (6) Centers for Disease Control and to which this part applies concerning Prevention—Director; information acquired in the course of (7) Centers for Medicare and Medicaid performing official duties or because of Services—Administrator; the person’s official relationship with (8) Health Resources and Services Ad- the Department unless authorized by ministration—Administrator; the Agency head pursuant to this part (9) Indian Health Service—Director; based on a determination by the Agen- (10) National Institutes of Health— cy head, after consultation with the Of- Director; fice of the General Counsel, that com- (11) Substance Abuse and Mental pliance with the request would pro- Health Services Administration—Ad- mote the objectives of the Department. ministrator; [68 FR 25839, May 14, 2003] (12) Office of Inspector General—In- spector General. § 2.4 Procedures when voluntary testi- Employee includes: mony is requested or when an em- (1) Commissioned officers in the Pub- ployee is subpoenaed. lic Health Service Commissioned (a) All requests for testimony by an Corps, as well as regular and special employee or former employee of the DHHS employees (except employees of DHHS in his or her official capacity the Food and Drug Administration), and not subject to the exceptions set when they are performing the duties of forth in § 2.1(d) of this part must be ad- their regular positions, as well as when dressed to the Agency head in writing they are performing duties in a tem- and must state the nature of the re- porary assignment at DHHS or another quested testimony, why the informa- organization. tion sought is unavailable by any other (2) Any employees of health insur- means, and the reasons why the testi- ance intermediaries and carriers per- mony would be in the interest of the forming functions under agreements DHHS or the federal government. entered into pursuant to sections 1816 (b) If the Agency head denies ap- and 1842 of the Social Security Act, 42 proval to comply with a subpoena for U.S.C. 1395h, 1395u; and testimony, or if the Agency head has

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not acted by the return date, the em- are to be disclosed. Fees for copying ployee will be directed to appear at the and certification are set forth in 45 stated time and place, unless advised CFR 5.43. by the Office of the General Counsel [68 FR 25840, May 14, 2003] that responding to the subpoena would be inappropriate (in such circumstances as, for example, an in- PART 3—CONDUCT OF PERSONS stance where the subpoena was not val- AND TRAFFIC ON THE NATIONAL idly issued or served, where the sub- INSTITUTES OF HEALTH FEDERAL poena has been withdrawn, or where ENCLAVE discovery has been stayed), produce a copy of these regulations, and respect- Subpart A—General fully decline to testify or produce any documents on the basis of these regula- Sec. tions. 3.1 Definitions. 3.2 Applicability. [68 FR 25840, May 14, 2003] 3.3 Compliance. 3.4 False reports and reports of injury or § 2.5 Subpoenas duces tecum. damage. (a) Whenever a subpoena duces tecum 3.5 Lost and found, and abandoned property. has been served upon a DHHS employee 3.6 Nondiscrimination. or former employee commanding the production of any record, such person Subpart B—Traffic Regulations shall refer the subpoena to the Office of 3.21 Emergency vehicles. the General Counsel (including re- 3.22 Request for identification. gional chief counsels) for a determina- 3.23 Parking. tion of the legal sufficiency of the sub- 3.24 Parking permits. poena, whether the subpoena was prop- 3.25 Servicing of vehicles. erly served, and whether the issuing 3.26 Speed limit. court or other tribunal has jurisdiction 3.27 Bicycles. over the Department.) If the General Counsel or his designee determines Subpart C—Facilities and Grounds that the subpoena is legally sufficient, 3.41 Admission to facilities or grounds. the subpoena was properly served, and 3.42 Restricted activities. the tribunal has jurisdiction, the terms 3.43 Removal of property. of the subpoena shall be complied with 3.44 Solicitation. unless affirmative action is taken by the Department to modify or quash the Subpart D—Penalties subpoena in accordance with Fed. R. 3.61 Penalties. Civ. P. 45 (c). (b) If a subpoena duces tecum served AUTHORITY: 40 U.S.C. 318–318d. 486; Delega- upon a DHHS employee or former em- tion of Authority, 33 FR 604. ployee commanding the production of SOURCE: 55 FR 2068, Jan. 22, 1990, unless any record is determined by the Office otherwise noted. of the General Counsel to be legally insufficient, improperly served, or from a Subpart A—General tribunal not having jurisdiction, such subpoena shall be deemed a request for § 3.1 Definitions. records under the Freedom of Informa- Director means the Director or Acting tion Act and shall be handled pursuant Director of the National Institutes of to the rules governing public disclosure Health (NIH), or other officer or em- established in 45 CFR part 5. ployee of NIH to whom the authority [68 FR 25840, May 14, 2003] involved has been delegated. Enclave means, unless the context re- § 2.6 Certification and authentication quires a different meaning, the area, of records. containing about 318 acres, acquired by Upon request, DHHS agencies will the United States in several parcels in certify, pursuant to 42 U.S.C. 3505, the the years 1935 through 1983, and any authenticity of copies of records that further future acquisitions, comprising

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the National Institutes of Health lo- (1) Without regard to the place of the cated in Montgomery County, Mary- offense, or land, over which the United States ac- (2) To areas (such as the enclave) sub- quired exclusive jurisdiction under the ject to the ‘‘special maritime and terri- Act of March 31, 1953, Chapter 158 (1953 torial jurisdiction of the United Maryland Laws 311). States,’’ as defined in Title 18 United Police officer means a uniformed or States Code section 7. non-uniformed police officer appointed (d) In accordance with the Assimila- under a delegation of authority to the tive Crimes Act (18 U.S.C. 13), whoever Director under Title 40 United States is found guilty of an offense which, al- Code section 318 or 318d; any other Fed- though not made punishable by any act eral law enforcement officer; and any of Congress, nor any provision of these other person whose law enforcement regulations, would be punishable if services are secured by contract, or committed within the State of Mary- upon request or deputation from a land, shall be guilty of a like offense State or local law enforcement agency. and subject to a like punishment. In § 3.2 Applicability. the event of an irreconcilable conflict between a provision of this part and a (a) The regulations in this part apply Maryland statute governing the iden- to all areas in the enclave and to all tical subject matter, this part shall persons on or within the enclave, except as otherwise provided. control. (b) The regulations in this part do (e) Federal criminal statutes which not apply to occupants, their visitors, apply. The following Federal criminal and other authorized persons in areas statutes in the United States Code used as living quarters: apply to Federal enclaves and else- (1) When specifically made inappli- where without regard to the place of cable, and the offense. This listing is provided (2) In the case of the following provi- solely for the information of the public sions: § 3.24 Parking permits; § 3.25 and is not all-inclusive. The omission Servicing of vehicles; § 3.42 Hobbies and of other Federal statutes does not sports; and § 3.42(f) Smoking. mean that such other statutes do not (c) All regulations in this part are in apply. In any given situation, the cited addition to the provisions in the statutory provisions and any amend- United States Code, including title 18 ments in effect when the alleged of- relating to crimes and criminal proce- fense occurred shall determine the spe- dure, and title 21 relating to food and cifics of the offense, applicability, and drugs, which apply: penalty.

Subject U.S. Code Provides generally Maximum penalty

1. By force or threat of force, willful 18 U.S.C. 245 ... Prohibits ...... Not involving death or bodily in- injury, intimidation or inter- jury: Imprisonment one year ference with, or attempts to in- and/or $1,000 fine. jure, intimidate or interfere 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 dam- 18 U.S.C. 844(f) Prohibits ...... First offense not involving death or age, by an explosive, to a build- personal injury: Imprisonment ing or other property owned, 10 years and/or $10,000 fine possessed, used, or leased by and seizure and forfeiture of ex- the U.S., U.S. agency, or any or- plosive materials. ganization receiving Federal financial assistance. 3. Possession of explosive in 18 U.S.C. 844(g) Prohibits, except with written con- Imprisonment one year and/or buildings owned, possessed, sent of the agency. $1,000 fine and seizure and for- used, or leased by U.S. or U.S. feiture of explosive materials. agency.

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Subject U.S. Code Provides generally Maximum penalty

4. Use of or carrying an explosive 18 U.S.C. 844(h) Prohibits ...... First offense: Imprisonment 10 to commit, or during commission years and seizure and forfeiture of, a felony prosecutable in a of explosive materials. U.S. court. 5. Use of or carrying a firearm dur- 18 U.S.C. 924(c) Prohibits ...... First offense: Imprisonment 5 ing and in relation to any crime years and $5,000 fine and sei- of violence prosecutable in a zure and forfeiture of firearm U.S. court. and ammunition. 6. Manufacture, distribution, dis- 21 U.S.C. 841, Prohibits, except as authorized by First offense: Imprisonment 20 pensing, or possession with in- 842, 843, 845. the Controlled Substances Act years and/or $250,000 fine de- tent to do these acts, of nar- (generally 21 U.S.C. 801–904). pending on the amount and kind cotics and other controlled sub- of substance (twice the above stances and counterfeit sub- penalties for distribution by a stances. person at least 18 years of age to one under age 21). 7. Simple possession of narcotics 21 U.S.C. 844 ... Prohibits, unless substance ob- First offense: Imprisonment 1 year or other controlled substances. tained directly, or pursuant to and/or $5,000 fine. 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 statutes does not mean that such other apply. The matters described in this statutes are not assimilated as Federal paragraph are governed, in whole or in offenses under the Act. Generally, part, by the current version of the other Maryland criminal statutes will cited Maryland criminal statutory pro- apply on the enclave, by force of the visions, which are made Federal crimi- Act, unless superseded by Federal Law nal offenses under the Assimilative or a given provision of this part. In any Crimes Act (18 U.S.C. 13). This listing given situation, the cited statutory sets forth areas of conduct particularly provisions and any amendments in ef- relevant to the enclave and is provided fect when the alleged offense occured solely for the information of the pub- shall determine the specifics of the of- lic. The list is not all-inclusive and omission of other Maryland criminal fense, applicability, and penalty.

Maryland code Subject annotated Provides generally Maximum penalty

1. Pedestrian right-of-way ...... Transportation, Pedestrians have the right-of-way Imprisonment 2 months and/or Sec. 21–502. in crosswalks and certain other $500 fine. areas. Subject to certain limitations. Sec. 21–511 ...... Blind, partially blind, or hearing $500 fine. impaired pedestrians have the right-of-way at any crossing or intersection. Subject to certain limitations. 2. Drivers to exercise due care ..... Transportation, Drivers shall exercise due care to $500 fine. Sec. 21–504. avoid colliding with pedestrians, children and incapacitated individuals. 3. Driving while intoxicated, under Transportation, Prohibits ...... Sec. 21–902(a) (driving while in- the influence of alcohol and/or a Sec. 21–902. toxicated, first offense): Impris- drug or controlled substance. onment 1 year and/or $1,000 fine. Sec. 21–902 (b), (c), (d) (driving under the influence): Imprison- ment 2 months and/or $500 fine. 4. Unattended motor vehicles ...... Transportation, Prohibits leaving motor vehicles $500 fine. Sec. 21–1101. unattended unless certain precautions are taken. 5. Carrying or wearing certain con- Article 27, Sec. Prohibits, except for law enforce- Imprisonment 3 years or $1,000 cealed weapons (other than 36. ment personnel or as a reason- fine. handguns) or openly with intent able precaution against appre- to injure. hended danger.

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Maryland code Subject annotated Provides generally Maximum penalty

6. Unlawful wearing, carrying, or Article 27, Sec. Prohibits except by law enforce- First offense and no prior related transporting a handgun, whether 36B. ment personnel or with permit. offense: Imprisonment 3 years concealed or openly. and/or $2,500 fine. 7. Use of handgun or concealable Article 27, Sec. Prohibits ...... Imprisonment 20 years. antique firearm in commission of 36B. felony or crime of violence. 8. Disturbance of the peace ...... Article 27, Sec. Prohibits acting in a disorderly Imprisonment 30 days and/or 122. manner in public places. $500 fine. 9. Gambling ...... Article 27, Secs. Prohibits betting, wagering and Sec. 240: Imprisonment one year 240, 245. gambling, and certain games of and/or $1,000 fine. Sec. 245: chance (does not apply to vend- Imprisonment 2 years and/or ing or purchasing lottery tickets $100 fine. authorized under State law in accordance with approved procedures).

§ 3.3 Compliance. part 101–48). Abandoned, or other unclaimed property and, in the absence of A person must comply with the regu- specific direction by a court, forfeited lations in this part; with all official property, may be so identified by the signs; and with the lawful directions or Police Office and sold and the proceeds orders of a police officer or other au- deposited in accordance with 41 CFR thorized person, including traffic and 101–45.304 and 101–48.305. parking directions. [57 FR 1874, Jan. 16, 1992] § 3.4 False reports and reports of injury or damage. § 3.6 Nondiscrimination. A person may not knowingly give A person may not discriminate by any false or fictitious report con- segregation or otherwise against an- cerning an accident or violation of the other person because of age, color, regulations of this part or any applica- creed, handicap, national origin, race ble Federal or Maryland statute to any or sex, in furnishing or by refusing to person properly investigating an acci- furnish to that person the use of any dent or alleged violation. All incidents facility of a public nature, including resulting in injury to persons or willful all services, privileges, accommoda- damage to property in excess of $100.00 tions, and activities provided within (one hundred dollars) in value must be the enclave. (Title 18 United States reported by the persons involved to the Code section 245 prohibits, by use of Police Office as soon as possible. The force or threat of force, willful injury, Police Office’s main location and tele- intimidation, or interference with, a phone number is: Building 31, Room person from participating in or enjoy- B3BN10; (301) 496–5685. ing any benefit, service, privilege, program, facility, or activity provided by § 3.5 Lost and found, and abandoned or administered by the United States, property. attempts to do these acts, and engag- Lost articles which are found on the ing in certain other activities.) enclave, including money and other personal property, together with any Subpart B—Traffic Regulations identifying information, must be deposited at the Police Office or with an § 3.21 Emergency vehicles. office (such as the place where found) A person must yield the right of way which may likely have some knowledge to an emergency vehicle operating its of ownership. If the article is deposited siren or flashing lights. with an office other than the Police Of- fice and the owner does not claim it § 3.22 Request for identification. within 30 days, it shall be deposited at Upon request by a police officer, a the Police Office for further disposition person involved in any of the following in accordance with General Services situations must provide identification, Administration regulations (41 CFR for example, by exhibiting satisfactory

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credentials (such as an employment § 3.24 Parking permits. identification card or driver’s license): Except for visitor parking, a person (a) A traffic accident within the en- may not park a motor vehicle without clave; displaying a parking permit, currently (b) The police officer reasonably be- valid for that location. The Director lieves that the individual is engaged in, may revoke or refuse to issue or renew or has engaged in, criminal conduct or any parking permit for violation of a violation of the regulations of this this section, or any provision of this part; or part. (c) The enclave or a portion of the enclave is not open to the public (see § 3.25 Servicing of vehicles. § 3.41). A person may not wash, polish, A driver of a motor vehicle involved change oil, lubricate, or make non- in an accident within the enclave shall emergency repairs on a privately also exhibit, upon the request of a po- owned vehicle. lice officer, the owner’s registration card or other satisfactory proof of own- § 3.26 Speed limit. ership. The speed limit is 25 miles per hour, § 3.23 Parking. unless otherwise posted. A driver of a vehicle may not exceed the speed limit. (a) A person may not stand (vehicle stopped, with or without, an occupant), § 3.27 Bicycles. or park a motor vehicle or other vehicle: A person may not operate a bicycle, (1) In a lane, space, or area not des- motorbike, or similar vehicle without ignated by a sign for parking, and/or a horn or other warning device, and, if standing; the vehicle is operated between dusk and dawn, it must be equipped with an (2) On a sidewalk; operating headlight, and taillight or (3) Within an intersection or cross- reflector. walk; (4) Within 10 feet of a fire hydrant, 5 feet of a driveway, or 20 feet of a stop Subpart C—Facilities and Grounds sign, crosswalk, or traffic control sig- § 3.41 Admission to facilities or nal; grounds. (5) In a double-parked position; (6) At a curb painted yellow; The enclave is officially open to the public during normal working and vis- (7) On the side of a street facing on- iting hours and for approved public coming traffic; events. The enclave is closed to the (8) In a position that would obstruct public at all other times, and the Di- traffic; rector may also officially close all or (9) For a period in excess of 24 hours, part of the enclave, or any building, in except at living quarters, or with the emergency situations and at other approval of the Police Office. times the Director deems necessary to (b) A person must park bicycles, mo- ensure the orderly conduct of Govern- torbikes, and similar vehicles only in ment business. When all or part of the designated areas, and may not bring enclave is closed to the public, admis- these vehicles inside buildings. sion is restricted to employees and (c) A visitor must park in an area other authorized persons who may be identified for that purpose by posted required to display Government cre- signs or similar instructions, such as dentials or other identification when ‘‘visitor parking’’ and ‘‘reserved for requested by a police officer and may visitors’’. be required to sign a register. The liv- (d) A person may not drive or park an ing quarters and adjacent areas are not unauthorized motor vehicle on a open to the public but are open at all grassy, or any other unpaved, area times to occupants and their visitors without the approval of the Police Of- and business invitees, unless otherwise fice. closed by the Director.

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§ 3.42 Restricted activities. is prohibited and shall be governed by (a) Hobbies and sports. A person may Maryland Code Annotated, Article 27, undertake hobbies and sports only in section 122); littering or disposal of designated areas or as approved by the rubbish in an unauthorized manner, Director. the creation of any hazard to persons (b) Pets and other animals. A person or property; the throwing of articles of may not bring on the enclave any cat, any kind from or at a building; the dog, or other animal except for author- climbing upon any part of a building ized purposes. This prohibition does for other than an authorized purpose; not apply to domestic pets at living the loud playing of radios or other quarters or to the exercise of these pets similar devices; and rollerskating, under leash or other appropriate re- skateboarding, sledding or similar ac- straints. The use of a dog by a handi- tivities, except in officially designated capped person to assist that person is areas. authorized. (f) Smoking. Except as part of an ap- (c) Photography. A person may take proved medical research protocol, a photographs, films or audiovisuals, for person may not smoke in any building personal or news purposes on the on the enclave. grounds of the enclave or in entrances, (g) Firearms, explosive, and other weap- lobbies, foyers, corridors, and audito- ons. No person other than a specifically riums in use for public meetings, ex- authorized police officer shall possess cept when contrary to security regula- firearms, explosives, or other dan- tions or Department of Health and gerous or deadly weapons or dangerous Human Services policies, or where pro- materials intended to be used as weap- hibited by appropriate signs. Photo- ons either openly or concealed. Upon graphs and similar activities for adver- written request, the Director may per- tising or commercial purposes may be mit possession in living quarters of an- taken only with the advance written tique firearms held for collection pur- approval of the Director. A person may poses, if the Director finds that the col- take photographs of a patient only lection does not present any risk of with the informed consent of the pa- harm. tient (or the natural or legal guardian) and of the Director of the Warren [55 FR 2068, Jan. 22, 1990, as amended at 57 Grant Magnuson Clinical Center or del- FR 1874, Jan. 16, 1992] egate. § 3.43 Removal of property. (d) Intoxicating beverages, narcotics, and other controlled substances. A person A person may not remove Federal may not possess, sell, consume, or use property from the enclave or any build- alcohol or other intoxicating bev- ing on the enclave without a property erages, except in connection with offi- pass, signed by an authorized property cial duties, as part of authorized re- custodian, which specifically describes search, or as otherwise authorized by the items to be removed. In an emer- the Director, or, in the case of posses- gency, or when the property custodian sion, consumption or use only, in living is not available, a police officer may quarters. (The sale, consumption, use, approve removal of Federal property if, or possession of narcotics and other after consulting with the administra- controlled substances is prohibited and tive officer or other appropriate offi- shall be governed by the Controlled cial, the police officer is authorized by Substances Act (21 U.S.C. 841–845); driv- the official to do so. Privately-owned ing under the influence of an alcoholic property, other than that ordinarily beverage, drug or controlled substance carried on one’s person, may be re- is prohibited and shall be governed by moved only under this property pass the Maryland Transportation Code An- procedure, or upon properly estab- notated section 21–902.) lishing ownership of the property to a (e) Nuisances and disturbances. The police officer. following acts by a person are prohib- Packages, briefcases, or other con- ited: Unwarranted loitering, disorderly tainers brought within the enclave are conduct (acting in a disorderly manner subject to inspection while on, or being to the disturbance of the public peace removed from, the enclave.

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§ 3.44 Solicitation. AUTHORITY: 5 U.S.C. 301, 42 U.S.C. 300aa–11. It shall be unlawful for a person SOURCE: 48 FR 24079, May 31, 1983, unless (other than an employee using author- otherwise noted. ized bulletin boards), without prior written approval of the Director, to § 4.1 Suits against the Department and offer or display any article or service its employees in their official capacities. for sale within the enclave buildings or grounds; or to display any sign, Summonses and complaints to be placard, or other form of advertise- served by mail on the Department of ment; or to collect private debts; or to Health and Human Services, the Sec- solicit business, alms, subscriptions or retary of Health and Human Services, contributions, except in connection or other employees of the Department with approved national or local cam- in their official capacities should be paigns for funds for welfare, health and sent to the General Counsel, Depart- other public interest purposes, or solic- ment of Health and Human Services, itation of labor organization member- 200 Independence Avenue, S.W., Wash- ship or dues as authorized under the ington, DC 20201. Civil Service Reform Act of 1978 (Pub. L. 95–454). § 4.2 Other process directed to the De- This provision shall not apply to au- partment or Secretary. thorized lessees and their agents and Subpoenas and other process (other employees with regard to space leased than summonses and complaints) that for commercial, cultural, educational, are required to be served on the De- or recreational purposes, under the partment of Health and Human Serv- Public Buildings Cooperative Use Act ices or the Secretary of Health and of 1976 (40 U.S.C. 490(A)(16)). Human Services in his official capacity should be served as follows: Subpart D—Penalties (a) If authorized by law to be served § 3.61 Penalties. by mail, any mailed process should be sent to the General Counsel, Depart- (a) A person found guilty of violating ment of Health and Human Services, any provision of the regulations in this 200 Independence, S.W., Washington, part is subject to a fine of not more DC 20201. than $50 or imprisonment of not more (b) If served by an individual, the than thirty days or both, for each vio- process should be delivered to the staff lation (40 U.S.C. 318c). of the correspondence control unit in (b) Penalties for violation of offenses the Office of the General Counsel, proscribed by Federal statutes (generally codified in title 18 of the United Room 711–E, 200 Independence Avenue, States Code) and Maryland criminal S.W., Washington, DC, or, in the ab- statutes which are made Federal of- sence of that staff, to any Deputy Gen- fenses under the Assimilative Crimes eral Counsel or secretary to any Dep- Act and are prescribed in the applica- uty General Counsel of the Depart- ble provisions of those statutes. ment. § 4.3 Process against Department offi- PART 4—SERVICE OF PROCESS cials in their individual capacities.

Sec. Process to be served on Department 4.1 Suits against the Department and its officials in their individual capacities employees in their official capacities. must be served in compliance with the 4.2 Other process directed to the Depart- requirements for service of process on ment or Secretary. individuals who are not governmental 4.3 Process against Department officials in officials. The Office of the General their individual capacities. Counsel is authorized but not required 4.4 Acknowledgment of mailed process. 4.5 Effect of regulations. to accept process to be served on De- 4.6 Materials related to petitions under the partmental officials in their individual National Vaccine Injury Compensation capacities if the suit relates to an em- Program. ployee’s official duties.

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§ 4.4 Acknowledgement of mailed proc- 5.23 Referral of requests outside the Depart- ess. ment. 5.24 Responding to your request. The Department will not provide a receipt or other acknowledgement of Subpart C—Release and Denial of Records process received, except for a return receipt associated with certified mail 5.31 Designation of authorized officials. 5.32 Release of records. and, where required, the acknowledge- 5.33 Denial of requests. ment specified by Rule 4(c)(2)(C) of the 5.34 Appeal of denials. Federal Rules of Civil Procedure. 5.35 Time limits.

§ 4.5 Effect of regulations. Subpart D—Fees The regulations in this part are in- 5.41 Fees to be charged—categories of re- tended solely to identify Department quests. officials who are authorized to accept 5.42 Fees to be charged—general provisions. service of process. Litigants must com- 5.43 Fee schedule. ply with all requirements pertaining to 5.44 Procedures for assessing and collecting service of process that are established fees. by statute and court rule even though 5.45 Waiver or reduction of fees. they are not repeated in these regula- Subpart E—Records Available for Public tions. Inspection § 4.6 Materials related to petitions 5.51 Records available. under the National Vaccine Injury 5.52 Indexes of records. Compensation Program. Notwithstanding the provisions of Subpart F—Reasons for Withholding Some §§ 4.1, 4.2, and 4.3, service of the Sec- Records retary’s copies of petitions for com- 5.61 General. pensation under the VICP and of re- 5.62 Exemption one: National defense and lated filings, by mail, shall be served foreign policy. upon the Director, Division of Vaccine 5.63 Exemption two: Internal personnel Injury Compensation, Office of Special rules and practices. 5.64 Exemption three: Records exempted by Programs, Health Resources and Serv- other statutes. ices Administration 5600 Fishers Lane, 5.65 Exemption four: Trade secrets and con- Parklawn Building, Room 16C–17, fidential commercial or financial infor- Rockville, Maryland 20857, or in person, mation. shall be served upon the Director, Divi- 5.66 Exemption five: Internal memoranda. sion of Vaccine Injury Compensation, 5.67 Exemption six: Clearly unwarranted in- Office of Special Programs, Health Re- vasion of personal privacy. 5.68 Exemption seven: Law enforcement. sources and Services Administration, 5.69 Exemptions 8 and 9: Records on finan- 4350 East West Highway, 10th Floor, cial institutions; records on wells. Bethesda, Maryland 20814. AUTHORITY: 5 U.S.C. 552, 18 U.S.C. 1905, 31 [67 FR 78990, Dec. 27, 2002] U.S.C. 9701, 42 U.S.C. 1306(c), E.O. 12600. SOURCE: 53 FR 47700, Nov. 25, 1988, unless PART 5—FREEDOM OF otherwise noted. INFORMATION REGULATIONS Subpart A—Basic Policy Subpart A—Basic Policy § 5.1 Purpose. Sec. 5.1 Purpose. This part contains the rules that the 5.2 Policy. Department of Health and Human 5.3 Scope. Services (HHS) follows in handling re- 5.4 Relationship between the FOIA and the quests for records under the Freedom Privacy Act of 1974. of Information Act (FOIA). It describes 5.5 Definitions. how to make a FOIA request; who can release records and who can decide not Subpart B—Obtaining a Record to release; how much time it should 5.21 How to request records. take to make a determination regard- 5.22 Requests not handled under the FOIA. ing release; what fees may be charged;

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what records are available for public then to the extent you are requesting inspection; why some records are not your own records in a system of released; and your right to appeal and records, we will handle your request then go to court if we refuse to release under the Privacy Act and part 5b. If records. there is any record that we need not release to you under those provisions, we § 5.2 Policy. will also consider your request under As a general policy, HHS follows a the FOIA and this rule, and we will re- balanced approach in administering lease the record to you if the FOIA re- FOIA. We not only recognize the right quires it. of public access to information in the (c) Requesting another individual’s possession of the Department, but also record. Whether or not you are an indi- protect the integrity of internal proc- vidual, if you request records that are esses. In addition, we recognize the le- about an individual (other than your- gitimate interests of organizations or self) and that are in a system of persons who have submitted records to records, we will handle your request the Department or who would other- under the FOIA and this rule. (How- wise be affected by release of records. ever, if our disclosure in response to For example, we have no discretion to your request would be permitted by the release certain records, such as trade Privacy Act’s disclosure provision, 5 secrets and confidential commercial in- U.S.C. 552a(b), for reasons other than formation, prohibited from release by the requirements of the FOIA, and if law. This policy calls for the fullest re- we decide to make the disclosure, then sponsible disclosure consistent with we will not handle your request under those requirements of administrative the FOIA and this rule. For example, necessity and confidentiality which are when we make routine use disclosures recognized in the Freedom of Informa- pursuant to requests, we do not handle tion Act. them under the FOIA and this rule. ‘‘Routine use’’ is defined in the Privacy § 5.3 Scope. Act and in Part 5b). If we handle your These rules apply to all components request under the FOIA and this rule of the Department. Some units may es- and the FOIA does not require releas- tablish additional rules because of ing the record to you, then the Privacy unique program requirements, but such Act may prohibit the release and re- rules must be consistent with these move our discretion to release. rules and must have the concurrence of the Assistant Secretary for Public Af- § 5.5 Definitions. fairs. Existing implementing rules re- As used in this part, main in effect to the extent that they Agency means any executive depart- are consistent with the new Depart- ment, military department, governmental regulation. If additional rules ment corporation, government con- are issued, they will be published in the trolled corporation, or other establish- FEDERAL REGISTER, and you may get ment in the executive branch of the copies from our Freedom of informa- Federal Government, or any inde- tion Officers. pendent regulatory agency. Thus, HHS is an agency. A private organization is § 5.4 Relationship between the FOIA not an agency even if it is performing and the Privacy Act of 1974. work under contract with the Govern- (a) Coverage. The FOIA and this rule ment or is receiving Federal financial apply to all HHS records. The Privacy assistance. Grantee and contractor Act, 5 U.S.C. 552a, applies to records records are not subject to the FOIA un- that are about individuals, but only if less they are in the possession or under the records are in a system of records. the control of HHS or its agents, such ‘‘Individuals’’ and ‘‘system of records’’ as Medicare health insurance carriers are defined in the Privacy Act and in and intermediaries. our Privacy Act regulation, part 5b of Commercial use means, when referring this title. to a request, that the request is from (b) Requesting your own records. If you or on behalf of one who seeks informa- are an individual and request records, tion for a use or purpose that furthers

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the commercial, trade, or profit inter- and minutes) and documentary mate- ests of the requester or of a person on rial in other forms (such as punch- whose behalf the request is made. cards; magnetic tapes, cards, or discs; Whether a request is for a commercial paper tapes; audio or video recordings; use depends on the purpose of the re- maps; photographs; slides; microfilm; quest and the use to which the records and motion pictures). It does not in- will be put; the identity of the re- clude objects or articles such as exhib- quester (individual, non-profit corpora- its, models, equipment, and duplication tion, for-profit corporation), on the na- machines or audiovisual processing ture of the records, while in some cases materials. Nor does it include books, indicative of that purpose or use, is not magazines, pamphlets, or other ref- necessarily determinative. When a re- erence material in formally organized quest is from a representative of the and officially designated HHS libraries, news media, a purpose or use sup- where such materials are available porting the requester’s news dissemina- under the rules of the particular li- tion function is not a commercial use. brary. Department or HHS means the Depart- Representative of the news media ment of Health and Human Services. It means a person actively gathering in- includes Medicare health insurance formation for an entity organized and carriers and intermediaries to the ex- operated to publish or broadcast news tent they are performing functions to the public. News media entities in- under agreements entered into under clude television and radio broadcasters, sections 1816 and 1842 of the Social Se- publishers of periodicals who distribute curity Act, 42 U.S.C. 1395h, 1395u. their products to the general public or Duplication means the process of who make their products available for making a copy of a record and sending purchase or subscription by the general it to the requester, to the extent nec- public, and entities that may dissemi- essary to respond to the request. Such nate news through other media (e.g., copies include paper copy, microform, electronic dissemination of text). We audio-visual materials, and magnetic will treat freelance journalists as rep- tapes, cards, and discs. resentatives of a new media entity if Educational institution means a pre- they can show a likelihood of publica- school, elementary or secondary tion through such an entity. A publica- school, institution of undergraduate or tion contract is such a basis, and the graduate higher education, or institu- requester’s past publication record tion of professional or vocational edu- may show such a basis. cation, which operates a program of Request means asking for records, scholarly research. whether or not you refer specifically to Freedom of Information Act or FOIA the Freedom of Information Act. Re- means section 552 of Title 5, United quests from Federal agencies and court States Code, as amended. orders for documents are not included Freedom of Information Officer means within this definition. Subpoenas are an HHS official who has been delegated requests only to the extent provided by the authority to release or withhold Part 2 of this title. records and assess, waive, or reduce Review means, when used in connec- fees in response to FOIA requests. tion with processing records for a com- Non-commercial scientific institution mercial use request, examining the means an institution that is not oper- records to determine what portions, if ated substantially for purposes of fur- any, may be withheld, and any other thering its own or someone else’s busi- processing that is necessary to prepare ness, trade, or profit interests, and that the records for release. It includes only is operated for purposes of conducting the examining and processing that are scientific research whose results are done the first time we analyze whether not intended to promote any particular a specific exemption applies to a par- product or industry. ticular record or portion of a record. It Records means any handwritten, does not include examination done in typed, or printed documents (such as the appeal stage with respect to an ex- memoranda, books, brochures, studies, emption that was applied at the initial writings, drafts, letters, transcripts, request stage. However, if we initially

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withhold a record under one exemp- clude your telephone number(s) to help tion, and on appeal we determine that us reach you if we have questions. If that exemption does not apply, then you are not sure how to write your re- examining the record in the appeal quest or what details to include, com- stage for the purpose of determining municate with a Freedom of Informa- whether a different exemption applies tion Officer. is included in review. It does not include the process of researching or re- § 5.22 Requests not handled under the solving general legal or policy issues FOIA. regarding exemptions. (a) We will not handle your request Search means looking for records or under the FOIA and this regulation to portions of records responsive to a re- the extent it asks for records that are quest. It includes reading and inter- currently available, either from HHS preting a request, and also page-by- or from another part of the Federal page and line-by-line examination to Government, under a statute that pro- identify responsive portions of a docu- vides for charging fees for those ment. However, it does not include records. For example, we will not han- line-by-line examination where merely dle your request under the FOIA and duplicating the entire page would be a this regulation to the extent it asks for less expensive and quicker way to com- detailed earnings statements under the ply with the request. Social Security program, or records currently available from the Govern- Subpart B—Obtaining a Record ment Printing Office of the National Technical Information Service. § 5.21 How to request records. (b) We will not handle your request (a) General. Our policy is to answer under the FOIA and this regulation to all requests, both oral and written, for the extent it asks for records that are records. However, in order to have the distributed by an HHS program office rights given you by the FOIA and by as part of its regular program activity, this regulation (for example, the right for example, health education bro- to appeal if we deny your request and chures distributed by the Public Health the right to have our decisions re- Service or public information leaflets viewed in court), you must either make distributed by the Social Security Ad- your request in writing or make it ministration. orally to a Freedom of Information Of- ficer. Freedom of Information Officers § 5.23 Referral of requests outside the and their staffs may put in writing any Department. oral requests they receive directly. If you request records that were cre- (b) Addressing requests. It will help us ated by, or provided to us by, another to handle your request sooner if you Federal agency, and if that agency as- address it to the Freedom of Informa- serts control over the records, we may tion Officer in the HHS unit that is refer the records and your request to most likely to have the records you that agency. We may likewise refer re- want. (See § 5.31 of this Part for a list quests for classified records to the of Freedom of Information Officers.) If agency that classified them. In these you cannot determine this, send the re- cases, the other agency will process quest to: HHS Freedom of Information and respond to your request, to the ex- Officer, 645–F, Hubert H. Humphrey tent it concerns those records, under Building, Department of Health and that agency’s regulation, and you need Human Services, 200 Independence Ave- not make a separate request to that nue SW., Washington, DC 20201. Write agency. We will notify you when we the words ‘‘Freedom of Information refer your request to another agency. Act Request’’ on the envelope and letter. § 5.24 Responding to your request. (c) Details in the letter. You should (a) Retrieving records. The Depart- provide details that will help us iden- ment is required to furnish copies of tify and find the records you are re- records only when they are in our pos- questing. If there is insufficient infor- session or we can retrieve them from mation, we will ask you for more. In- storage. If we have stored the records

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you want in the National Archives or the authority to release or deny another storage center, we will retrieve records. These same officials determine and review them for possible disclo- fees. sure. However, the Federal Govern- (1) HHS Freedom of Information Offi- ment destroys many old records, so cer. Only the HHS Freedom of Informa- sometimes it is impossible to fill re- tion Officer may determine whether to quests. Various laws, regulations, and release or deny records in any of the manuals give the time periods for following situations: keeping records before they may be de- (i) The records you seek include stroyed. For example, there is informa- records addressed to or sent from an of- tion about retention of records in the ficial or office of the Office of the Sec- Records Disposal Act of 1944, 44 U.S.C. retary, including its staff offices, or of 3301 through 3314; the Federal Property any Regional Director’s Office; Management Regulations, 41 CFR 101– (ii) The records you seek include any 11.4; the General Records Schedules of records of the Office of Human Devel- the National Archives and Records Ad- opment Services, the Family Support ministration; and in the HHS Hand- Administration, or any organizational book: Files Maintenance and Records unit of HHS not specifically indentified Disposition. below; or (b) Furnishing records. The require- (iii) The records include records of ment is that we furnish copies only of more than one of the major units iden- records that we have or can retrieve. tified below (PHS, CMS, and SSA) ei- We are not compelled to create new ther at headquarters or in a Regional records. For example, we are not re- Office. quired to write a new program so that (2) PHS Freedom of Information Officer. a computer will print information in If the records you seek are exclusively the format you prefer. However, if the records of the Public Health Service or requested information is maintained in if the records you seek involve more computerized form, but we can, with than one health agency of the Public minimal computer instructions, Health Service, including its records in produce the information on paper, we the regions, only the Deputy Assistant will do this if it is the only way to re- Secretary for Health (Communica- spond to a request. Nor are we required tions), who also is the PHS Freedom of to perform research for you. On the Information Officer, may determine other hand, we may decide to conserve whether to release or deny the records, government resources and at the same except as follows: time supply the records you need by (i) CDC and ATSDR Freedom of Infor- consolidating information from various mation Officer. If the records you seek records rather than copying them all. are exclusively records of the Centers Moreover, we are required to furnish for Disease Control and/or the Agency only one copy of a record and usually for Toxic Substances and Disease Reg- impose that limit. If information exists istry, only the Director, Office of Pub- in different forms, we will provide the lic Affairs, CDC, who also is the CDC record in the form that best conserves and ATSDR Freedom of Information government resources. For example, if Officer, may determine whether to re- it requires less time and expense to lease or deny the records. provide a computer record as a paper (ii) FDA Freedom of Information Offi- printout rather than in an electronic cer. If the records you seek are exclu- medium, we will provide the printout. sively records of the Food and Drug Administration, only the Associate Subpart C—Release and Denial of Commissioner for Public Affairs, FDA, Records who also is the FDA Freedom of Infor- mation Officer, may determine wheth- § 5.31 Designation of authorized offi- er to release or deny the records. cials. (iii) NIH Freedom of Information Offi- (a) Freedom of Information Officers. To cer. If the records you seek are exclu- provide coordination and consistency sively records of the National Insti- in responding to FOIA requests, only tutes of Health, only the Associate Di- Freedom of Information Officers have rector of Communications, HIH, who

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also is the NIH Freedom of Information FREEDOM OF INFORMATION OFFICERS Officer, may determine whether to release or deny the records. HHS Freedom of Information Officer, Room 645–F, Hubert H. Humphrey Building, 200 (iv) HRSA Freedom of Information Offi- Independence Avenue SW., Washington, DC cer. If the records you seek are exclu- 20201, Tel: (202) 472–7453 sively records of the Health Resources SSA Freedom of Information Officer, Room and Services Administration, only the 4–H–8, Annex Building, 6401 Security Bou- Associate Administrator for Commu- levard, Baltimore, Maryland 21235, Tel: nications, HRSA, who also is the HRSA (301) 965–3962 Freedom of Information Officer, may CMS Freedom of Information Officer, Room determine whether to release or deny 100, Professional Building, Office of Public the records. Affairs, 6660 Security Boulevard, Balti- more, Maryland 21207, Tel: (301) 966–5352 (v) ADAMHA Freedom of Information PHS Freedom of Information Officer, Room Officer. If the records you seek are ex- 13–C–24, Parklawn Building, 5600 Fishers clusively records of the Alcohol, Drug Lane, Rockville, Maryland 20857, Tel: (301) Abuse and Mental Health Administra- 443–5252 tion, only the Associate Administrator FDA Freedom of Information Officer, HFW– for Communications and Public Af- 35, Room 12A16, Parklawn Building, 5600 fairs, ADAMHA, who is also the Fishers Land, Rockville, Maryland 20857, ADAMHA Freedom of Information Offi- Tel: (301) 443–1813 cer, may determine whether to release NIH Freedom of Information Officer, Na- tional Institutes of Health, Building 31, or deny the records. Room 2B39, 9000 Rockville Pike, Bethesda, (vi) IHS Freedom of Information Offi- Maryland 20892, Tel: (301) 496–5633 cer. If the records you seek are exclu- CDC Freedom of Information Officer, Centers sively records of the Indian Health for Disease Control, 1600 Clifton Road, NE., Service, only the Director of Commu- Atlanta, Georgia 30333, Tel: (404) 329–3286 nications, IHS, who also is the IHS HRSA Freedom of Information Officer, Room Freedom of Information Officer, may 14–43, Parklawn Building, 5600 Fishers determine whether to release or deny Lane, Rockville, Maryland 20857, Tel: (301) the records. 443–2086 ADAMHA Freedom of Information Officer, (3) SSA Freedom of Information Officer. Room 12–C–15, Parklawn Building, 5600 If the records you seek are exclusively Fishers Lane, Rockville, Maryland 20857, records of the Social Security Adminis- Tel: (301) 443–3783 tration, including its records in the re- IHS Freedom of Information Officer, Room gions, only the Director, Office of Pub- 5–A–39, Parklawn Building, 5600 Fishers lic Inquiries, SSA, who also is the SSA Land, Rockville, Maryland 20857, Tel: (301) Freedom of Information Officer, may 443–1397. determine whether to release or deny the records. § 5.32 Release of records. (4) CMS Freedom of Information Offi- (a) Records previously released. If we cer. If the records you seek are exclu- have released a record, or a part of a sively records of theCenters for Medi- record, to others in the past, we will care & Medicaid Services, including its ordinarily release it to you also. How- records in the regions, only the Direc- ever, we will not release it to you if a tor, Office of Public Affairs, CMS, who statute forbids this disclosure, and we also is the CMS Freedom of Informa- will not necessarily release it to you if tion Officer, may determine whether to an exemption applies in your situation release or deny the records. and did not apply, or applied dif- (b) Delegations. Any of the above ferently, in the previous situations. Freedom of Information Officers may (b) Unauthorized disclosure. The prin- delegate his or her authority to release ciple stated in paragraph (a) of this or deny records and to determine fees. section, does not apply if the previous Any such delegation requires the con- release was unauthorized. currence of the Assistant Secretary for (c) Poor copy. If we cannot make a Public Affairs. legible copy of a record to be released, (c) Addresses and telephone numbers. we do not attempt to reconstruct it. The addresses and telephone numbers Instead, we furnish the best copy pos- of the Freedom of Information Officers sible and note its poor quality in our are listed below. reply.

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§ 5.33 Denial of requests. cial responds to an appeal, that con- (a) Information furnished. All denials stitutes the Department’s final action are in writing and describe in general on the request. If the review official terms the material withheld; state the grants your appeal, we will send the reasons for the denial, including, as ap- records to you promptly or let you in- plicable, a reference to the specific ex- spect them, or else we will explain the emption of the FOIA authorizing the reason for any delay and the approxi- withholding or deletion; explain your mate date you will receive copies or be right to appeal the decision and iden- allowed to inspect the records. If the tify the official to whom you should decision is to deny your appeal, the of- send the appeal; and are signed by the ficial will state the reasons for the de- person who made the decision to deny cision in writing and inform you of the all or part of the request. FOIA provision for judicial review. (b) Unproductive searches. We make a diligent search for records to satisfy § 5.35 Time limits. your request. Nevertheless, we may not (a) General. FOIA sets certain time be able always to find the records you limits for us to decide whether to dis- want using the information you pro- close the records you requested, and to vided, or they may not exist. If we advise you that we have been unable to decide appeals. If we fail to meet the find the records despite a diligent deadlines, you may proceed as if we search, this does not constitute a de- had denied your request or your appeal. nial of your request. We will try diligently to comply with the time limits, but if it appears that § 5.34 Appeal of denials. processing your request may take (a) Right of appeal. You have the longer than we would wish, we will ac- right to appeal a partial or full denial knowledge your request and tell you of your FOIA request. To do so, you its status. Since requests may be must put your appeal in writing and misaddressed or misrouted, you should send it to the review official identified call or write to confirm that we have in the denial letter. You must send the request and to learn its status if your appeal within 30 days from the you have not heard from us in a rea- date you receive that letter or from the sonable time. date you receive the records released as (b) Time allowed. (1) We will decide a partial grant of your request, which- whether to release records within 10 ever is later. working days after your request (b) Letter of appeal. The appeal letter reaches the appropriate FOI office, as should state reasons why you believe identified in § 5.31 of this part. When we that the FOIA exemption(s) we cited do decide to release records, we will actu- not apply to the records that you re- ally provide the records, or let you in- quested, or give reasons why they spect them, as soon as possible after should be released regardless of wheth- that decision. er the exemption(s) apply. Because we (2) We will decide an appeal within 20 have some discretionary authority in working days after the appeal reaches deciding whether to release or withhold records, you may strengthen your re- the appropriate review official quest by explaining your reasons for (c) Extension of time limits. FOI Offi- wanting the records. However, you are cers of review officials may extend the not required to give any explanation. time limits in unusual circumstances. (c) Review process. Before making a Extension at the request stage and at decision on an appeal of a denial, the the appeal stage may total up to 10 designated review official will consult working days. We will notify you in with the General Counsel to ensure writing of any extension. ‘‘Unusual cir- that the rights and interests of all par- cumstances’’ include situations when ties affected by the request are pro- we: tected. Also, the concurrence of the As- (1) Search for and collect records sistant Secretary for Public Affairs is from field facilites, archives, or loca- required in all appeal decisions, includ- tions other than the office processing ing those on fees. When the review offi- the request.

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(2) Search for, collect, or examine a ator spends less than two hours on the great many records in response to a search, we well reduce the total search single request. fees by the average hourly rate for the (3) Consult with another office or operator’s time, multipled by two. agency that has substantial interest in (c) If we are not charging you for the the determination of the request. first 100 pages of duplication, under (4) Conduct negotiations with sub- § 5.41 (b) or (c), then those 100 pages are mitters and requesters of information the first 100 pages of photocopies of to determine the nature and extent of standard size pages, or the first 100 non-disclosable proprietary materials. pages of computer printout. If we cannot use this method to calculate the Subpart D—Fees fee reduction, then we will reduce your total duplication fee by the normal § 5.41 Fees to be charged—categories charge for photocopying a standard of requests. size page, multiplied by 100. The paragraphs below state, for each (d) We will not charge you any fee at category of request, the type of fees all if the costs of routine collection and that we will generally charge. How- processing of the fee are likely to equal ever, for each of these categories, the or exceed the amount of the fee. As of fees may be limited, waived, or reduced May 1987, such costs among the units for the reasons given in §§ 5.42 through HHS ranged between $6.00 and $12.50. 5.45 or for other reasons. (e) If we determine that you (acting (a) Commercial use request. If your re- either alone or together with others) quest is for a commercial use, HHS will are breaking down a single request into charge you the costs of search, review, a series of requests in order to avoid and duplication. (or reduce) the fees charged, we may (b) Educational and scientific institu- aggregate all these requests for pur- tions and news media. If you are an edu- poses of calculating the fees charged. cational institution or a non-commer- (f) We will charge interest on unpaid cial scientific institution, operated pri- bills beginning on the 31st day fol- marily for scholarly or scientific re- lowing the day the bill was sent. We search, or a representative of the news will use the provisions of Part 30 of media, and your request is not for a this Title in assessing interest, admin- commercial use, HHS will charge you istrative costs, and penalties and in only for the duplication of documents. taking actions to encourage payment. Also, HHS will not charge you the (g) This subpart does not apply to re- copying costs for the first 100 pages of quests for Social Security program duplication. records on Social Security number (c) Other requesters. If your request is holders, wage earners, employers, and not the kind described by paragraph (a) claimants, where the requests are gov- or (b) of this section, then HHS will erned by section 1106 of the Social Se- charge you only for the search and the curity Act, 42 U.S.C. 1306(c), and by 20 duplication. Also, we will not charge CFR 442.441. you for the first two hours of search time or for the copying costs of the § 5.43 Fee schedule. first 100 pages of duplication. HHS charges the following fees: (a) Manual searching for or reviewing § 5.42 Fees to be charged—general proof records—when the search or review visions. is performed by employees at grade (a) We may charge search fees even if GS–1 through GS–8, an hourly rate the records we find are exempt from based on the salary of a GS–5, step 7, disclosure, or even if we do not find employee; when done by a GS–9 any records at all. through GS–14, an hourly rate based on (b) If we are not charging you for the the salary of a GS–12, step 4, employee; first two hours of search time, under and when done by a GS–15 or above, an § 5.41(c), and those two hours are spent hourly rate based on the salary of a on a computer search, then the two GS–15, step 7, employee. In each case, free hours are the first two hours of the the hourly rate will be computed by operator’s own operation. If the oper- taking the current hourly rate for the

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specified grade and step, adding 16% of charge for services associated with that rate to cover benefits, and round- your request. You may specify a limit ing to the nearest whole dollar. As of on the amount you are willing to November 25, 1988, these rates were $10, spend. We will notify you if it appears $20, and $37 respectively. When a search that the fees will exceed the limit and involves employees at more than one of ask whether you nevertheless want us these levels, we will charge the rate ap- to proceed with the search. propriate for each. (b) Advance payment. If you have (b) Computer searching and print- failed to pay previous bills in a timely ing—the actual cost of operating the fashion, or if our initial review of your computer plus charges for the time request indicates that we will charge spent by the operator, at the rates you fees exceeding $250, we will require given in paragraph (a) of this section. you to pay your past due fees and/or (c) Photocopying standard size the estimated fees, or a deposit, before pages—$0.10 per page. FOI Officers may we start searching for the records you charge lower fees for particular docu- want. If so, we will let you know ments where— promptly upon receiving your request. (1) The document has already been In such cases, the administrative time printed in large numbers, limits prescribed in § 5.35 of the part (2) The program office determines (i.e., ten working days from receipt of that using existing stock to answer initial requests and 20 working days this request, and any other anticipated from receipt of appeals from initial de- FOI requests, will not interfere with nials, plus permissible extensions of program requirements, and these time limits) will begin only after (3) The FOI Officer determines that we come to an agreement with you the lower fee is adequate to recover the over payment of fees, or decide that fee prorated share of the original printing waiver or reduction is appropriate. costs. (c) Billing and payment. We will nor- (d) Photocopying odd-size documents mally require you to pay all fees before (such as punchcards or blueprints), or we furnish the records to you. We may, reproducing other records (such as at our discretion, send you a bill along tapes)—the actual costs of operating with or following the furnishing of the the machine, plus the actual cost of records. For example, we may do this if the materials used, plus charges for the you have a history of prompt payment. time spent by the operator, at the We may also, at our discretion, aggre- rates given in paragraph (a) of this sec- gate the charges for certain time peri- tion. ods in order to avoid sending numerous (e) Certifying that records are true small bills to frequent requesters, or to copies. This service is not required by businesses or agents representing re- the FOIA. If we agree to provide it, we questers. For example, we might send a will charge $10 per certification. bill to such a requester once a month. (f) Sending records by express mail, Fees should be paid in accordance with certified mail, or other special meth- the instructions furnished by the per- ods. This service is not required by the son who responds to your requests. FOIA. If we agree to provide it, we will charge our actual costs. § 5.45 Waiver or reduction of fees. (g) Performing any other special (a) Standard. We will waive or reduce service that you request and we agree the fees we would otherwise charge if to—actual costs of operating any ma- disclosure of the information meets chinery, plus actual cost of any mate- both of the following tests: rials used, plus charges for the time of (1) It is in the public interest because our employees, at the rates given in it is likely to contribute significantly paragraph (a) of this section. to public understanding of the operations or activities of the government, § 5.44 Procedures for assessing and and collecting fees. (2) It is not primarily in the commer- (a) Agreement to pay. We generally as- cial interest of the requester. sume that when you request records These two tests are explained in you are willing to pay the fees we paragraphs (b) and (c) of this section.

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(b) Public interest. The disclosure making corporations have commercial passes the first test only if it furthers interests—so do nonprofit corpora- the specific public interest of being tions, individuals, unions, and other as- likely to contribute significantly to sociations. The interest of a represent- public understanding of government ative of the news media in using the in- operations or activities, regardless of formation for news dissemination pur- any other public interest it may fur- poses will not be considered a commer- ther. In analyzing this question, we cial interest. will consider the following factors. (2) If disclosure would further a com- (1) How, if at all, do the records to be mercial interest of the requester, disclosed pertain to the operations or would that effect outweigh the ad- activities of the Federal Government? vancement of the public interest de- (2) Would disclosure of the records re- fined in paragraph (b) of this section? veal any meaningful information about Which effect is primary? government operations or activities? (d) Deciding between waiver and reduc- Can one learn from these records any- tion. If the disclosure passes both tests, thing about such operations that is not we will normally waive fees. However, already public knowledge? in some cases we may decide only to (3) Will the disclosure advance the reduce the fees. For example, we may understanding of the general public as do this when disclosure of some but not distinguished from a narrow segment all of the requested records passes the of interested persons? Under this factor tests. we may consider whether the requester (e) Procedure for requesting a waiver or is in a position to contribute to public reduction. You must make your request understanding. For example, we may for a waiver or reduction at the same consider whether the requester has time you make your request for such knowledge or expertise as may be records. You should explain why you necessary to understand the informa- believe a waiver or reduction is proper tion, and whether the requester’s in- under the analysis in paragraphs (a) tended use of the information would be through (d) of this section. Only FOI likely to disseminate the information Officers may make the decision wheth- among the public. An unsupported er to waive, or reduce, the fees. If we do claim to be doing research for a book not completely grant your request for or article does not demonstrate that a waiver or reduction, the denial letter likelihood, while such a claim by a rep- will designate a review official. You resentative of the news media is better may appeal the denial to that official. evidence. In your appeal letter, you should dis- (4) Will the contribution to public un- cuss whatever reasons are given in our derstanding be a significant one? Will denial letter. The process prescribed in the public’s understanding of the gov- § 5.34(c) of this part will also apply to ernment’s operations be substantially these appeals. greater as a result of the disclosure? (c) Not primarily in the requester’s com- Subpart E—Records Available for mercial interest. If the disclosure passes Public Inspection the test of furthering the specific public interest described in paragraph (b) § 5.51 Records available. of this section, we will determine (a) Records of general interest. We will whether it also furthers the requester’s make the following records of general commercial interest and, if so, whether interest available for your inspection this effect outweighs the advancement and copying. Before releasing them, of that public interest. In applying this however, we may delete the names of second test, we will consider the fol- people, or information that would iden- lowing factors: tify them, if release would invade their (1) Would the disclosure further a personal privacy to a clearly unwar- commercial interest of the requester, ranted degree. (See § 5.67 of this part.) or of someone on whose behalf the re- (1) Orders and final opinions, includ- quester is acting? ‘‘Commercial inter- ing concurring and dissenting opinions ests’’ include interests relating to busi- in adjudications, such as Letters of ness, trade, and profit. Not only profit- Finding issued by the Office for Civil

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Rights in civil rights complaints, and emption may apply to the same docu- Social Security Rulings. (See § 5.66 of ment.) Information obtained by the De- this part for availability of internal partment from any individual or orga- memoranda, including attorney opin- nization, furnished in reliance on a pro- ions and advice.) vision for confidentiality authorized by (2) Statements of policy and interpre- applicable statute or regulation, will tations that we have adopted but have not be disclosed, to the extent it can be not published in the FEDERAL REG- withheld under one of these exemp- ISTER. tions. This section does not itself au- (3) Administrative staff manuals and thorize the giving of any pledge of con- instructions to staff that affect the fidentiality by any officer or employee public. (We will not make available, of the Department. however, manuals or instructions that reveal investigative or audit proce- § 5.62 Exemption one: National defense dures as described in §§ 5.63 and 5.68 of and foreign policy. this part.) (b) Other records. In addition to such We are not required to release records as those described in paragraph records that, as provided by FOIA, are (a) of this section, we will make avail- ‘‘(a) specifically authorized under cri- able to any person a copy of all other teria established by an Executive Order agency records, unless we determine to be kept secret in the interest of na- that such records should be withheld tional defense or foreign policy and (b) from disclosure under subsection (b) of are in fact properly classified pursuant the Act and Subpart F of this regula- to such Executive Order.’’ Executive tion. Order No. 12356 (1982) provides for such classification. When the release of cer- § 5.52 Indexes of records. tain records may adversely affect U.S. (a) Inspection and copying. We will relations with foreign countries, we maintain and provide for your inspec- usually consult with officials of those tion and copying current indexes of the countries or officials of the Depart- records described in § 5.51(a). We will ment of State. Also, we may on occa- also publish and distribute copies of sion have in our possession records the indexes unless we announce in the classified by some other agency. We FEDERAL REGISTER that it is unneces- may refer your request for such records sary or impracticable to do so. For as- to the agency that classified them and sistance in locating indexes main- notify you that we have done so, as ex- tained in the Department, you may plained in § 5.23. contact the HHS Freedom of Informa- tion Officer at the address and tele- § 5.63 Exemption two: Internal per- phone number in § 5.31(c). sonnel rules and practices. (b) Record citation as precedent. We We are not required to release will not use or cite any record de- records that are ‘‘related solely to the scribed in § 5.51(a) as a precedent for an internal personnel rules and practices action against a person unless we have of an agency.’’ Under this exemption, indexed the record and published it or we may withhold routine internal made it available, or unless the person agency practices and procedures. For has timely notice of the record. example, we may withhold guard schedules and rules governing parking Subpart F—Reasons for facilities or lunch periods. Also under Withholding Some Records this exemption, we may withhold internal records whose release would help § 5.61 General. some persons circumvent the law or Section 552(b) of the Freedom of In- agency regulations. For example, we formation Act contains nine exemp- ordinarily do not disclose manuals that tions to the mandatory disclosure of instruct our investigators or auditors records. We describe these exemptions how to investigate possible violations below and explain how this Department of law, to the extent that this release applies them to disclosure determina- would help some persons circumvent tions. (In some cases more than one ex- the law.

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§ 5.64 Exemption three: Records ex- (3) Information is ‘‘privileged’’ if it empted by other statutes. would ordinarily be protected from dis- We are not required to release closure in civil discovery by a recog- records if another statute specifically nized evidentiary privilege, such as the allows us to withhold them. We may attorney-client privilege or the work use another statute to justify with- product privilege. Information may be holding only if it absolutely prohibits privileged for this purpose under a disclosure or if it sets forth criteria to privilege belonging to a person outside guide our decision on releasing or iden- the government, unless the providing tifies particular types of material to be of the information to the government withheld. rendered the information no longer protectable in civil discovery. § 5.65 Exemption four: Trade secrets (4) Information is ‘‘confidential’’ if it and confidential commercial or fi- meets one of the following tests: nancial information. (i) Disclosure may impair the govern- We will withhold trade secrets and ment’s ability to obtain necessary in- commercial or financial information formation in the future; that is obtained from a person and is (ii) Disclosure would substantially privileged or confidential. harm the competitive position of the (a) Trade secrets. A trade secret is a person who submitted the information; secret, commercially valuable plan, (iii) Disclosure would impair other formula, process, or device that is used government interests, such as program for the making, preparing, effectiveness and compliance; or compounding, or processing of trade (iv) Disclosure would impair other commodities and that can be said to be private interests, such as an interest in the end product of either innovation or controlling availability of intrinsically substantial effort. There must be a di- valuable records, which are sold in the rect relationship between the trade se- market by their owner. cret and the productive process. The following questions may be rel- (b) Commercial or financial informa- evant in analyzing whether a record tion. We will not disclose records whose meets one or more of the above tests: information is ‘‘commercial or finan- Is the information of a type custom- cial,’’ is obtained from a person, and is arily held in strict confidence and not ‘‘privileged or confidential.’’ disclosed to the public by the person to (1) Information is ‘‘commercial or fi- whom it belongs? What is the general nancial’’ if it relates to businesses, custom or usage with respect to such commerce, trade, employment, profits, information in the relevant occupation or finances (including personal fi- or business? How many, and what types nances). We interpret this category of, individuals have access to the infor- broadly. mation? What kind and degree of finan- (2) Information is ‘‘obtained from a cial injury can be expected if the infor- person’’ if HHS or another agency has mation is disclosed? obtained it from someone outside the (c) Designation of certain confidential Federal Government or from someone information. A person who submits within the Government who has a com- records to the government may des- mercial or financial interest in the in- ignate part or all of the information in formation. ‘‘Person’’ includes an indi- such records as exempt from disclosure vidual, partnership, corporation, asso- under Exemption 4 of the FOIA. The ciation, state or foreign government, person may make this designation ei- or other organization. Information is ther at the time the records are sub- not ‘‘obtained from a person’’ if it is mitted to the government or within a generated by HHS or another federal reasonable time thereafter. The des- agency. However, information is ‘‘ob- ignation must be in writing. Where a tained from a person’’ if it is provided legend is required by a request for pro- by someone, including but not limited posals or request for quotations, pursu- to an agency employee, who retains a ant to 48 CFR 352.215–12, then that leg- commercial or financial interest in the end is necessary for this purpose. Any information. such designation will expire ten years

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after the records were submitted to the object. Whenever we send a notice to a government. submitter under paragraph (d)(3) of (d) Predisclosure notification. The pro- this section, we will notify the re- cedures in this paragraph apply to quester of this fact. records on which the submitter has (e) Exceptions to predisclosure notifica- designated information as provided in tion. The notice requirements in para- paragraph (c) of this section. They also graph (d) of this section do not apply in apply to records that were submitted the following situations: to the government where we have sub- (1) We decided not to disclose the stantial reason to believe that informa- records; tion in the records could reasonably be (2) The information has previously considered exempt under Exemption 4. been published or made generally Certain exceptions to these procedures available; are stated in paragraph (e) of this sec- (3) Disclosure is required by a regulation. tion, issued after notice and oppor- (1) When we receive a request for tunity for public comment, that speci- such records, and we determine that we fies narrow categories of records that may be required to disclose them, we are to be disclosed under the FOIA, but will make reasonable efforts to notify in this case a submitter may still des- the submitter about these facts. The ignate records as described in para- notice will include a copy of the re- graph (c) of this section, and in excep- quest, and it will inform the submitter tional cases, we may, at our discretion, about the procedures and time limits follow the notice procedures in para- for submission and consideration of ob- graph (d) of this section; or jections to disclosure. If we must no- (4) The designation appears to be ob- tify a large number of submitters, we viously frivolous, but in this case we may do this by posting or publishing a will still give the submitter the writ- notice in a place where the submitters ten notice required by paragraph (d)(3) are reasonably likely to become aware of this section (although this notice of it. need not explain our decision or in- (2) The submitter has five working clude a copy of the records), and we days from receipt of the notice to ob- will notify the requester as described ject to disclosure of any part of the in paragraph (d)(5) of this section. records and to state all bases for its objections. § 5.66 Exemption five: Internal memo- (3) We will give consideration to all randa. bases that have been timely stated by This exemption covers internal gov- the submitter. If we decide to disclose ernment communications and notes the records, we will notify the sub- that fall within a generally recognized mitter in writing. This notice will evidentiary privilege. Internal govern- briefly explain why we did not sustain ment communications include an agen- its objections. We will include with the cy’s communications with an outside notice a copy of the records about consultant or other outside person, which the submitter objected, as we with a court, or with Congress, when propose to disclose them. The notice those communications are for a pur- will state that we intend to disclose pose similar to the purpose of privi- the records five working days after the leged intra-agency communications. submitter receives the notice unless we Some of the most-commonly applicable are ordered by a United States District privileges are described in the fol- Court not to release them. lowing paragraphs. (4) When a requester files suit under (a) Deliberative process privilege. This the FOIA to obtain records covered by privilege protects predecisional delib- this paragraph, we will promptly notify erative communications. A commu- the submitter. nication is protected under this privi- (5) Whenever we send a notice to a lege if it was made before a final deci- submitter under paragraph (d)(1) of sion was reached on some question of this section, we will notify the re- policy and if it expressed recommenda- quester that we are giving the sub- tions or opinions on that question. The mitter a notice and an opportunity to purpose of the privilege is to prevent

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injury to the quality of the agency de- ranted invasion of their personal pri- cisionmaking process by encouraging vacy. open and frank internal policy discus- (b) Balancing test. In deciding wheth- sions, by avoiding premature disclosure er to release records to you that con- of policies not yet adopted, and by tain personal or private information avoiding the public confusion that about someone else, we weigh the fore- might result from disclosing reasons seeable harm of invading that person’s that were not in fact the ultimate privacy against the public benefit that grounds for an agency’s decision. Pure- would result from the release. If you ly factual material in a deliberative were seeking information for a purely document is within this privilege only commercial venture, for example, we if it is inextricably intertwined with might not think that disclosure would the deliberative portions so that it can- primarily benefit the public and we not reasonably be segregated, if it would deny your request. On the other would reveal the nature of the delibera- hand, we would be more inclined to re- tive portions, or if its disclosure would lease information if you were working in some other way make possible an in- on a research project that gave promise trusion into the decisionmaking proc- of providing valuable information to a ess. We will release purely factual ma- wide audience. However, in our evalua- terial in a deliberative document un- tion of requests for records we attempt less that material is otherwise exempt. to guard against the release of infor- The privilege continues to protect mation that might involve a violation predecisional documents even after a of personal privacy because of a re- decision is made. quester being able to ‘‘read between (b) Attorney work product privilege. the lines’’ or piece together items that This privilege protects documents pre- would constitute information that nor- pared by or for an agency, or by or for mally would be exempt from manda- its representative (typically, HHS at- tory disclosure under Exemption Six. torneys) in anticipation of litigation or (c) Examples. Some of the informa- for trial. It includes documents pre- tion that we frequently withhold under pared for purposes of administrative Exemption Six is: Home addresses, adjudications as well as court litiga- ages, and minority group status of our tion. It includes documents prepared employees or former employees; social by program offices as well as by attor- security numbers; medical information neys. It includes factual material in about individuals participating in clin- such documents as well as material re- ical research studies; names and ad- vealing opinions and tactics. Finally, dresses of individual beneficiaries of the privilege continues to protect the our programs, or benefits such individ- documents even after the litigation is uals receive; earning records, claim closed. files, and other personal information (c) Attorney-client communication privi- maintained by the Social Security Ad- lege. This privilege protects confiden- ministration, the Public Health Serv- tial communications between a lawyer ice, and theCenters for Medicare & and an employee or agent of the gov- Medicaid Services. ernment where there is an attorney-client relationship between them (typi- § 5.68 Exemption seven: Law enforce- cally, where the lawyer is acting as at- ment. torney for the agency and the em- We are not required to disclose infor- ployee is communicating on behalf of mation or records that the government the agency) and where the employee has compiled for law enforcement pur- has communicated information to the poses. The records may apply to actual attorney in confidence in order to ob- or potential violations of either crimi- tain legal advice or assistance. nal or civil laws or regulations. We can withhold these records only to the ex- § 5.67 Exemption six: Clearly unwar- tent that releasing them would cause ranted invasion of personal privacy. harm in at least one of the following (a) Documents affected. We may with- situations: hold records about individuals if disclo- (a) Enforcement proceedings. We may sure would constitute a clearly unwar- withhold information whose release

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could reasonably be expected to inter- in general terms those techniques fere with prospective or ongoing law without disclosing the very material to enforcement proceedings. Investiga- be withheld. We may also withhold tions of fraud and mismanagement, records whose release would disclose employee misconduct, and civil rights guidelines for law enforcement inves- violations may fall into this category. tigations or prosecutions if this disclo- In certain cases—such as when a fraud sure could reasonably be expected to investigation is likely—we may refuse create a risk that someone could cir- to confirm or deny the existence of cumvent requirements of law or of reg- records that relate to the violations in ulation. order not to disclose that an investiga- (f) Life and physical safety. We may tion is in progress, or may be con- withhold records whose disclosure ducted. could reasonably be expected to endan- (b) Fair trial or impartial adjudication. ger the life or physical safety of any in- We may withhold records whose release dividual. This protection extends to would deprive a person of a fair trial or threats and harassment as well as to an impartial adjudication because of physical violence. prejudicial publicity. (c) Personal privacy. We are careful § 5.69 Exemptions 8 and 9: Records on financial institutions; records on not to disclose information that could wells. reasonably be expected to constitute an unwarranted invasion of personal Exemption eight permits us to with- privacy. When a name surfaces in an hold records about regulation or super- investigation, that person is likely to vision of financial institutions. Exemp- be vulnerable to innuendo, rumor, har- tion nine permits the withholding of assment, and retaliation. geological and geophysical information (d) Confidential sources and informa- and data, including maps, concerning tion. We may withhold records whose wells. release could reasonably be expected to disclose the identity of a confidential PART 5a [RESERVED] source of information. A confidential source may be an individual; a state, PART 5b—PRIVACY ACT local, or foreign government agency; or REGULATIONS any private organization. The exemption applies whether the source pro- Sec. vides information under an express 5b.1 Definitions. promise of confidentiality or under cir- 5b.2 Purpose and scope. cumstances from which such an assur- 5b.3 Policy. ance could be reasonably inferred. 5b.4 Maintenance of records. 5b.5 Notification of or access to records. Also, where the record, or information 5b.6 Special procedures for notification of in it, has been compiled by a criminal or access to medical records. law enforcement authority conducting 5b.7 Procedures for correction or amend- a criminal investigation, or by an ment of records. agency conducting a lawful national 5b.8 Appeals of refusals to correct or amend security investigation, the exemption records. also protects all information supplied 5b.9 Disclosure of records. 5b.10 Parents and guardians. by a confidential source. Also pro- 5b.11 Exempt systems. tected from mandatory disclosure is 5b.12 Contractors. any information which, if disclosed, 5b.13 Fees. could reasonably be expected to jeop- APPENDIX A TO PART 5b—EMPLOYEE STAND- ardize the system of confidentiality ARDS OF CONDUCT that assures a flow of information from APPENDIX B TO PART 5b—ROUTINE USES AP- sources to investigatory agencies. PLICABLE TO MORE THAN ONE SYSTEM OF (e) Techniques and procedures. We may RECORDS MAINTAINED BY HHS withhold records reflecting special APPENDIX C TO PART 5b—DELEGATIONS OF AU- THORITY [RESERVED] techniques or procedures of investigation or prosecution, not otherwise gen- AUTHORITY: 5 U.S.C. 301, 5 U.S.C. 552a. erally known to the public. In some SOURCE: 40 FR 47409, Oct. 8, 1975, unless cases, it is not possible to describe even otherwise noted.

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§ 5b.1 Definitions. sures required to be made by statute As used in this part: other than the Freedom of Information (a) Access means availability of a Act, 5 U.S.C. 552. It does not include record to a subject individual. disclosures which are permitted to be (b) Agency means the Department of made without the consent of the sub- Health and Human Services. ject individual which are not compat- (c) Department means the Department ible with the purpose for which it was of Health and Human Services. collected such as disclosures to the Bu- (d) Disclosure means the availability reau of the Census, the General Ac- or release of a record to anyone other counting Office, or to Congress. than the subject individual. (k) Secretary means the Secretary of (e) Individual means a living person Health and Human Services, or his des- who is a citizen of the United States or ignee. an alien lawfully admitted for perma- (l) Statistical record means a record nent residence. It does not include per- maintained for statistical research or sons such as sole proprietorships, part- reporting purposes only and not main- nerships, or corporations. A business tained to make determinations about a firm which is identified by the name of particular subject individual. one or more persons is not an indi- (m) Subject individual means that in- vidual within the meaning of this part. dividual to whom a record pertains. (f) Maintain means to maintain, col- (n) System of records means any group lect, use, or disseminate when used in of records under the control of the De- connection with the term ‘‘record’’; partment from which a record is re- and, to have control over or responsi- trieved by personal identifier such as bility for a system of records when the name of the individual, number, used in connection with the term ‘‘sys- symbol or other unique retriever as- tem of records.’’ signed to the individual. Single records (g) Notification means communication or groups of records which are not re- to an individual whether he is a subject trieved by a personal identifier are not individual. part of a system of records. Papers (h) Record means any item, collec- maintained by individual employees of tion, or grouping of information about the Department which are prepared, an individual that is maintained by the maintained, or discarded at the discre- Department, including but not limited tion of the employee and which are not to the individual’s education, financial subject to the Federal Records Act, 44 transactions, medical history, and U.S.C. 2901, are not part of a system of criminal or employment history and records; Provided, That such personal that contains his name, or an identi- papers are not used by the employee or fying number, symbol, or other identi- the Department to determine any fying particular assigned to the indi- rights, benefits, or privileges of individual, such as a finger or voice print viduals. or a photograph. When used in this part, record means only a record which § 5b.2 Purpose and scope. is in a system of records. (a) This part implements section 3 of (i) Responsible Department official the Privacy Act of 1974, 5 U.S.C. 552a means that officer who is listed in a (hereinafter referred to as the Act), by notice of a system of records as the establishing agency policies and proce- system manager for a given system of dures for the maintenance of records. records or another individual listed in This part also establishes agency poli- the notice of a system of records to cies and procedures under which a sub- whom requests may be made, or the ject individual may be given notifica- designee of either such officer or indi- tion of or access to a record pertaining vidual. to him and policies and procedures (j) Routine use means the disclosure under which a subject individual may of a record outside the Department, have his record corrected or amended if without the consent of the subject indi- he believes that his record is not accu- vidual, for a purpose which is compat- rate, timely, complete, or relevant or ible with the purpose for which the necessary to accomplish a Department record was collected. It includes disclo- function.

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(b) All components of the Depart- the general public records which would ment are governed by the provisions of otherwise not be available to the gen- this part. Also governed by the provi- eral public under the Freedom of Infor- sions of this part are: mation Act, 5 U.S.C. 552, and Part 5 of (1) Certain non-Federal entities this title. which operate as agents of the Depart- (3) Govern the maintenance or disclo- ment for purposes of carrying out Fed- sure of, notification of or access to, eral functions, such as intermediaries records in the possession of the Depart- and carriers performing functions ment which are subject to regulations under contracts and agreements en- of another agency, such as personnel tered into pursuant to sections 1816 and records subject to the regulations of 1842 of the Social Security Act, 42 the Civil Service Commission. U.S.C. 1395h and 1395u. (4) Apply to grantees, including State (2) Advisory committees and councils and local governments or subdivisions within the meaning of the Federal Ad- thereof, administering federally funded visory Committee Act which provide programs. advice to (i) any official or component (5) Make available records compiled of the Department or (ii) the President by the Department in reasonable an- and for which the Department has been ticipation of court litigation or formal delegated responsibility for providing administrative proceedings. The avail- services. ability of such records to the general (c) Employees of the Department public or to any subject individual or governed by this part include all reg- party to such litigation or proceedings ular and special government employees shall be governed by applicable con- of the Department; members of the stitutional principles, rules of dis- Public Health Service Commissioned covery, and applicable regulations of Corps; experts and consultants whose the Department and any of its compo- temporary (not in excess of 1 year) or nents. intermittent services have been procured by the Department by contract § 5b.3 Policy. pursuant to 3109 of Title 5, United It is the policy of the Department to States Code; volunteers where accept- protect the privacy of individuals to ance of their services are authorized by the fullest extent possible while none- law; those individuals performing gra- theless permitting the exchange of tuitous services as permitted under records required to fulfill the adminis- conditions prescribed by the Civil Serv- trative and program responsibilities of ice Commission; and, participants in the Department, and responsibilities of work-study or training programs. the Department for disclosing records (d) Where other statutes mandate which the general public is entitled to procedures which are inconsistent with have under the Freedom of Information the procedures set forth in this part, Act, 5 U.S.C. 552, and Part 5 of this components of the Department may title. issue supplementary regulations containing procedures necessary to comply § 5b.4 Maintenance of records. with such statutes. In addition, components of the Department may supple- (a) No record will be maintained by ment by regulation the policies and the Department unless: procedures set forth in this part to (1) It is relevant and necessary to ac- meet particular needs of the programs complish a Department function re- administered by such components. quired to be accomplished by statute or (e) This part does not: Executive Order; (1) Make available to a subject indi- (2) It is acquired to the greatest ex- vidual records which are not retrieved tent practicable from the subject indi- by that individual’s name or other per- vidual when maintenance of the record sonal identifier. may result in a determination about (2) Make available to the general the subject individual’s rights, benefits public records which are retrieved by a or privileges under Federal programs; subject individual’s name or other per- (3) The individual providing the sonal identifier or make available to record is informed of the authority for

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providing the record (including wheth- sponsible Department official a request er the providing of the record is man- for notification of or access to a record datory or voluntary, the principal pur- under the control of another respon- pose for maintaining the record, the sible Department official; Provided, routine uses for the record, what effect That the request is addressed in writ- his refusal to provide the record may ing to the appropriate responsible De- have on him), and if the record is not partment official. required by statute or Executive Order (b) Verification of identity—(1) When to be provided by the individual, he required. Unless an individual, who is agrees to provide the record. making a request for notification of or (b) No record will be maintained by access to a record in person, is person- the Department which describes how ally known to the responsible Depart- an individual exercises rights guaran- ment official, he shall be required to teed by the First Amendment unless verify his identity in accordance with expressly authorized (1) by statute, or paragraph (b)(2) of this section if: (2) by the subject individual, or (3) un- (i) He makes a request for notifica- less pertinent to and within the scope tion of a record and the responsible De- of an authorized law enforcement ac- partment official determines that the tivity. mere disclosure of the existence of the record would be a clearly unwarranted § 5b.5 Notification of or access to records. invasion of privacy if disclosed to someone other than the subject indi- (a) Times, places, and manner of re- vidual; or, questing notification of or access to a (ii) He makes a request for access to record. (1) Subject to the provisions a record which is not required to be governing medical records in § 5b.6 of disclosed to the general public under this part, any individual may request the Freedom of Information Act, 5 notification of a record. He may at the U.S.C. 552, and Part 5 of this title. same time request access to any record pertaining to him. An individual may (2) Manner of verifying identity. (i) An be accompanied by another individual individual who makes a request in per- of his choice when he requests access son shall provide to the responsible De- to a record in person; Provided, That he partment official at least one piece of affirmatively authorizes the presence tangible identification such as a driv- of such other individual during any dis- er’s license, passport, alien or voter cussion of a record to which access is registration card, or union card to requested. verify his identity. If an individual (2) An individual making a request does not have identification papers to for notification of or access to a record verify his identity, he shall certify in shall address his request to the respon- writing that he is the individual who sible Department official and shall he claims to be and that he under- verify his identity when required in ac- stands that the knowing and willful re- cordance with paragraph (b)(2) of this quest for or acquisition of a record per- section. At the time the request is taining to an individual under false made, the individual shall specify pretenses is a criminal offense under which systems of records he wishes to the Act subject to a $5,000 fine. have searched and the records to which (ii) Except as provided in paragraph he wishes to have access. He may also (b)(2)(v) of this section, an individual request that copies be made of all or who does not make a request in person any such records. An individual shall shall submit a notarized request to the also provide the responsible Depart- responsible Department official to ment official with sufficient particu- verify his identity or shall certify in lars to enable such official to distin- his request that he is the individual guish between records on subject indi- who he claims to be and that he under- viduals with the same name. The nec- stands that the knowing and willful re- essary particulars are set forth in the quest for or acquisition of a record per- notices of systems of records. taining to an individual under false (3) An individual who makes a re- pretenses is a criminal offense under quest in person may leave with any re- the Act subject to a $5,000 fine.

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(iii) An individual who makes a re- dividual requesting access to the quest on behalf of a minor or legal in- record is the subject individual. competent as authorized under § 5b.10 (2) If the responsible Department of- of this part shall verify his relationship ficial determines that there will be a to the minor or legal incompetent, in delay in responding to a request be- addition to verifying his own identity, cause of the number of requests being by providing a copy of the minor’s processed, a breakdown of equipment, birth certificate, a court order, or shortage of personnel, storage of other competent evidence of guardian- records in other locations, etc., he will ship to the responsible Department of- so inform the individual and indicate ficial; except that, an individual is not when notification or access will be required to verify his relationship to granted. the minor or legal incompetent when (3) Prior to granting notification of he is not required to verify his own or access to a record, the responsible identity or when evidence of his rela- Department official may at his discre- tionship to the minor or legal incom- tion require an individual making a re- petent has been previously given to the quest in person to reduce his request to responsible Department official. writing if the individual has not al- (iv) An individual shall further verify ready done so at the time the request his identity if he is requesting notifica- is made. tion of or access to sensitive records such as medical records. Any further § 5b.6 Special procedures for notifica- verification shall parallel the record to tion of or access to medical records. which notification or access is being (a) General. An individual in general sought. Such further verification may has a right to notification of or access include such particulars as the individ- to his medical records, including psy- ual’s years of attendance at a par- chological records, as well as to other ticular educational institution, rank records pertaining to him maintained attained in the uniformed services, by the Department. This section sets date or place of birth, names of par- forth special procedures as permitted ents, an occupation or the specific by the Act for notification of or access times the individual received medical to medical records, including a special treatment. procedure for notification of or access (v) An individual who makes a re- to medical records of minors. The spe- quest by telephone shall verify his cial procedures set forth in paragraph identity by providing to the respon- (b) of this section may not be suitable sible Department official identifying for use by every component of the De- particulars which parallel the record to partment. Therefore, components may which notification or access is being follow the paragraph (b) procedure for sought. If the responsible Department notification of or access to medical official determines that the particulars records, or may issue regulations es- provided by telephone are insufficient, tablishing special procedures for such the requester will be required to sub- purposes. The special procedure set mit the request in writing or in person. forth in paragraph (c) of this section Telephone requests will not be accept- relating to medical records of minors is ed where an individual is requesting mandatory. notification of or access to sensitive (b) Medical records procedures—(1) No- records such as medical records. tification of or access to medical records. (c) Granting notification of or access to (i) Any individual may request notifi- a record. (1) Subject to the provisions cation of or access to a medical record governing medical records in § 5b.6 of pertaining to him. Unless the indi- this part and the provisions governing vidual is a parent or guardian request- exempt systems in § 5b.11 of this part, a ing notification of or access to a mi- responsible Department official, who nor’s medical record, an individual receives a request for notification of or shall make a request for a medical access to a record and, if required, record in accordance with this section verification of an individual’s identity, and the procedures in § 5b.5 of this part. will review the request and grant noti- (ii) An individual who requests notifi- fication or access to a record, if the in- cation of or access to a medical record

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shall, at the time the request is made, to the attention of the physician or designate a representative in writing. health professional to whom the record The representative may be a physician, is sent. The physician or health profes- other health professional, or other re- sional will be asked to consider the ef- sponsible individual, who would be fect that disclosure of the record to the willing to review the record and inform parent or guardian would have on the the subject individual of its contents at minor in determining whether the mi- the representative’s discretion. nor’s medical record should be made (2) Utilization of the designated rep- available to the parent or guardian. resentative. A subject individual will be Response to the parent or guardian granted direct access to a medical making the request will be made in record if the responsible official deter- substantially the following form: mines that direct access is not likely We have completed processing your request to have an adverse effect on the subject for notification of or access to ——————— individual. If the responsible Depart- ment official believes that he is not llllllllllllllllllll’s qualified to determine, or if he does de- (Name of minor) termine, that direct access to the sub- medical records. Please be informed that if ject individual is likely to have an ad- any medical record were found pertaining to verse effect on the subject individual, that individual, they have not been sent to the record will be sent to the des- your designated physician or health profes- ignated representative. The subject in- sional. dividual will be informed in writing that the record has been sent. In each case where a minor’s medical (c) Medical records of minors—(1) Re- record is sent to a physician or health quests by minors; notification of or access professional, reasonable efforts will be to medical records to minors. A minor made to so inform the minor. may request notification of or access to a medical record pertaining to him § 5b.7 Procedures for correction or amendment of records. in accordance with paragraph (b) of this section. (a) Any subject individual may re- (2) Requests on a minor’s behalf; notifi- quest that his record be corrected or cation of or access to medical records to amended if he believes that the record an individual on a minor’s behalf. (i) In is not accurate, timely, complete, or order to protect the privacy of a minor, relevant or necessary to accomplish a a parent or guardian, authorized to act Department function. A subject indi- on a minor’s behalf as provided in vidual making a request to amend or § 5b.10 of this part, who makes a re- correct his record shall address his request for notification of or access to a quest to the responsible Department minor’s medical record will not be official in writing; except that, the re- given direct notification of or access to quest need not be in writing if the sub- such record. ject individual makes his request in (ii) A parent or guardian shall make person and the responsible Department all requests for notification of or ac- official corrects or amends the record cess to a minor’s medical record in ac- at that time. The subject individual cordance with this paragraph and the shall specify in each request: procedures in § 5b.5 of this part. A par- (1) The system of records from which ent or guardian shall at the time he the record is retrieved; makes a request designate a family (2) The particular record which he is physician or other health professional seeking to correct or amend; (other than a family member) to whom (3) Whether he is seeking an addition the record, if any, will be sent. to or a deletion or substitution of the (iii) Where a medical record on the record; and, minor exists, it will be sent to the phy- (4) His reasons for requesting correc- sician or health professional des- tion or amendment of the record. ignated by the parent or guardian in (b) A request for correction or all cases. If disclosure of the record amendment of a record will be ac- would constitute an invasion of the mi- knowledged within 10 working days of nor’s privacy, that fact will be brought its receipt unless the request can be

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processed and the subject individual in- fusal by the Assistant Secretary for formed of the responsible Department Administration and Management is the official’s decision on the request within Under Secretary. that 10 day period. (ii) Assistant Secretary for Health (c) If the responsible Department of- for records of the Public Health Serv- ficial agrees that the record is not ac- ice including Office of Assistant Sec- curate, timely, or complete based on a retary for Health; Health Resources preponderance of the evidence, the Administration; Health Services Ad- record will be corrected or amended. ministration; Alcohol, Drug Abuse, and The record will be deleted without re- Mental Health Administration; Center gard to its accuracy, if the record is for Disease Control; National Insti- not relevant or necessary to accom- tutes of Health; and Food and Drug Ad- plish the Department function for ministration. which the record was provided or is (iii) Assistant Secretary for Edu- maintained. In either case, the subject cation for records of the Office of the individual will be informed in writing Assistant Secretary for Education, Na- of the correction, amendment, or dele- tional Center for Education Statistics, tion and, if accounting was made of National Institute of Education, and prior disclosures of the record, all pre- Office of Education. vious recipients of the record will be (iv) Assistant Secretary for Human informed of the corrective action Development for records of the Office taken. of Human Development. (d) If the responsible Department of- (v) Commissioner of Social Security ficial does not agree that the record for records of the Social Security Ad- should be corrected or amended, the ministration. subject individual will be informed in (vi) Administrator, Social and Reha- writing of the refusal to correct or bilitation Service for the records of the amend the record. He will also be in- Social and Rehabilitation Service. formed that he may appeal the refusal (2) An appeal will be completed with- to correct or amend his record to the in 30 working days from its receipt by appropriate appeal authority listed in the appeal authority; except that, the § 5b.8 of this part. The appropriate ap- appeal authority may for good cause peal authority will be identified to the extend this period for an additional 30 subject individual by name, title, and days. Should the appeal period be ex- business address. tended, the subject individual appeal- (e) Requests to correct or amend a ing the refusal to correct or amend the record governed by the regulation of record will be informed in writing of another government agency, e.g., Civil the extension and the circumstances of Service Commission, Federal Bureau of the delay. The subject individual’s re- Investigation, will be forwarded to quest to amend or correct the record, such government agency for processing the responsible Department official’s and the subject individual will be in- refusal to correct or amend, and any formed in writing of the referral. other pertinent material relating to the appeal will be reviewed. No hearing § 5b.8 Appeals of refusals to correct or will be held. amend records. (3) If the appeal authority agrees (a) Processing the appeal. (1) A subject that the record subject to the appeal individual who disagrees with a refusal should be corrected or amended, the to correct or amend his record may ap- record will be amended and the subject peal the refusal in writing. All appeals individual will be informed in writing shall be made to the following appeal of the correction or amendment. Where authorities, or their designees, or suc- an accounting was made of prior disclo- cessors in function: sures of the record, all previous recipi- (i) Assistant Secretary for Adminis- ents of the record will be informed of tration and Management for records of the corrective action taken. the Office of the Secretary, or where (4) If the appeal is denied, the subject the initial refusal to correct or amend individual will be informed in writing: was made by another appeal authority. (i) Of the denial and the reasons for The appeal authority for an initial re- the denial;

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(ii) That he has a right to seek judi- consent to disclose all of a subject indi- cial review of the denial; and, vidual’s records to unspecified individ- (iii) That he may submit to the re- uals or organizational units will not be sponsible Department official a concise honored. The subject individual’s iden- statement of disagreement to be asso- tity and, where applicable (e.g., where a ciated with the disputed record and dis- subject individual gives consent to disclosed whenever the record is disclosed. closure of a record to a specific indi- (b) Notation and disclosure of disputed vidual), the identity of the individual records. Whenever a subject individual to whom the record is to be disclosed submits a statement of disagreement shall be verified. to the responsible Department official (2) A parent or guardian of any minor in accordance with paragraph (a)(4)(iii) is not authorized to give consent to a of this section, the record will be noted disclosure of the minor’s medical to indicate that it is disputed. In any record. subsequent disclosure, a copy of the (b) Disclosures without the consent of subject individual’s statement of dis- the subject individual. The disclosures agreement will be disclosed with the listed in this paragraph may be made record. If the responsible Department without the consent of the subject indi- official deems it appropriate, a concise vidual. Such disclosures are: statement of the appeal authority’s (1) To those officers and employees of reasons for denying the subject individ- the Department who have a need for ual’s appeal may also be disclosed with the record in the performance of their the record. While the subject indi- duties. The responsible Department of- vidual will have access to this state- ficial may upon request of any officer ment of reasons, such statement will or employee, or on his own initiative, not be subject to correction or amend- determine what constitutes legitimate ment. Where an accounting was made need. of prior disclosures of the record, all (2) Required to be disclosed under the previous recipients of the record will Freedom of Information Act, 5 U.S.C. be provided a copy of the subject indi- 552, and Part 5 of this title. vidual’s statement of disagreement, as (3) For a routine use as defined in well as the statement, if any, of the ap- paragraph (j) of § 5b.1 of this part. Rou- peal authority’s reasons for denying tine uses will be listed in any notice of the subject individual’s appeal. a system of records. Routine uses published in Appendix B are applicable to § 5b.9 Disclosure of records. more than one system of records. (a) Consent to disclosure by a subject Where applicable, notices of systems of individual. (1) Except as provided in records may contain references to the paragraph (b) of this section author- routine uses listed in Appendix B. Ap- izing disclosures of records without pendix B will be published with any consent, no disclosure of a record will compendium of notices of systems of be made without the consent of the records. subject individual. In each case the (4) To the Bureau of the Census for consent, whether obtained from the purposes of planning or carrying out a subject individual at the request of the census or survey or related activity Department or whether provided to the pursuant to the provisions of Title 13 Department by the subject individual U.S.C. on his own initiative, shall be in writ- (5) To a recipient who has provided ing. The consent shall specify the indi- the agency with advance written assur- vidual, organizational unit or class of ance that the record will be used solely individuals or organizational units to as a statistical research or reporting whom the record may be disclosed, record; Provided, That, the record is which record may be disclosed and, transferred in a form that does not where applicable, during which time identify the subject individual. frame the record may be disclosed (e.g., (6) To the National Archives of the during the school year, while the sub- United States as a record which has ject individual is out of the country, sufficient historical or other value to whenever the subject individual is re- warrant its continued preservation by ceiving specific services). A blanket the United States Government, or for

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evaluation by the Administrator of subject individual will be granted ac- General Services or his designee to de- cess to an accounting of the disclosures termine whether the record has such of a record in accordance with the pro- value. cedures of this part which govern ac- (7) To another government agency or cess to the related record. Access to an to an instrumentality of any govern- accounting of a disclosure of a record mental jurisdiction within or under the made under paragraph (b)(7) of this sec- control of the United States for a civil tion may be granted at the discretion or criminal law enforcement activity if of the responsible Department official. the activity is authorized by law, and if the head of such government agency or § 5b.10 Parents and guardians. instrumentality has submitted a writ- For the purpose of this part, a parent ten request to the Department speci- or guardian of any minor or the legal fying the record desired and the law en- guardian or any individual who has forcement activity for which the record been declared incompetent due to phys- is sought. ical or mental incapacity or age by a (8) To an individual pursuant to a court of competent jurisdiction is au- showing of compelling circumstances thorized to act on behalf of an indi- affecting the health or safety of any in- vidual or a subject individual. Except dividual if a notice of the disclosure is as provided in paragraph (b)(2) of § 5b.5, transmitted to the last known address of this part governing procedures for of the subject individual. verifying an individual’s identity, and (9) To either House of Congress, or to paragraph (c) (2) of § 5b.6 of this part the extent of matter within its juris- governing special procedures for notifi- diction, any committee or sub- cation of or access to a minor’s medical committee thereof, any joint com- records, an individual authorized to act mittee of Congress or subcommittee of on behalf of a minor or legal incom- any such joint committee. petent will be viewed as if he were the (10) To the Comptroller General, or individual or subject individual. any of his authorized representatives, in the course of the performance of the § 5b.11 Exempt systems. duties of the General Accounting Of- (a) General policy. The Act permits fice. certain types of specific systems of (11) Pursuant to the order of a court records to be exempt from some of its of competent jurisdiction. requirements. It is the policy of the (c) Accounting of disclosures. (1) An ac- Department to exercise authority to counting of all disclosures of a record exempt systems of records only in com- will be made and maintained by the pelling cases. Department for 5 years or for the life of (b) Specific systems of records exempted. the record, whichever is longer; except (1) Those systems of records listed in that, such an accounting will not be paragraph (b)(2) of this section are ex- made: empt from the following provisions of (i) For disclosures under paragraphs the Act and this part: (b) (1) and (2) of this section; and, (i) 5 U.S.C. 552a(c)(3) and paragraph (ii) For disclosures made with the (c)(2) of § 5b.9 of this part which require written consent of the subject indi- a subject individual to be granted ac- vidual. cess to an accounting of disclosures of (2) The accounting will include: a record. (i) The date, nature, and purpose of (ii) 5 U.S.C. 552a(d) (1) through (4) and each disclosure; and (f) and §§ 5b.6, 5b.7, and 5b.8 of this part (ii) The name and address of the per- relating to notification of or access to son or entity to whom the disclosure is records and correction or amendment made. of records. (3) Any subject individual may re- (iii) 5 U.S.C. 552a(e)(4) (G) and (H) quest access to an accounting of disclo- which require inclusion of information sures of a record. The subject indi- about Department procedures for noti- vidual shall make a request for access fication, access, and correction or to an accounting in accordance with amendment of records in the notice for the procedures in § 5b.5 of this part. A the systems of records.

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(iv) 5 U.S.C. 552(e)(3) and paragraph (iii) Pursuant to subsection (k)(4) of (a)(3) of § 5b.4 of this part which require the Act: that an individual asked to provide a (A) The Health and Demographic record to the Department be informed Surveys Conduct in Random Samples of the authority for providing the of the U.S. Population; record (including whether the pro- (B) The Health Manpower Inventories viding of the record is mandatory or and Surveys; voluntary, the principal purposes for (C) The Vital Statistics for Births, maintaining the record, the routine Deaths, Fetal Deaths, Marriages and uses for the record, and what effect his Divorces Occurring in the U.S. during refusal to provide the record may have Each Year; and, on him), and if the record is not re- (D) The Maryland Psychiatric Case quired by statute or Executive Order to Register. be provided by the individual, he agrees (E) The Health Resources Utilization to provide the record. This exemption Statistics, DHHS/OASH/NCHS. applies only to an investigatory record (F) National Medical Expenditure compiled by the Department for crimi- Survey Records. HHS/OASH/NCHSR. nal law enforcement purposes in a sys- (iv) Pursuant to subsection (k)(5) of tem of records exempt under sub- the Act: section (j)(2) of the Act to the extent (A) The Investigatory Material Com- that these requirements would preju- piled for Security and Suitability Pur- dice the conduct of the investigation. poses System, HHS; and, (2) The following systems of records (B) The Suitability for Employment are exempt from those provisions of Records, HHS. the Act and this part listed in paragraph (b) (1) of this section. (v) Pursuant to subsections (j)(2), (i) Pursuant to subsection (j)(2) of the (k)(2), and (k)(5) of the Act: Act: (A) The Clinical Investigatory (A) The Saint Elizabeths Hospital’s Records, HHS/FDA; Court-Ordered Forensic Investigatory (B) The Regulated Industry Em- Materials Files; and ployee Enforcement Records, HHS/ (B) The Investigatory Material Com- FDA; piled for Law Enforcement Purposes (C) The Employee Conduct Investiga- System, HHS. tive Records, HHS/FDA; and, (ii) Pursuant to subsection (k)(2) of (D) The Service Contractor Employee the Act: Investigative Records, HHS/FDA. (A) The General Criminal Investiga- (vi) Pursuant to subsection (k)(6) of tion Files, HHS/SSA; the Act: (B) The Criminal Investigations File, (A) The Personnel Research and HHS/SSA; and, Merit Promotion Test Records, HHS/ (C) The Program Integrity Case SSA/OMA. Files, HHS/SSA. (vii) Pursuant to subsections (k)(2) (D) Civil and Administrative Inves- and (k)(5) of the Act: tigative Files of the Inspector General, (A) Public Health Service Records HHS/OS/OIG. Related to Investigations of Scientific (E) Complaint Files and Log. HHS/ Misconduct, HHS/OASH/ORI. OS/OCR. (B) Administration: Investigative (F) Investigative materials compiled Records, HHS/NIH/OM/OA/OMA. for law enforcement purposes for the (c) Notification of or access to records in Healthcare Integrity and Protection exempt systems of records. (1) Where a Data Bank (HIPDB), of the Office of In- system of records is exempt as provided spector General. (See § 61.15 of this title in paragraph (b) of this section, any infor access and correction rights under dividual may nonetheless request noti- the HIPDB by subjects of the Data fication of or access to a record in that Bank.) system. An individual shall make re- (G) Investigative materials compiled quests for notification of or access to a for law enforcement purposes for the record in an exempt system of records Program Information Management in accordance with the procedures of System, HHS/OS/OCR. §§ 5b.5 and 5b.6 of this part.

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(2) An individual will be granted noti- of the Department to maintain, a sys- fication of or access to a record in an tem of records to accomplish a Depart- exempt system but only to the extent ment function must contain a provi- such notification or access would not sion requiring the contractor to com- reveal the identity of a source who fur- ply with the Act and this part. nished the record to the Department (b) All unexpired contracts entered under an express promise, and prior to into prior to September 27, 1975 which September 27, 1975 an implied promise, require the contractor to maintain or that his identity would be held in con- on behalf of the Department to main- fidence, if: tain, a system of records to accomplish (i) The record is in a system of a Department function will be amended records which is exempt under sub- as soon as practicable to include a pro- section (k)(2) of the Act and the indi- vision requiring the contractor to com- vidual has been, as a result of the ply with the Act and this part. All such maintenance of the record, denied a contracts must be so amended by July right, privilege, or benefit to which he 1, 1976 unless for good cause the appeal would otherwise be eligible; or, authority identified in § 5b.8 of this (ii) The record is in a system of part authorizes the continuation of the records which is exempt under subcontract without amendment beyond section (k)(5) of the Act. that date. (3) If an individual is not granted no- (c) A contractor and any employee of tification of or access to a record in a such contractor shall be considered em- system of records exempt under sub- ployees of the Department only for the sections (k) (2) and (5) of the Act in ac- purposes of the criminal penalties of cordance with this paragraph, he will the Act, 5 U.S.C. 552a(i), and the em- be informed that the identity of a con- ployee standards of conduct listed in fidential source would be revealed if Appendix A of this part where the con- notification of or access to the record tract contains a provision requiring were granted to him. the contractor to comply with the Act (d) Discretionary actions by the respon- and this part. sible Department official. Unless disclo- (d) This section does not apply to sure of a record to the general public is systems of records maintained by a otherwise prohibited by law, the re- contractor as a result of his manage- sponsible Department official may in ment discretion, e.g., the contractor’s his discretion grant notification of or personnel records. access to a record in a system of records which is exempt under para- § 5b.13 Fees. graph (b) of this section. Discretionary (a) Policy. Where applicable, fees for notification of or access to a record in copying records will be charged in ac- accordance with this paragraph will cordance with the schedule set forth in not be a precedent for discretionary no- this section. Fees may only be charged tification of or access to a similar or where an individual requests that a related record and will not obligate the copy be made of the record to which he responsible Department official to ex- is granted access. No fee may be ercise his discretion to grant notifica- charged for making a search of the sys- tion of or access to any other record in tem of records whether the search is a system of records which is exempt manual, mechanical, or electronic. under paragraph (b) of this section. Where a copy of the record must be made in order to provide access to the [40 FR 47409, Oct. 8, 1975, as amended at 43 FR 40229, Sept. 11, 1978; 47 FR 57040, Dec. 22, 1982; record (e.g., computer printout where 49 FR 14108, Apr. 10, 1984; 51 FR 41352, Nov. 14, no screen reading is available), the 1986; 59 FR 36717, July 19, 1994; 65 FR 34988, copy will be made available to the indi- June 1, 2000; 65 FR 37289, June 14, 2000; 68 FR vidual without cost. Where a medical 62751, Nov. 6, 2003] record is made available to a representative designated by the individual or to § 5b.12 Contractors. a physician or health professional des- (a) All contracts entered into on or ignated by a parent or guardian under after September 27, 1975 which require § 5b.6 of this part, no fee will be a contractor to maintain or on behalf charged.

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(b) Fee schedule. The fee schedule for the basis of such a record, and consequently the Department is as follows: a determination is made which is adverse to (1) Copying of records susceptible to the individual; or photocopying—$.10 per page. (d) Failing to comply with any other provision of the Act or any rule promulgated (2) Copying records not susceptible to thereunder, in such a way as to have an ad- photocopying (e.g., punch cards or mag- verse effect on an individual. netic tapes)—at actual cost to be deter- (3) An employee may be personally subject mined on a case-by-case basis. to criminal liability as set forth below and in (3) No charge will be made if the 5 U.S.C. 552a (i): total amount of copying does not ex- (a) Any officer or employee of an agency, ceed $25. who by virtue of his employment or official position, has possession of, or access to, APPENDIX A TO PART 5b—EMPLOYEE agency records which contain individually identifiable information the disclosure of STANDARDS OF CONDUCT which is prohibited by the Act or by rules or (a) General. All employees are required to regulations established thereunder, and who, be aware of their responsibilities under the knowing that disclosure of the specific mate- Privacy Act of 1974, 5 U.S.C. 552a. Regula- rial is so prohibited, willfully discloses the tions implementing the Act are set forth in material in any manner to any person or 45 CFR 5b. Instruction on the requirements agency not entitled to receive it, shall be of the Act and regulation shall be provided guilty of a misdemeanor and fined not more to all new employees of the Department. In than $5,000. addition, supervisors shall be responsible for (b) Any officer or employee of any agency assuring that employees who are working who willfully maintains a system of records with systems of records or who undertake without meeting the notice requirements [of new duties which require the use of systems the Act] shall be guilty of a misdemeanor of records are informed of their responsibil- and fined not more than $5,000. ities. Supervisors shall also be responsible (c) Rules Governing Employees Not Working for assuring that all employees who work With Systems of Records. Employees whose du- with such systems of records are periodically ties do not involve working with systems of reminded of the requirements of the Act and records will not generally disclose to any are advised of any new provisions or inter- one, without specific authorization from pretations of the Act. their supervisors, records pertaining to em- (b) Penalties. (1) All employees must guard ployees or other individuals which by reason against improper disclosure f records which of their official duties are available to them. are governed by the Act. Because of the seri- Notwithstanding the above, the following ous consequences of improper invasions of records concerning Federal employees are a personal privacy, employees may be subject matter of public record and no further au- to disciplinary action and criminal prosecu- thorization is necessary for disclosure: tion for knowing and willful violations of the (1) Name and title of individual. Act and regulation. In addition, employees (2) Grade classification or equivalent and may also be subject to disciplinary action for annual rate of salary. unknowing or unwillful violations, where the (3) Position description. employee had notice of the provisions of the (4) Location of duty station, including Act and regulations and failed to inform room number and telephone number. himself sufficiently or to conduct himself in In addition, employees shall disclose accordance with the requirements to avoid records which are listed in the Department’s violations. Freedom of Information Regulation as being (2) The Department may be subjected to available to the public. Requests for other civil liability for the following actions un- records will be referred to the responsible dertaken by its employees: Department official. This does not preclude (a) Making a determination under the Act employees from discussing matters which and §§ 5b.7 and 5b.8 of the regulation not to are known to them personally, and without amend an individual’s record in accordance resort to a record, to official investigators of with his request, or failing to make such re- Federal agencies for official purposes such as view in conformity with those provisions; suitability checks, Equal Employment Op- (b) Refusing to comply with an individual’s portunity investigations, adverse action pro- request for notification of or access to a ceedings, grievance proceedings, etc. record pertaining to hiem; (d) Rules governing employees whose duties (c) Failing to maintain any record per- require use or reference to systems of records. taining to any individual with such accu- Employees whose official duties require that racy, relevance, timeliness, and complete- they refer to, maintain, service, or otherwise ness as is necessary to assure fairness in any deal with systems of records (hereinafter redetermination relating to the qualifications, ferred to as ‘‘Systems Employees’’) are gov- character, rights, or opportunities of, or ben- erned by the general provisions. In addition, efits to the individual that may be made on extra precautions are required and systems

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employees are held to higher standards of partment function, the contracting officer conduct. shall be responsible for including in the con- (1) Systems Employees shall: tract appropriate provisions to apply the (a) Be informed with respect to their re- provisions of the Act and regulation to the sponsibilities under the Act; system, including prohibitions against im- (b) Be alert to possible misuses of the sys- proper release by the contractor, his employ- tem and report to their supervisors any po- ees, agents, or subcontractors. tential or actual use of the system which (3) Other service contracts. Contracting offi- they believe is not in compliance with the cers entering into general service contracts Act and regulation; shall be responsible for determining the ap- (c) Make a disclosure of records within the propriateness of including provisions in the Department only to an employee who has a contract to prevent potential misuse (inad- legitimate need to know the record in the vertent or otherwise) by employees, agents, course of his official duties; or subcontractors of the contractor. (d) Maintain records as accurately as prac- (f) Rules Governing Responsible Department ticable. Officials. In addition to the requirements for (e) Consult with a supervisor prior to tak- Systems Employees, responsible Department ing any action where they are in doubt officials shall: whether such action is in conformance with (1) Respond to all requests for notification the Act and regulation. of or access, disclosure, or amendment of (2) Systems Employees shall not: records in a timely fashion in accordance (a) Disclose in any form records from a sys- with the Act and regulation; tem of records except (1) with the consent or (2) Make any amendment of records accu- at the request of the subject individual; or rately and in a timely fashion; (2) where its disclosure is permitted under (3) Inform all persons whom the accounting § 5b.9 of the regulation. records show have received copies of the (b) Permit unauthorized individuals to be record prior to the amendments of the cor- present in controlled areas. Any unauthor- rection; and ized individuals observed in controlled areas (4) Associate any statement of disagree- shall be reported to a supervisor or to the ment with the disputed record, and guard force. (a) Transmit a copy of the statement to all (c) Knowingly or willfully take action persons whom the accounting records show which might subject the Department to civil have received a copy of the disputed record, liability. and (d) Make any arrangements for the design (b) Transmit that statement with any fu- development, or operation of any system of ture disclosure. records without making reasonable effort to provide that the system can be maintained APPENDIX B TO PART 5b—ROUTINE USES in accordance with the Act and regulation. APPLICABLE TO MORE THAN ONE (e) Contracting officers. In addition to any SYSTEM OF RECORDS MAINTAINED BY applicable provisions set forth above, those HHS employees whose official duties involve entering into contracts on behalf of the De- (1) In the event that a system of records partment shall also be governed by the fol- maintained by this agency or carry out its lowing provisions: functions indicates a violation or potential (1) Contracts for design, or development of violation of law, whether civil, criminal or systems and equipment. No contract for the regulatory in nature, and whether arising by design or development of a system of general statute or particular program stat- records, or for equipment to store, service or ute, or by regulation, rule or order issued maintain a system of records shall be en- pursuant thereto, the relevant records in the tered into unless the contracting officer has system of records may be referred, as a rou- made reasonable effort to ensure that the tine use, to the appropriate agency, whether product to be purchased is capable of being federal, or foreign, charged with the respon- used without violation of the Act or regula- sibility of investigating or prosecuting such tion. Special attention shall be given to pro- violation or charged with enforcing or imple- vision of physical safeguards. menting the statute, or rule, regulation or (2) Contracts for the operation of systems of order issued pursuant thereto. records. A review by the Contracting Officer, (2) Referrals may be made of assignments in conjunction with other officials whom he of research investigators and project mon- feels appropriate, of all proposed contracts itors to specific research projects to the providing for the operation of systems of Smithsonian Institution to contribute to the records shall be made prior to execution of Smithsonian Science Information Exchange, the contracts to determine whether oper- Inc. ation of the system of records is for the pur- (3) In the event the Department deems it pose of accomplishing a Department func- desirable or necessary, in determining tion. If a determination is made that the op- whether particular records are required to be eration of the system is to accomplish a De- disclosed under the Freedom of Information

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Act, disclosure may be made to the Depart- to maintain Privacy Act safeguards with re- ment of Justice for the purpose of obtaining spect to such records. its advice. (10)–(99) [Reserved] (4) A record from this system of records (100) To the Department of Justice or other may be disclosed as a ‘‘routine use’’ to a fed- appropriate Federal agencies in defending eral, state or local agency maintaining civil, claims against the United States when the criminal or other relevant enforcement claim is based upon an individual’s mental or records or other pertinent records, such as physical condition and is alleged to have current licenses, if necessary to obtain a arisen because of activities of the Public record relevant to an agency decision con- Health Service in connection with such indi- cerning the hiring or retention of an em- vidual. ployee, the issuance of a security clearance, (101) To individuals and organizations, the letting of a contract, or the issuance of deemed qualified by the Secretary to carry a license, grant or other benefit. out specific research solely for the purpose of A record from this system of records may carrying out such research. be disclosed to a Federal agency, in response (102) To organizations deemed qualified by to its request, in connection with the hiring the Secretary to carry out quality assess- or retention of an employee, the issuance of ment, medical audits or utilization review. a security clearance, the reporting of an in- (103) Disclosures in the course of employee vestigation of an employee, the letting of a discipline or competence determination pro- contract, or the issuance of a license, grant, ceedings. or other benefit by the requesting agency, to the extent that the record is relevant and APPENDIX C TO PART 5b—DELEGATIONS necessary to the requesting agency’s deci- OF AUTHORITY [RESERVED] sion on the matter. (5) In the event that a system of records maintained by this agency to carry out its PART 6 [RESERVED] function indicates a violation or potential violation of law, whether civil, criminal or PART 7—EMPLOYEE INVENTIONS regulatory in nature, and whether arising by general statute or particular program statute, or by regulation, rule or order issued Sec. 7.0 Who are employees. pursuant thereto, the relevant records in the 7.1 Duty of employee to report inventions. system of records may be referred, as a rou- 7.3 Determination as to domestic rights. tine use, to the appropriate agency, whether 7.4 Option to acquire foreign rights. state or local charged with the responsibility 7.7 Notice to employee of determination. of investigating or prosecuting such viola- 7.8 Employee’s right of appeal. tion or charged with enforcing or implementing the statute, or rule, regulation or AUTHORITY: Reorg. Plan No. 1 of 1953, 18 FR order issued pursuant thereto. 2053; 3 CFR 1953 Supp. E.O. 10096, 15 FR 391; (6) Where Federal agencies having the 3 CFR. 1950 Supp. and E.O. 10930, 26 FR 2583; power to subpoena other Federal agencies’ 3 CFR 1961 Supp. records, such as the Internal Revenue Serv- ice or the Civil Rights Commission, issue a § 7.0 Who are employees. subpoena to the Department for records in this system of records, the Department will As used in this part, the term Govern- make such records available. ment employee means any officer or em- (7) Where a contract between a component ployee, civilian or military, except of the Department and a labor organization such part-time employees or part-time recognized under E.O. 11491 provides that the consultants as may be excluded there- agency will disclose personal records rel- from by a determination made in writ- evant to the organization’s mission, records ing by the head of the employee’s office in this system of records may be disclosed to or constituent organization, pursuant such organization. (8) Where the appropriate official of the to an exemption approved by the Com- Department, pursuant to the Department’s missioner of Patents that to include Freedom of Information Regulation deter- him or them would be impracticable or mines that it is in the public interest to dis- inequitable, given the reasons therefor. close a record which is otherwise exempt A person shall not be considered to be from mandatory disclosure, disclosure may a part-time employee or part-time con- be made from this system of records. sultant for this purpose unless the (9) The Department contemplates that it terms of his employment contemplate will contract with a private firm for the purpose of collating, analyzing, aggregating or that he shall work for less than the otherwise refining records in this system. minimum number of hours per day, or Relevant records will be disclosed to such a less than a minimum number of days contractor. The contractor shall be required per week, or less than the minimum

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number of weeks per year, regularly re- signment to the Government of the en- quired of full-time employees of his tire domestic right, title and interest class. in and to such invention, or in any case where the Government has insufficient [27 FR 7986, Aug. 10, 1962] interest in an invention to obtain the § 7.1 Duty of employee to report inven- entire domestic right, title, and inter- tions. est therein (although the Government could obtain same under paragraph (a) Every Department employee is re- of this section), the Department, sub- quired to report to the Assistant Sec- ject to the approval of the Commis- retary (Health and Scientific Affairs) sioner, shall leave title to such inven- in accordance with the procedures es- tion in the employee, subject, however, tablished therefor, every invention to the reservation to the Government made by him (whether or not jointly of a nonexclusive, irrevocable, royalty- with others) which bears any relation free license in the invention with to his official duties or which was made power to grant licenses for all govern- in whole or in any part during working mental purposes, such reservation to hours, or with any contribution of Gov- appear, where practicable, in any pat- ernment facilities, equipment, mate- ent, domestic or foreign, which may rial, funds, or information, or of time issue on such invention. or services of other Government em- (c) In applying the provisions of para- ployees on official duty. graphs (a) and (b) of this section, to the [31 FR 12842, Oct. 1, 1966] facts and circumstances relating to the making of any particular invention, it § 7.3 Determination as to domestic shall be presumed that an invention rights. made by an employee who is employed The determination of the ownership or assigned (1) to invent or improve or of the domestic right, title, and inter- perfect any art, machine, manufacture, est in and to an invention which is or or composition of matter, (2) to con- may be patentable, made by a Govern- duct or perform research, development ment employee while under the admin- work, or both, (3) to supervise, direct, istrative jurisdiction of the Depart- coordinate, or review Government fi- ment, shall be made in writing by the nanced or conducted research, develop- Assistant Secretary (Health and Sci- ment work, or both, or (4) to act in a li- entific Affairs), in accordance with the aison capacity among governmental or provisions of Executive Order 10096 and nongovernmental agencies or individ- Government-wide regulations issued uals engaged in such work, falls within thereunder by the Commissioner of the provisions of paragraph (a) of this Patents as follows: section, and it shall be presumed that (a) The Government as represented any invention made by any other em- by the Assistant Secretary (Health and ployee falls within the provisions of Scientific Affairs) shall obtain the en- paragraph (b) of this section. Either tire domestic right, title and interest presumption may be rebutted by a in and to all inventions made by any showing of the facts and circumstances Government employee (1) during work- and shall not preclude a determination ing hours, or (2) with a contribution by that these facts and circumstances jus- the Government of facilities, equip- tify leaving the entire right, title and ment, materials, funds, or information, interest in and to the invention in the or of time or services of other Govern- Government employee, subject to law. ment employees on official duty, or (3) (d) In any case wherein the Govern- which bear a direct relation to or are ment neither (1) obtains the entire do- made in consequence of the official du- mestic right, title and interest in and ties of the inventor. to an invention pursuant to the provi- (b) In any case where the contribu- sions of paragraph (a) of this section, tion of the Government, as measured nor (2) reserves a nonexclusive, irrev- by any one or more of the criteria set ocable, royalty-free license in the in- forth in paragraph (a) of this section, vention, with power to grant licenses to the invention is insufficient equi- for all governmental purposes, pursu- tably to justify a requirement of as- ant to the provisions of paragraph (b)

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of this section, the Government shall and a copy of the appeal with the As- leave the entire right, title and inter- sistant Secretary (Health and Sci- est in and to the invention in the Gov- entific Affairs), within 30 days (or such ernment employee, subject to law. longer period as the Commissioner [27 FR 7986, Aug. 10, 1962, as amended at 31 may, for good cause, fix in any case) FR 12842, Nov. 1, 1966] after receiving written notice of such determination. § 7.4 Option to acquire foreign rights. [27 FR 7986, Aug. 10, 1962, as amended at 31 In any case where it is determined FR 12842, Oct. 1, 1966] that all domestic rights should be assigned to the Government, it shall fur- PART 8 [RESERVED] ther be determined, pursuant to Execu- tive Order 9865 and Government-wide regulations issued thereunder, that the PART 9—USE OF HHS RESEARCH Government shall reserve an option to FACILITIES BY ACADEMIC SCI- require the assignment of such rights ENTISTS, ENGINEERS, AND STU- in all or in any specified foreign coun- DENTS tries. In case where the inventor is not required to assign the patent rights in Sec. any foreign country or countries to the 9.1 Purpose. Government or the Government fails to 9.2 Policy. exercise its option within such period 9.3 Delegations of authority. of time as may be provided by regula- 9.4 Criteria. tions issued by the Commissioner of 9.5 Restrictions. Patents, any application for a patent AUTHORITY: 27 Stat. 395, as amended; 20 which may be filed in such country or U.S.C. 91. countries by the inventor or his assignee shall nevertheless be subject to SOURCE: 34 FR 18938, Nov. 27, 1969, unless otherwise noted. a nonexclusive, irrevocable, royalty- free license to the Government for all § 9.1 Purpose. governmental purposes, including the power to issue sublicenses for use in be- To enhance the availability of DHHS half of the Government and/or in fur- scientific research and study facilities therance of the foreign policies of the to academic scientists, engineers, and Government. qualified students. [27 FR 7987, Aug. 10, 1962] § 9.2 Policy. § 7.7 Notice to employee of determina- It is the policy of the Department of tion. Health and Human Services in accordance with the policy of the President The employee-inventor shall be noti- announced on February 21, 1969, to fied in writing of the Department’s de- make research and study facilities of termination of the rights to his inven- the Department readily available to tion and of his right of appeal, if any. the scientific community, especially Notice need not be given if the em- qualified academic scientists and engi- ployee stated in writing that he would neers. Unique, unusual, and expensive- agree to the determination of owner- to-duplicate facilities at laboratories ship which was in fact made. and other study and research facilities [31 FR 12842, Oct. 1, 1966] of the Department will be made available to the national scientific commu- § 7.8 Employee’s right of appeal. nity, to the maximum extent practical An employee who is aggrieved by a without serious detriment to the mis- determination of the Department may sions of those facilities. It is also the appeal to the Commissioner of Patents, policy of the Department to permit pursuant to section 4(d) of Executive qualified students and graduates of in- Order 10096, as amended by Executive stitutions of learning in the several Order 10930, and regulations issued States, and territories, as well as the thereunder, by filing a written appeal District of Columbia, to use study and with the Commissioner, in duplicate, research facilities of the Department.

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When such facilities are used by aca- (1) That facilities are available for demic scientists, engineers, and stu- the period desired; and dents, the costs incurred for the oper- (2) That the proposed research will ation of the unique or unusual research not interfere with regular Department facilities, as well as of the other facili- functions or needs, nor require the sub- ties, should be funded by the operating sequent acquisition of additional agency responsible for the operation of equipment by the Department. that facility, except for any significant incremental costs incurred in support § 9.5 Restrictions. of research not directly related to an (a) Each individual authorized to use HHS mission. Department facilities will be expected to use the facilities and equipment § 9.3 Delegations of authority. with customary care and otherwise conduct himself in such manner as to (a) The heads of operating agencies complete his research or study within are delegated authority for negotia- any time limits prescribed. tions and decisions as to the use of De- (b) Each individual authorized to use partment facilities by qualified aca- HHS facilities may not be authorized demic scientists, engineers, and stu- to sign requisitions for supplies and dents. equipment. (b) The heads of operating agencies (c) Any official approving the use of may (and are encouraged to) redelegate HHS facilities should seek an agree- to the heads of their respective compo- ment, executed by non-Government nent organizations, with the power to users, absolving the Federal agency of further redelegate to laboratory direc- liability in case of personal injury, tors, the authority for negotiations death, and failure or damage to the and decisions as to the use of depart- non-Government user’s experiments or mental facilities. Appropriate use shall equipment. The agreement must also be made of advisory groups in formu- contain a statement that the non-Gov- lating their decisions. ernment user will comply with all safety regulations and procedures while § 9.4 Criteria. using such facilities. (a) The official permitting use of De- partment facilities must determine PART 12—DISPOSAL AND UTILIZA- that it would be consistent with the TION OF SURPLUS REAL PROPERTY programs of his activity to participate. FOR PUBLIC HEALTH PURPOSES Facilities may be made available provided the use of such facilities will be Sec. of direct benefit to the objectives of 12.1 Definitions. the academic scientist, or engineer, or 12.2 Scope. student, with the prospect of fruitful 12.3 General policies. interchange of ideas and information 12.4 Limitations. between Department personnel and the 12.5 Awards. academic scientist, or engineer, or stu- 12.6 Notice of available property. 12.7 Applications for surplus real property. dent, and such use will not interfere 12.8 Assignment of surplus real property. with the Department program. 12.9 General disposal terms and conditions. (b) The official permitting use of De- 12.10 Compliance with the National Envi- partment facilities will furnish the ronmental Policy Act of 1969 and other non-Government user with safety re- related Acts (environmental impact). quirements or operating procedures to 12.11 Special terms and conditions. 12.12 Utilization. be followed. Such requirements or pro- 12.13 Form of conveyance. cedures are to include the requirement 12.14 Compliance inspections and reports. to report to the permitting official any 12.15 Reports to Congress. accident involving the non-Govern- EXHIBIT A TO PART 12—PUBLIC BENEFIT AL- ment user. LOWANCE FOR TRANSFER OF REAL PROP- (c) The official delegated authority ERTY FOR HEALTH PURPOSES for approving the use of Department fa- AUTHORITY: Sec. 203, 63 Stat. 385, as amend- cilities will not permit the use of lab- ed; 40 U.S.C. 484; sec. 501 of Pub. L. 100–77, 101 oratory facilities unless he determines: Stat. 509–10, 42 U.S.C. 11411.

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SOURCE: 45 FR 72173, Oct. 31, 1980, unless empt under section 501(c)(3) of the In- otherwise noted. ternal Revenue Code of 1954. (k) Off-site property means surplus § 12.1 Definitions. buildings, utilities and all other re- (a) Act means the Federal Property movable improvements, including re- and Administrative Services Act of lated personal property, to be trans- 1949, 63 Stat. 377 (40 U.S.C. 471 et seq.). ferred by the Department for removal Terms defined in the Act and not de- and use away from the site for public fined in this section have the meanings health purposes. given to them in the Act. (l) On-site means surplus real prop- (b) Accredited means having the ap- erty, including related personal prop- proval of a recognized accreditation erty, to be transferred by the Depart- board or association on a regional, ment for use in place for public health State, or national level, such as a purposes. State Board of Health. Approval as used (m) Public benefit allowance means a above describes the formal process car- discount on the sale or lease price of ried out by State Agencies and institu- real property transferred for public tions in determining that health orga- health purposes, representing any ben- nizations or programs meet minimum efit determined by the Secretary which acceptance standards. has accrued or may accrue to the (c) Administrator means the Adminis- United States thereby. trator of General Services. (n) Related personal property means (d) Assigned property means real and any personal property: (1) Which is lo- related personal property which, in the cated on and is (i) an integral part of, discretion of the Administrator or his or (ii) useful in the operation of real designee, has been made available to property; or (2) which is determined by the Department for transfer for public the Administrator to be otherwise re- health purposes. lated to the real property. (e) Department means the U.S. De- (o) Secretary means the Secretary of partment of Health and Human Serv- Health and Human Services. ices. (p) State means a State of the United (f) Disposal agency means the execu- States, and includes the District of Co- tive agency of the Government which lumbia, the Commonwealth of Puerto has authority to assign property to the Rico, and the Territories and posses- Department for transfer for public sions of the United States. health purposes. (q) Surplus when used with respect to real property means any excess real (g) Excess means any property under property not required for the needs and the control of any Federal agency the discharge of the responsibilities of which is not required for its needs and all Federal agencies as determined by the discharge of its responsibilities, as the Administrator. determined by the head thereof. (h) Fair market value means the high- [45 FR 72173, Oct. 31, 1980, as amended at 53 est price which the property will bring FR 7745, Mar. 10, 1988] by sale in the open market by a willing seller to a willing buyer. § 12.2 Scope. (i) Holding agency means the Federal This part is applicable to surplus real agency which has control over and ac- property located within any State countability for the property involved. which is appropriate for assignment to, (j) Nonprofit institution means any in- or which has been assigned to, the De- stitution, organization, or association, partment for transfer for public health whether incorporated or unincor- purposes, as provided for in section porated, no part of the net earnings of 203(k) of the Act. which inures or may lawfully inure to the benefit of any private shareholder § 12.3 General policies. or individual, and (except for institu- (a) It is the policy of the Department tions which lease property to assist the to foster and assure maximum utiliza- homeless under Title V of Pub. L. 100– tion of surplus real property for public 77) which has been held to be tax-ex- health purposes, including research.

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(b) Transfers may be made only to with State or local zoning restrictions, States, their political subdivisions and building codes, or similar limitations. instrumentalities, tax-supported public (e) Organizations which may be eligi- health institutions, and nonprofit pub- ble include those which provide care lic health institutions which (except and training for the physically and for institutions which lease property to mentally ill, including medical care of assist the homeless under Title V of the aged and infirm; clinical services; Pub. L. 100–77) have been held tax-ex- services (including shelter) to homeless empt under section 501(c)(3) of the In- individuals; other public health serv- ternal Revenue Code of 1954. ices (including water and sewer); or (c) Real property will be requested similar services devoted primarily to for assignment only when the Depart- the promotion and protection of public ment has determined that the property health. In addition, organizations is suitable and needed for public health which provide assistance to homeless purposes. The amount of real and re- individuals may be eligible for leases lated personal property to be trans- under title V of Public Law 100–77. Ex- ferred shall not exceed normal oper- cept for the provision of services (in- ating requirements of the applicant. cluding shelter) to homeless individ- Such property will not be requested for uals, organizations which have as their assignment unless it is needed at the principal purpose the providing of cus- time of application for public health todial or domiciliary care are not eligi- purposes or will be so needed within ble. The eligible organization must be the immediate or foreseeable future. authorized to carry out the activity for Where construction or major renova- which it requests the property. tion is not required or proposed, the property must be placed into use with- (f) An applicant’s plan of operation in twelve (12) months from the date of will not be approved unless it provides transfer. When construction or major that the applicant will not discrimi- renovation is contemplated at the time nate because of race, color, sex, handi- of transfer, the property must be cap, or national origin in the use of the placed in use within 36 months from property. the date of transfer. If the applicable [45 FR 72173, Oct. 31, 1980, as amended at 53 time limitation is not met, the trans- FR 7745, Mar. 10, 1988; 55 FR 32252, Aug. 8, feree shall either commence payments 1990] in cash to the Department for each month thereafter during which the pro- § 12.4 Limitations. posed use has not been implemented or (a) Surplus property transferred pur- take such other action as set forth in suant to this part will be disposed of on § 12.12 as is deemed appropriate by the an ‘‘as is, where is,’’ basis without war- Department. Such monthly payments ranty of any kind. shall be computed on the basis of the (b) Unless excepted by the General current fair market value of the property at the time of the first payment Services Administrator in his assign- by subtracting therefrom any portion ment, mineral rights will be conveyed of the purchase price paid in cash at together with the surface rights. the time of transfer, and by dividing § 12.5 Awards. the balance by the total number of months in the period of restriction. If Where there is more than one appli- the facility has not been placed into cant for the same property, it will be use within eight (8) years of the date of awarded to the applicant having a pro- the deed, title to the property will be gram of utilization which provides, in revested in the United States, or, at the opinion of the Department, the the discretion of the Department, the greatest public benefit. Where the restrictions and conditions may be ab- property will serve more than one pro- rogated in accordance with § 12.9. gram, it will be apportioned to fit the (d) Transfers will be made only after needs of as many programs as is prac- the applicant has certified that the ticable. proposed program is not in conflict

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§ 12.6 Notice of available property. § 12.9 General disposal terms and conditions. Reasonable publicity will be given to the availability of surplus real prop- (a) Surplus real property transfers erty which is suitable for assignment under this part will be limited to pub- to the Department for transfer for public health purposes. Transferees shall be entitled to a public benefit allow- lic health uses. The Department will ance in terms of a percentage which establish procedures reasonably cal- will be applied against the value of the culated to afford all eligible users hav- property to be conveyed. Such an al- ing a legitimate interest in acquiring lowance will be computed on the basis the property for such uses an oppor- of benefits to the United States from tunity to make an application therefor. the use of such property for public However, publicity need not be given to health purposes. The computation of the availability of surplus real prop- such public benefit allowances will be erty which is occupied and being used in accordance with Exhibit A attached for eligible public health purposes at hereto and made a part hereof. the time the property is declared sur- (b) A transfer of surplus real property plus, the occupant expresses interest in for public health purposes is subject to the property, and the Department de- the disapproval of the Administrator termines that it has a continuing need within 30 days after notice is given to therefor. him of the proposed transfer. (c) Transfers will be on the following § 12.7 Applications for surplus real terms and conditions: property. (1) The transferee will be obligated to utilize the property continuously in ac- Applications for surplus real prop- cordance with an approved plan of op- erty for public health purposes shall be eration. made to the Department through the (2) The transferee will not be per- office specified in the notice of avail- mitted to sell, lease or sublease, rent, ability. mortgage, encumber, or otherwise dis- [55 FR 32252, Aug. 8, 1990] pose of the property, or any part thereof, without the prior written authoriza- § 12.8 Assignment of surplus real prop- tion of the Department. erty. (3) The transferee will file with the Department such reports covering the (a) Notice of interest in a specific utilization of the property as may be property for public health purposes will required. be furnished the General Services Ad- (4) In the event the property is sold, ministrator by the Department at the leased or subleased, encumbered, dis- earliest possible date. posed of, or is used for purposes other (b) Requests to the Administrator for than those set forth in the approved assignment of surplus real property to plan without the consent of the De- the Department for transfer for public partment, all revenues or the reason- health purposes will be based on the able value of other benefits received by following conditions: the transferee directly or indirectly (1) The Department has an acceptable from such use, as determined by the application for the property. Department, will be considered to have (2) The applicant is willing, author- been received and held in trust by the ized, and in a position to assume imme- transferee for the account of the diate care, custody, and maintenance United States and will be subject to of the property. the direction and control of the De- (3) The applicant is able, willing and partment. The provisions of this para- authorized to pay the administrative graph shall not impair or affect the rights reserved to the United States in expenses incident to the transfer. paragraph (c)(6) of this section, or the (4) The applicant has the necessary right of the Department to impose con- funds, or the ability to obtain such ditions to its consent. funds, to carry out the approved pro- (5) Lessees will be required to carry gram of use of the property. all perils and liability insurance to

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protect the Government and the Gov- health use for which the property was ernment’s residual interest in the prop- leased. erty. Transferees will be required to With respect to any reverter of title or carry such flood insurance as may be termination of leasehold resulting required by the Department pursuant from noncompliance, the Government to Pub. L. 93–234. Where the transferee shall, in addition thereto, be reim- elects to carry insurance against dam- bursed for such costs as may be in- ages to or loss of on-site property due curred in recovering title to or posses- to fire or other hazards, and where loss sion of the property. or damage to transferred Federal surplus real property occurs, all proceeds Any payments of cash made by the from insurance shall be promptly used transferee against the purchase price of by the transferee for the purpose of re- property transferred shall, upon a for- pairing and restoring the property to feiture of title to the property for its former condition, or replacing it breach of condition, be forfeited. with equivalent or more suitable facili- (7) With respect to off-site property, ties. If not so used, there shall be paid in the event of noncompliance with any to the United States that part of the of the terms and conditions of the insurance proceeds that is attributable transfer, the unearned public benefit to the Government’s residual interest allowance shall, at the option of the in the property lost, damaged, or de- Department, become immediately due stroyed in the case of leases, attrib- and payable or, if the property or any utable to the fair market value of the portion thereof is sold, leased, or other- leased facilities. wise disposed of without authorization (6) With respect to on-site property, from the Department, such sale, lease in the event of noncompliance with any or sublease, or other disposal shall be of the conditions of the transfer as de- for the benefit and account of the termined by the Department, title to United States and the United States the property transferred and the right shall be entitled to the proceeds. In the to immediate possession shall, at the event the transferee fails to remove the option of the Department, revert to the property or any portion thereof within Government. In the event title is re- the time specified, then in addition to verted to the United States for non- the rights reserved above, at the option compliance or voluntarily reconveyed, of the Department, all right, title, and the transferee shall, at the option of interest in and to such unremoved the Department, be required to reim- property shall be retransferred to other burse the Government for the decrease eligible applicants or shall be forfeited in value of the property not due to rea- to the United States. sonable wear and tear or acts of God or (8) With respect only to on-site prop- attributable to alterations completed erty which has been declared excess by by the transferee to adapt the property the Department of Defense, such dec- to the public health use for which the laration having included a statement property was transferred. With respect indicating the property has a known to leased property, in the event of non- potential for use during a national compliance with any of the conditions emergency, the Department shall re- of the lease, as determined by the De- serve the right during any period of partment, the right of occupancy and emergency declared by the President of possession shall, at the option of the the United States or by the Congress of Department, be terminated. In the the United States to the full and unre- event a leasehold is terminated by the stricted use by the Government of the United States for noncompliance or is surplus real property, or of any portion voluntarily surrendered, the lessee thereof, disposed of in accordance with shall be required at the option of the the provisions of this part. Such use Department to reimburse the Govern- may be either exclusive or nonexclu- ment for the decrease in value of the sive. Prior to the expiration or termi- property not due to reasonable wear nation of the period of restricted use and tear or acts of God or attributable by the transferee, the Government will to alterations completed by the lessee not be obligated to pay rent or any to adapt the property to the public other fees or charges during the period

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of emergency, except that the Govern- main in the period of restriction as de- ment will: termined by the Department. For pur- (i) Bear the entire cost of mainte- poses of abrogation payment computa- nance of such portion of the property tion, the current fair market value used by it exclusively or over which it shall not include the value of any im- may have exclusive possession or con- provements placed on the property by trol; the transferee. (ii) Pay the fair share, commensurate (e) Related personal property will be with the use of the cost of maintenance transferred or leased as a part of the of such surplus real property as it may realty and in accordance with real use nonexclusively or over which it property procedures. It will be subject may have nonexclusive possession or to the same public benefit allowance control; granted for the real property. Where (iii) Pay a fair rental for the use of related personal property is involved in improvements or additions to the sur- an on-site transfer, the related per- plus real property made by the pur- sonal property may be transferred by a chaser or lessee without Government bill of sale imposing restrictions for a aid; and period not to exceed five years from (iv) Be responsible for any damage to the date of transfer, other terms and the surplus real property caused by its conditions to be the same as, and made use, reasonable wear and tear, the com- a part of, the real property trans- mon enemy and acts of God excepted. action. Subsequent to the expiration or termination of the period of restricted use, § 12.10 Compliance with the National the obligations of the Government will Environmental Policy Act of 1969 be as set forth in the preceding sen- and other related Acts (environ- tence and, in addition, the Government mental impact). shall be obligated to pay a fair rental (a) The Department will, prior to for all or any portion of the conveyed making a final decision to convey or premises which it uses. lease, or to amend, reform, or grant an (9) The restrictions set forth in para- approval or release with respect to a graphs (c) (1) through (7) of this section previous conveyance or lease of, sur- will extend for thirty (30) years for plus real property for public health land with or without improvements; purposes, complete an environmental and for facilities being acquired sepa- assessment of the proposed transaction rately from land whether they are for in keeping with applicable provisions use on-site or off-site, the period of of the National Environmental Policy limitations on the use of the structures Act of 1969, the National Historic Pres- will be equal to their estimated eco- ervation Act of 1966, the National Ar- nomic life. The restrictions set forth in cheological Data Preservation Act, and paragraphs (c) (1) through (7) of this other related acts. No permit to use section will extend for the entire ini- surplus real property shall allow the tial lease period and for any renewal permittee to make, or cause to be periods for property leased from the made, any irreversible change in the Department. condition of said property, and no use (d) Transferees, by obtaining the con- permit shall be employed for the pur- sent of the Department, may abrogate pose of delaying or avoiding compli- the restrictions set forth in paragraph ance with the requirements of these (c) of this section for all or any portion Acts. of the property upon payment in cash (b) Applicants shall be required to to the Department of an amount equal provide such information as the De- to the then current fair market value partment deems necessary to make an of the property to be released, multi- assessment of the impact of the pro- plied by the public benefit allowance posed Federal action on the human en- granted at the time of conveyance, di- vironment. Materials contained in the vided by the total number of months of applicant’s official request, responses the period of restriction set forth in to a standard questionnaire prescribed the conveyance document and multi- by the Public Health Service, as well as plied by the number of months that re- other relevant information, will be

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used by the Department in making said Assistance under the terms of a cooper- assessment. ative agreement with the Department. (c) If the assessment reveals (1) That (b) In the case of off-site property, the proposed Federal action involves applicants will be required to post per- properties of historical significance formance bonds, make performance which are listed, or eligible for listing, guarantee deposits, or give such other in the National Register of Historic assurances as may be required by the Places, or (2) that a more than insig- Department or the holding agency to nificant impact on the human environ- insure adequate site clearance and to ment is reasonably foreseeable as a repay service charges, if any, made by sult of the proposed action, or (3) that State Agencies for Federal Property the proposed Federal action could re- Assistance under the terms of a cooper- sult in irreparable loss or destruction ative agreement with the Department. of archeologically significant items or (c) Whenever negotiations are under- data, the Department will, except as taken for disposal to private nonprofit provided for in paragraph (d) of this public health organizations of any sur- section, prepare and distribute, or plus real property which cost the Gov- cause to be prepared or distributed, ernment $1 million or more, the De- such notices and statements and obtain partment will give notice to the Attor- such approvals as are required by the ney General of the United States of the above cited Acts. proposed disposal and the terms and (d) If a proposed action involves conditions thereof. The applicant shall other Federal agencies in a sequence of furnish to the Department such infor- actions, or a group of actions, directly mation and documents as the Attorney related to each other because of their General may determine to be appro- functional interdependence, the De- priate or necessary to enable him to partment may enter into and support a give the advice as provided for by sec- lead agency agreement to designate a tion 207 of the Act. single lead agency which will assume (d) Where an applicant proposes to primary responsibility for coordinating acquire or lease and use in place im- the assessment of environmental ef- provements located on land which the fects of proposed Federal actions, pre- Government does not own, he shall be paring and distributing such notices required, before the transfer is con- and statements, or obtaining such ap- summated, to obtain a right to use the provals, as are required by the above land commensurate with the duration cited Acts. The procedures of the des- of the restrictions applicable to the im- ignated lead agency will be utilized in provements, or the term of the lease. conducting the environmental assess- The applicant will be required to as- ment. In the event of disagreement be- sume, or obtain release of, the Govern- tween the Department and another ment’s obligations respecting the land Federal agency, the Department will including but not limited to obliga- reserve the right to abrogate its lead tions relating to restoration, waste, agency agreement with the other Fed- and rent. At the option of the Depart- eral Agency. ment, the applicant may be required to post a bond to indemnify the Govern- [45 FR 72173, Oct. 31, 1980, as amended at 55 ment against such obligations. FR 32252, Aug. 8, 1990] (e) The Department may require the inclusion in the transfer or lease docu- § 12.11 Special terms and conditions. ment of any other provision deemed de- (a) Applicants will be required to pay sirable or necessary. all external administrative costs which (f) Where an eligible applicant for an will include, but not be limited to, on-site transfer proposes to construct taxes, surveys, appraisals, inventory new, or rehabilitate old, facilities, the costs, legal fees, title search, certifi- financing of which must be accom- cate or abstract expenses, decon- plished through issuance of revenue tamination costs, moving costs, closing bonds having terms inconsistent with fees in connection with the transaction the terms and conditions of transfer and service charges, if any, made by prescribed in § 12.9 (c), (d), and (e) of State Agencies for Federal Property this chapter, the Department may, in

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its discretion, impose such alternate that for which the property was trans- terms and conditions of transfer in lieu ferred or leased, approval from the De- thereof as may be appropriate to assure partment must be obtained, and will be utilization of the property for public conditioned upon such terms as the De- health purposes. partment may impose.

§ 12.12 Utilization. § 12.13 Form of conveyance. (a) Where property or any portion (a) Transfers or leases of surplus real thereof is not being used for the pur- property will be on forms approved by poses for which transferred, the trans- the Office of General Counsel of the De- feree will be required at the direction partment and will include such of the of the Department: disposal or lease terms and conditions (1) To place the property into imme- set forth in this part and such other diate use for an approved purpose; terms and conditions as the Office of (2) To retransfer such property to General Counsel may deem appropriate such other public health user as the or necessary. Department may direct; (b) Transfers of on-site property will (3) To sell such property for the ben- normally be by quitclaim deed without efit and account of the United States; warranty of title. (4) To return title to such property to the United States or to relinquish any § 12.14 Compliance inspections and re- leasehold interest therein; ports. (5) To abrogate the conditions and re- The Department will make or have strictions of the transfer, as set forth made such compliance inspections as in § 12.9(d) of this chapter, except that, are necessary and will require of the where property has never been placed transferee or lessee such compliance in use for the purposes for which trans- reports and actions as are deemed nec- ferred, abrogation will not be per- essary. mitted except under extenuating circumstances; or § 12.15 Reports to Congress. (6) To make payments as provided for The Secretary will make such reports in § 12.3(c) of this chapter. of real property disposal activities as (b) Where the transferee or lessee de- are required by section 203 of the Act sires to place the property in tem- and such other reports as may be re- porary use for a purpose other than quired by law.

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1 efit allow- Maximum public ben- . 100 Training program URPOSES P Public EALTH services H Utilization allowances services Outpatient ...... is applicable when such facilities are conveyed as a minor ROPERTY FOR o be moved from the site, a basic public benefit allowance of P program research Integrated EAL R 51 to 100% Percent allowed RANSFER OF T Unmet needs 10 to 25% 26 to 50% LLOWANCE FOR A Hardship Organization allowances ENEFIT tion B Accredita- UBLIC port Tax sup- 12—P 100 ...... 100 ...... 100 ...... 100 ...... 2 2 2 2 ART P lic benefit allowance Basic pub- TO A XHIBIT E Classification This public benefit allowance applies only to surplus real property being sold for on-site use. When is t Applicable when this is the primary use to be made of property. The public benefit allowance for overall health program tration ...... and Water Systems .... less ...... 1 2 Nursing Homes...... Hospitals ...... Clinics ...... Nursing ...... 50 20 20 10 20 30 Public Health Adminis- Facility.....100 ...... 10 10 20 30 20 10 50 20 Services...... Public Refuse Disposal 100 ...... 10 50 20 10 20 30 ...... Research ...... Rehabilitation 100 ...... 50 20 20 10 20 30 10 10 Special 50 20 10 20 30 Assistance to the Home- 10 100 100% will be granted. component of other facilities. [45 FR 72173, Oct. 31, 1980, as amended at 53 7745, Mar. 10, 1988]

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PART 12a—USE OF FEDERAL REAL tive agency that is not required for the PROPERTY TO ASSIST THE HOME- agency’s needs or the discharge of its LESS responsibilities, as determined by the head of the agency pursuant to 40 U.S.C. 483. Sec. 12a.1 Definitions. GSA means the General Services Ad- 12a.2 Applicability. ministration. 12a.3 Collecting the information. HHS means the Department of Health 12a.4 Suitability determination. and Human Services. 12a.5 Real property reported excess to GSA. Homeless means: 12a.6 Suitability criteria. (1) An individual or family that lacks 12a.7 Determination of availability. 12a.8 Public notice of determination. a fixed, regular, and adequate night- 12a.9 Application process. time residence; and 12a.10 Action on approved applications. (2) An individual or family that has a 12a.11 Unsuitable properties. primary nighttime residence that is: 12a.12 No applications approved. (i) A supervised publicly or privately AUTHORITY: 42 U.S.C. 11411; 40 U.S.C. 484(k); operated shelter designed to provide 42 U.S.C. 3535(d). temporary living accommodations (in- SOURCE: 56 FR 23794, 23795, May 24, 1991, un- cluding welfare hotels, congregate less otherwise noted. shelters, and transitional housing for the mentally ill); EFFECTIVE DATE NOTE: At 56 FR 23794, (ii) An institution that provides a 23795, May 24, 1991, part 12a was added, effective May 24, 1991, except for § 12a.3, which temporary residence for individuals in- will not become effective until approved by tended to be institutionalized; or the District Court for the District of Colum- (iii) A public or private place not de- bia, pending further proceedings. signed for, or ordinarily used as, a regular sleeping accommodation for § 12a.1 Definitions. human beings. This term does not in- Applicant means any representative clude any individual imprisoned or oth- of the homeless which has submitted erwise detained under an Act of the an application to the Department of Congress or a State law. Health and Human Services to obtain HUD means the Department of Hous- use of a particular suitable property to ing and Urban Development. assist the homeless. ICH means the Interagency Council Checklist or property checklist means on the Homeless. the form developed by HUD for use by Landholding agency means a Federal landholding agencies to report the in- department or agency with statutory formation to be used by HUD in mak- authority to control real property. ing determinations of suitability. Lease means an agreement between Classification means a property’s des- either the Department of Health and ignation as unutilized, underutilized, Human Services for surplus property, excess, or surplus. or landholding agencies in the case of Day means one calendar day includ- non-excess properties or properties sub- ing weekends and holidays. ject to the Base Closure and Realign- Eligible organization means a State, ment Act (Public Law 100–526; 10 U.S.C. unit of local government or a private 2687), and the applicant, giving rise to non-profit organization which provides the relationship of lessor and lessee for assistance to the homeless, and which the use of Federal real property for a is authorized by its charter or by State term of at least one year under the law to enter into an agreement with conditions set forth in the lease docu- the Federal government for use of real ment. property for the purposes of this sub- Non-profit organization means an or- part. Representatives of the homeless ganization no part of the net earnings interested in receiving a deed for a par- of which inures to the benefit of any ticular piece of surplus Federal prop- member, founder, contributor, or indi- erty must be section 501(c)(3) tax ex- vidual; that has a voluntary board; empt. that has an accounting system or has Excess property means any property designated an entity that will main- under the control of any Federal execu- tain a functioning accounting system

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for the organization in accordance with program purposes that can be satisfied generally accepted accounting proce- with only a portion of the property. dures; and that practices non- Unsuitable property means that HUD discrimination in the provision of as- has determined that a particular prop- sistance. erty does not satisfy the criteria in Permit means a license granted by a § 12a.6. landholding agency to use unutilized or Unutilized property means an entire underutilized property for a specific property or portion thereof, with or amount of time under terms and condi- without improvements, not occupied tions determined by the landholding for current program purposes for the agency. accountable executive agency or occu- Property means real property con- pied in caretaker status only. sisting of vacant land or buildings, or a portion thereof, that is excess, surplus, § 12a.2 Applicability. or designated as unutilized or underutilized in surveys by the heads of land- (a) This part applies to Federal real holding agencies conducted pursuant to property which has been designated by section 202(b)(2) of the Federal Prop- Federal landholding agencies as unuti- erty and Administrative Services Act lized, underutilized, excess or surplus of 1949 (40 U.S.C. 483(b)(2).) and is therefore subject to the provi- Regional Homeless Coordinator means sions of title V of the McKinney Act (42 a regional coordinator of the Inter- U.S.C. 11411). agency Council on the Homeless. (b) The following categories of prop- Representative of the Homeless means a erties are not subject to this subpart State or local government agency, or (regardless of whether they may be un- private nonprofit organization which utilized or underutilized). provides, or proposes to provide, serv- (1) Machinery and equipment. ices to the homeless. (2) Government-owned, contractor- Screen means the process by which operated machinery, equipment, land, GSA surveys Federal agencies, or and other facilities reported excess for State, local and non-profit entities, to sale only to the using contractor and determine if any such entity has an in- subject to a continuing military re- terest in using excess Federal property quirement. to carry out a particular agency mis- (3) Properties subject to special legis- sion or a specific public use. lation directing a particular action. State Homeless Coordinator means a (4) Properties subject to a Court state contact person designated by a Order. state to receive and disseminate infor- (5) Property not subject to survey re- mation and communications received quirements of Executive Order 12512 from the Interagency Council on the (April 29, 1985). Homeless in accordance with section (6) Mineral rights interests. 210(a) of the Stewart B. McKinney Act (7) Air Space interests. of 1987, as amended. (8) Indian Reservation land subject to means that HUD has Suitable property section 202(a)(2) of the Federal Prop- determined that a particular property erty and Administrative Service Act of satisfies the criteria listed in § 12a.6. 1949, as amended. Surplus property means any excess (9) Property interests subject to re- real property not required by any Fed- version. eral landholding agency for its needs or the discharge of its responsibilities, as (10) Easements. determined by the Administrator of (11) Property purchased in whole or GSA. in part with Federal funds if title to Underutilized means an entire prop- the property is not held by a Federal erty or portion thereof, with or with- landholding agency as defined in this out improvements which is used only Part. at irregular periods or intermittently by the accountable landholding agency § 12a.3 Collecting the information. for current program purposes of that (a) Canvass of landholding agencies. On agency, or which is used for current a quarterly basis, HUD will canvass

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landholding agencies to collect infor- longer be subject to security restric- mation about property described as un- tions, or property determined suitable utilized, underutilized, excess, or sur- may subsequently be found to be con- plus, in surveys conducted by the agen- taminated. cies under section 202 of the Federal Property and Administrative Services § 12a.4 Suitability determination. Act (40 U.S.C. 483), Executive Order (a) Suitability determination. Within 30 12512, and 41 CFR part 101–47.800. Each days after the receipt of information canvass will collect information on from landholding agencies regarding properties not previously reported and properties which were reported pursu- about property reported previously the ant to the canvass described in status or classification of which has § 12a.3(a), HUD will determine, under changed or for which any of the infor- criteria set forth in § 12a.6, which prop- mation reported on the property check- erties are suitable for use as facilities list has changed. to assist the homeless and report its (1) HUD will request descriptive in- determination to the landholding agen- formation on properties sufficient to cy. Properties that are under lease, make a reasonable determination, contract, license, or agreement by under the criteria described below, of which a Federal agency retains a real the suitability of a property for use as property interest or which are sched- a facility to assist the homeless. uled to become unutilized or underuti- (2) HUD will direct landholding agen- lized will be reviewed for suitability no cies to respond to requests for informa- earlier than six months prior to the ex- tion within 25 days of receipt of such pected date when the property will be- requests. come unutilized or underutilized, ex- (b) Agency Annual Report. By Decem- cept that properties subject to the Base ber 31 of each year, each landholding Closure and Realignment Act may be agency must notify HUD regarding the reviewed up to eighteen months prior current availability status and classi- to the expected date when the property fication of each property controlled by will become unutilized or underuti- the agency that: lized. (1) Was included in a list of suitable (b) Scope of suitability. HUD will de- properties published that year by HUD, termine the suitability of a property and for use as a facility to assist the home- (2) Remains available for application less without regard to any particular for use to assist the homeless, or has use. become available for application dur- (c) Environmental information. HUD ing that year. will evaluate the environmental infor- (c) GSA Inventory. HUD will collect mation contained in property check- information, in the same manner as de- lists forwarded to HUD by the land- scribed in paragraph (a) of this section, holding agencies solely for the purpose from GSA regarding property that is in of determining suitability of properties GSA’s current inventory of excess or under the criteria in § 12a.6. surplus property. (d) Written record of suitability deter- (d) Change in Status. If the informa- mination. HUD will assign an identification provided on the property checklist tion number to each property reviewed changes subsequent to HUD’s deter- for suitability. HUD will maintain a mination of suitability, and the prop- written public record of the following: erty remains unutilized, underutilized, (1) The suitability determination for excess or surplus, the landholding a particular piece of property, and the agency shall submit a revised property reasons for that determination; and checklist in response to the next quar- (2) The landholding agency’s response terly canvass. HUD will make a new to the determination pursuant to the determination of suitability and, if it requirements of § 12a.7(a). differs from the previous determina- (e) Property determined unsuitable. tion, republish the property informa- Property that is reviewed by HUD tion in the FEDERAL REGISTER. For ex- under this section and that is deter- ample, property determined unsuitable mined unsuitable for use to assist the for national security concerns may no homeless may not be made available

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for any other purpose for 20 days after § 12a.5 Real property reported excess publication in the FEDERAL REGISTER to GSA. of a Notice of unsuitability to allow for (a) Each landholding agency must review of the determination at the resubmit a report to GSA of properties it quest of a representative of the home- determines excess. Each landholding less. agency must also provide a copy of (f) Procedures for appealing HUD’s suitability determination, if unsuitability determinations. (1) To re- any, including HUD’s identification quest review of a determination of number for the property. unsuitability, a representative of the (b) If a landholding agency reports a homeless must contact HUD within 20 property to GSA which has been re- days of publication of notice in the viewed by HUD for homeless assistance FEDERAL REGISTER that a property is suitability and HUD determined the unsuitable. Requests may be submitted property suitable, GSA will screen the to HUD in writing or by calling 1–800– property pursuant to § 12a.5(g) and will 927–7588 (Toll Free). Written requests advise HUD of the availability of the must be received no later than 20 days property for use by the homeless as after notice of unsuitability is pub- provided in § 12a.5(e). In lieu of the lished in the FEDERAL REGISTER. above, GSA may submit a new check- (2) Requests for review of a deter- list to HUD and follow the procedures mination of unsuitability may be made in § 12a.5(c) through § 12a.5(g). only by representatives of the home- (c) If a landholding agency reports a less, as defined in § 12a.1. property to GSA which has not been re- (3) The request for review must speci- viewed by HUD for homeless assistance fy the grounds on which it is based, suitability, GSA will complete a prop- i.e., that HUD has improperly applied erty checklist, based on information the criteria or that HUD has relied on provided by the landholding agency, incorrect or incomplete information in and will forward this checklist to HUD making the determination (e.g., that for a suitability determination. This property is in a floodplain but not in a checklist will reflect any change in floodway). classification, i.e., from unutilized or (4) Upon receipt of a request to re- underutilized to excess. view a determination of unsuitability, (d) Within 30 days after GSA’s sub- HUD will notify the landholding agen- mission, HUD will advise GSA of the cy that such a request has been made, suitability determination. request that the agency respond with (e) When GSA receives a letter from any information pertinent to the re- HUD listing suitable excess properties view, and advise the agency that it in GSA’s inventory, GSA will transmit should refrain from initiating disposal to HUD within 45 days a response procedures until HUD has completed which includes the following for each its reconsideration regarding identified property: unsuitability. (1) A statement that there is no other (i) HUD will act on all requests for compelling Federal need for the prop- review within 30 days of receipt of the erty, and therefore, the property will landholding agency’s response and will be determined surplus; or notify the representative of the home- (2) A statement that there is further less and the landholding agency in and compelling Federal need for the writing of its decision. property (including a full explanation (ii) If a property is determined suit- of such need) and that, therefore, the able as a result of the review, HUD will property is not presently available for request the landholding agency’s deter- use to assist the homeless. mination of availability pursuant to (f) When an excess property is deter- § 12a.7(a), upon receipt of which HUD mined suitable and available and no- will promptly publish the determina- tice is published in the FEDERAL REG- tion in the FEDERAL REGISTER. If the ISTER, GSA will concurrently notify determination of unsuitability stands, HHS, HUD, State and local government HUD will inform the representative of units, known homeless assistance pro- the homeless of its decision. viders that have expressed interest in

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the particular property, and other or- within an airport runway clear zone or ganizations, as appropriate, concerning military airfield clear zone will be de- suitable properties. termined unsuitable. (g) Upon submission of a Report of (4) Floodway. A property located in Excess to GSA, GSA may screen the the floodway of a 100 year floodplain property for Federal use. In addition, will be determined unsuitable. If the GSA may screen State and local gov- floodway has been contained or cor- ernmental units and eligible nonprofit rected, or if only an incidental portion organizations to determine interest in of the property not affecting the use of the property in accordance with cur- the remainder of the property is in the rent regulations. (See 41 CFR 101– floodway, the property will not be de- 47.203–5, 101–47.204–1 and 101–47.303–2.) termined unsuitable. (h) The landholding agency will re- (5) Documented deficiencies. A prop- tain custody and accountability and erty with a documented and extensive will protect and maintain any property condition(s) that represents a clear which is reported excess to GSA as pro- threat to personal physical safety will vided in 41 CFR 101–47.402. be determined unsuitable. Such conditions may include, but are not limited § 12a.6 Suitability criteria. to, contamination, structural damage (a) All properties, buildings and land or extensive deterioration, friable as- will be determined suitable unless a bestos, PCB’s, or natural hazardous property’s characteristics include one substances such as radon, periodic or more of the following conditions: flooding, sinkholes or earth slides. (1) National security concerns. A prop- (6) Inaccessible. A property that is in- erty located in an area to which the accessible will be determined unsuit- general public is denied access in the able. An inaccessible property is one interest of national security (e.g., that is not accessible by road (includ- where a special pass or security clearing property on small off-shore islands) ance is a condition of entry to the or is land locked (e.g., can be reached property) will be determined unsuit- only by crossing private property and able. Where alternative access can be there is no established right or means provided for the public without com- of entry). promising national security, the property will not be determined unsuitable § 12a.7 Determination of availability. on this basis. (a) Within 45 days after receipt of a (2) Property containing flammable or letter from HUD pursuant to § 12a.4(a), explosive materials. A property located each landholding agency must trans- within 2000 feet of an industrial, commit to HUD a statement of one of the mercial or Federal facility handling following: flammable or explosive material (ex- (1) In the case of unutilized or under- cluding underground storage) will be utilized property: determined unsuitable. Above ground (i) An intention to declare the prop- containers with a capacity of 100 gal- erty excess, lons or less, or larger containers which (ii) An intention to make the prop- provide the heating or power source for erty available for use to assist the the property, and which meet local homeless, or safety, operation, and permitting (iii) The reasons why the property standards, will not affect whether a cannot be declared excess or made particular property is determined suit- available for use to assist the home- able or unsuitable. Underground stor- less. The reasons given must be dif- age, gasoline stations and tank trucks ferent than those listed as suitability are not included in this category and criteria in § 12a.6. their presence will not be the basis of (2) In the case of excess property an unsuitability determination unless which had previously been reported to there is evidence of a threat to per- GSA: sonal safety as provided in paragraph (i) A statement that there is no com- (a)(5) of this section. pelling Federal need for the property, (3) Runway clear zone and military air- and that, therefore, the property will field clear zone. A property located be determined surplus; or

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(ii) A statement that there is a fur- available for any other purpose for a ther and compelling Federal need for period of 60 days beginning on the date the property (including a full expla- of publication. Any representative of nation of such need) and that, there- the homeless interested in any under- fore, the property is not presently utilized, unutilized, excess or surplus available for use to assist the home- Federal property for use as a facility to less. assist the homeless must send to HHS a written expression of interest in that § 12a.8 Public notice of determination. property within 60 days after the prop- (a) No later than 15 days after the erty has been published in the FEDERAL last 45 day period has elapsed for re- REGISTER. ceiving responses from the landholding (2) If a written expression of interest agencies regarding availability, HUD to apply for suitable property for use will publish in the FEDERAL REGISTER a to assist the homeless is received by list of all properties reviewed, includ- HHS within the 60 day holding period, ing a description of the property, its such property may not be made avail- address, and classification. The fol- able for any other purpose until the lowing designations will be made: date HHS or the appropriate land- (1) Properties that are suitable and holding agency has completed action available. on the application submitted pursuant (2) Properties that are suitable and to that expression of interest. unavailable. (3) The expression of interest should (3) Properties that are suitable and identify the specific property, briefly to be declared excess. describe the proposed use, include the (4) Properties that are unsuitable. name of the organization, and indicate (b) Information about specific prop- whether it is a public body or a private erties can be obtained by contacting non-profit organization. The expression HUD at the following toll free number, of interest must be sent to the Division 1–800–927–7588. (c) HUD will transmit to the ICH a of Health Facilities Planning (DHFP) copy of the list of all properties pub- of the Department of Health and Human Services at the following ad- lished in the FEDERAL REGISTER. The ICH will immediately distribute to all dress: state and regional homeless coordina- Director, Division of Health Facilities Plan- tors area-relevant portions of the list. ning, Public Health Service, Room 17A–10, The ICH will encourage the state and Parklawn Building, 5600 Fishers Lane, regional homeless coordinators to dis- Rockville, Maryland 20857. seminate this information widely. (d) No later than February 15 of each HHS will notify the landholding agency (for unutilized and underutilized prop- year, HUD shall publish in the FED- ERAL REGISTER a list of all properties erties) or GSA (for excess and surplus reported pursuant to § 12a.3(b). properties) when an expression of inter- (e) HUD shall publish an annual list est has been received for a particular of properties determined suitable but property. which agencies reported unavailable (4) An expression of interest may be including the reasons such properties sent to HHS any time after the 60 day are not available. holding period has expired. In such a (f) Copies of the lists published in the case, an application submitted pursu- FEDERAL REGISTER will be available for ant to this expression of interest may review by the public in the HUD head- be approved for use by the homeless if: quarters building library (room 8141); (i) No application or written expres- area-relevant portions of the lists will sion of interest has been made under be available in the HUD regional of- any law for use of the property for any fices and in major field offices. purpose; and (ii) In the case of excess or surplus § 12a.9 Application process. property, GSA has not received a bona (a) Holding period. (1) Properties pub- fide offer to purchase that property or lished as available for application for advertised for the sale of the property use to assist the homeless shall not be by public auction.

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(b) Application Requirements. Upon re- U.S.C. 6101–6107) and implementing reg- ceipt of an expression of interest, ulations; and the prohibitions against DHFP will send an application packet otherwise qualified individuals with to the interested entity. The applica- handicaps under section 504 of the Re- tion packet requires the applicant to habilitation Act of 1973 (29 U.S.C. 794) provide certain information, including and implementing regulations. The ap- the following— plicant must state that it will not dis- (1) Description of the applicant organi- criminate on the basis of race, color, zation. The applicant must document national origin, religion, sex, age, fa- that it satisfies the definition of a milial status, or handicap in the use of ‘‘representative of the homeless,’’ as the property, and will maintain the re- specified in § 12a.1 of this subpart. The quired records to demonstrate compli- applicant must document its authority ance with Federal laws. to hold real property. Private non-prof- (6) Insurance. The applicant must cer- it organizations applying for deeds tify that it will insure the property must document that they are section against loss, damage, or destruction in 501(c)(3) tax-exempt. accordance with the requirements of 45 (2) Description of the property desired. CFR 12.9. The applicant must describe the prop- (7) Historic preservation. Where appli- erty desired and indicate that any cable, the applicant must provide in- modifications made to the property formation that will enable HHS to will conform to local use restrictions comply with Federal historic preserva- except for local zoning regulations. tion requirements. (3) Description of the proposed program. (8) Environmental information. The ap- The applicant must fully describe the plicant must provide sufficient infor- proposed program and demonstrate mation to allow HHS to analyze the po- how the program will address the needs tential impact of the applicant’s proof the homeless population to be as- posal on the environment, in accord- sisted. The applicant must fully de- ance with the instructions provided scribe what modifications will be made with the application packet. HHS will to the property before the program be- assist applicants in obtaining any per- comes operational. tinent environmental information in (4) Ability to finance and operate the the possession of HUD, GSA, or the proposed program. The applicant must landholding agency. specifically describe all anticipated (9) Local government notification. The costs and sources of funding for the applicant must indicate that it has in- proposed program. The applicant must formed the applicable unit of general indicate that it can assume care, cus- local government responsible for pro- tody, and maintenance of the property viding sewer, water, police, and fire and that it has the necessary funds or services, in writing of its proposed pro- the ability to obtain such funds to gram. carry out the approved program of use (10) Zoning and Local Use Restrictions. for the property. The applicant must indicate that it (5) Compliance with non-discrimination will comply with all local use restric- requirements. Each applicant and lessee tions, including local building code re- under this part must certify in writing quirements. Any applicant which ap- that it will comply with the require- plies for a lease or permit for a par- ments of the Fair Housing Act (42 ticular property is not required to com- U.S.C. 3601–3619) and implementing reg- ply with local zoning requirements. ulations; and as applicable, Executive Any applicant applying for a deed of a Order 11063 (Equal Opportunity in particular property, pursuant to § 12a. Housing) and implementing regula- 9(b)(3), must comply with local zoning tions; title VI of the Civil Rights Act of requirements, as specified in 45 CFR 1964 (42 U.S.C. 2000d to d–4) (Non- part 12. discrimination in Federally Assisted (c) Scope of evaluations. Due to the Programs) and implementing regula- short time frame imposed for evalu- tions; the prohibitions against dis- ating applications, HHS’ evaluation crimination on the basis of age under will, generally, be limited to the infor- the Age Discrimination Act of 1975 (42 mation contained in the application.

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(d) Deadline. Completed applications run the program fully and properly and must be received by DHFP, at the to operate the facility. above address, within 90 days after an (3) Additional evaluation factors may expression of interest is received from be added as deemed necessary by HHS. a particular applicant for that prop- If additional factors are added, the ap- erty. Upon written request from the plication packet will be revised to in- applicant, HHS may grant extensions, clude a description of these additional provided that the appropriate land- factors. holding agency concurs with the exten- (4) If HHS receives one or more com- sion. Because each applicant will have peting applications for a property with- a different deadline based on the date in 5 days of the first application HHS the applicant submitted an expression will evaluate all completed applica- of interest, applicants should contact tions simultaneously. HHS will rank the individual landholding agency to approved applications based on the ele- confirm that a particular property re- ments listed in § 12a.8(e)(2), and notify mains available prior to submitting an the landholding agency, or GSA, as ap- application. propriate, of the relative ranks. (e) Evaluations. (1) Upon receipt of an (Approved by the Office of Management and application, HHS will review it for Budget under control number 0937–0191) completeness, and, if incomplete, may return it or ask the applicant to fur- § 12a.10 Action on approved applica- nish any missing or additional required tions. information prior to final evaluation of (a) Unutilized and underutilized prop- the application. erties. (1) When HHS approves an appli- (2) HHS will evaluate each completed cation, it will so notify the applicant application within 25 days of receipt and forward a copy of the application and will promptly advise the applicant to the landholding agency. The land- of its decision. Applications are evalu- holding agency will execute the lease, ated on a first-come, first-serve basis. or permit document, as appropriate, in HHS will notify all organizations consultation with the applicant. which have submitted expressions of (2) The landholding agency maintains interest for a particular property re- the discretion to decide the following: garding whether the first application (i) The length of time the property received for that property has been ap- will be available. (Leases and permits will be for a period of at least one year proved or disapproved. All applications unless the applicant requests a shorter will be reviewed on the basis of the fol- term.) lowing elements, which are listed in (ii) Whether to grant use of the prop- descending order of priority, except erty via a lease or permit; that paragraphs (e)(2)(iv) and (e)(2)(v) (iii) The terms and conditions of the of this section are of equal importance. lease or permit document. (i) Services offered. The extent and (b) Excess and surplus properties. (1) range of proposed services, such as When HHS approves an application, it meals, shelter, job training, and coun- will so notify the applicant and request seling. that GSA assign the property to HHS (ii) Need. The demand for the pro- for leasing. Upon receipt of the assign- gram and the degree to which the ment, HHS will execute a lease in ac- available property will be fully uti- cordance with the procedures and re- lized. quirements set out in 45 CFR part 12. (iii) Implementation Time. The amount In accordance with 41 CFR 101–47.402, of time necessary for the proposed pro- custody and accountability of the prop- gram to become operational. erty will remain throughout the lease (iv) Experience. Demonstrated prior term with the agency which initially success in operating similar programs reported the property as excess. and recommendations attesting to that (2) Prior to assignment to HHS, GSA fact by Federal, State, and local au- may consider other Federal uses and thorities. other important national needs; how- (v) Financial Ability. The adequacy of ever, in deciding the disposition of sur- funding that will likely be available to plus real property, GSA will generally

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give priority of consideration to uses a property is published in the FEDERAL to assist the homeless. GSA may con- REGISTER, action to dispose of prop- sider any competing request for the erties determined unsuitable for home- property made under section 203(k) of less assistance. HUD will inform land- the Federal Property and Administra- holding agencies or GSA if appeal of an tive Services Act of 1949 (40 U.S.C. unsuitability determination is filed by 484(k)) that is so meritorious and com- a representative of the homeless pursu- pelling that it outweighs the needs of ant to § 12a.4(f)(4). HUD will advise the the homeless, and HHS may likewise agency that it should refrain from ini- consider any competing request made tiating disposal procedures until HUD under subsection 203(k)(1) of that law. has completed its reconsideration proc- (3) Whenever GSA or HHS decides in ess regarding unsuitability. Thereafter, favor of a competing request over a re- or if no appeal has been filed after 20 quest for property for homeless assist- days, GSA or the appropriate land- ance use as provided in paragraph (b)(2) holding agency may proceed with dis- of this section, the agency making the posal action in accordance with appli- decision will transmit to the appro- cable law. priate committees of the Congress an explanatory statement which details § 12a.12 No applications approved. the need satisfied by conveyance of the (a) At the end of the 60 day holding surplus property, and the reasons for period described in § 12a.9(a), HHS will determining that such need was so notify GSA, or the landholding agency, meritorious and compelling as to out- as appropriate, if an expression of in- weigh the needs of the homeless. terest has been received for a par- (4) Deeds. Surplus property may be ticular property. Where there is no ex- conveyed to representatives of the pression of interest, GSA or the land- homeless pursuant to section 203(k) of holding agency, as appropriate, will the Federal Property and Administra- proceed with disposal in accordance tive Services Act of 1949 (40 U.S.C. with applicable law. 484(k)(1), and section 501(f) of the (b) Upon advice from HHS that all McKinney Act as amended, 42 U.S.C. applications have been disapproved, or 11411. Representatives of the homeless if no completed applications or re- must complete the application packet quests for extensions have been re- pursuant to the requirements of § 12a.9 ceived by HHS within 90 days from the of this part and in accordance with the date of the last expression of interest, requirements of 45 CFR part 12. disposal may proceed in accordance (c) Completion of Lease Term and Re- with applicable law. version of Title. Lessees and grantees will be responsible for the protection and maintenance of the property dur- PART 13—IMPLEMENTATION OF THE ing the time that they possess the EQUAL ACCESS TO JUSTICE ACT property. Upon termination of the IN AGENCY PROCEEDINGS lease term or reversion of title to the Federal government, the lessee or Subpart A—General Provisions grantee will be responsible for remov- Sec. ing any improvements made to the 13.1 Purpose of these rules. property and will be responsible for 13.2 When these rules apply. restoration of the property. If such im- 13.3 Proceedings covered. provements are not removed, they will 13.4 Eligibility of applicants. become the property of the Federal 13.5 Standards for awards. government. GSA or the landholding 13.6 Allowable fees and expenses. agency, as appropriate, will assume re- 13.7 Studies, exhibits, analyses, engineering sponsibility for protection and mainte- reports, tests and projects. nance of a property when the lease terminates or title reverts. Subpart B—Information Required from Applicants § 12a.11 Unsuitable properties. 13.10 Contents of application. The landholding agency will defer, 13.11 Net worth exhibits. for 20 days after the date that notice of 13.12 Documentation of fees and expenses.

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Subpart C—Procedures for Considering § 13.3 Proceedings covered. Applications (a) These rules apply only to adver- 13.21 Filing and service of pleadings. sary adjudications. For the purpose of 13.22 When an application may be filed. these rules, only an adjudication re- 13.23 Responsive pleadings. quired to be under 5 U.S.C. 554, in 13.24 Settlements. which the position of the Department 13.25 Further proceedings. or one of its components is represented 13.26 Decisions. by an attorney or other representative 13.27 Agency review. (‘‘the agency’s litigating party’’) who 13.28 Judicial review. 13.29 Payment of award. enters an appearance and participates 13.30 Designation of adjudicative officer. in the proceeding, constitutes an adversary adjudication. These rules do APPENDIX A TO PART 13 not apply to proceedings for the pur- AUTHORITY: 5 U.S.C. 504(c)(1). pose of establishing or fixing a rate or SOURCE: 48 FR 45252, Oct. 4, 1983, unless for the purpose of granting, denying, or otherwise noted. renewing a license. (b) If the agency’s litigating party Subpart A—General Provisions enters an appearance, Department proceedings listed in Appendix A to this § 13.1 Purpose of these rules. part are covered by these rules. Also These rules implement section 203 of covered are any other proceedings the Equal Access to Justice Act, 5 under statutes that incorporate by ref- U.S.C. 504 and 504 note, for the Depart- erence the procedures of sections ment of Health and Human Services. 1128(f), 1128A(c)(2), or 1842(j)(2) of the They describe the circumstances under Social Security Act, 42 U.S.C. 1320a– which the Department may award at- 7(f), 1320a–7a(c)(2), or 1395u(j)(2). If a torney fees and certain other expenses proceeding is not covered under either to eligible individuals and entities who of the two previous sentences, a party prevail over the Department in certain may file a fee application as otherwise administrative proceedings (called required by this part and may argue ‘‘adversary adjudications’’). The De- that the Act covers the proceeding. partment may reimburse parties for ex- Any coverage issue shall be determined penses incurred in adversary adjudica- by the adjudicative officer and, if nec- tions if the party prevails in the pro- essary, by the appellate authority on ceeding and if the Department’s posi- review. tion in the proceeding was not substan- (c) If a proceeding is covered by these tially justified or if the action is one to rules, but also involves issues excluded enforce compliance with a statutory or under paragraph (a) of this section regulatory requirement and the De- from the coverage of these rules, reim- partment’s demand is substantially in bursement is available only for fees excess of the ultimate decision and is and expenses resulting from covered unreasonable when compared with that issues. decision. They also describe what proceedings constitute adversary adju- [45 FR 45252, Oct. 4, 1983, as amended at 69 FR dications covered by the Act, what 2845, Jan. 21, 2004] types of persons and entities may be el- § 13.4 Eligibility of applicants. igible for an award, and what procedures and standards the Department (a) To be eligible for an award of at- will use to make a determination as to torney fees and other expenses under whether a party may receive an award. these regulations, the applicant must be a party, as defined in 5 U.S.C. 551(3), [48 FR 45252, Oct. 4, 1983, as amended at 69 FR to the adversary adjudication for which 2845, Jan. 21, 2004] it seeks an award. An applicant must § 13.2 When these rules apply. show that it meets all conditions of eligibility set out in this subpart and in These rules apply to adversary adju- Subpart B. dications before the Department. (b) The categories of eligible appli- [69 FR 2845, Jan. 21, 2004] cants are as follows:

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(1) Charitable or other tax-exempt or- a majority of the voting shares or ganizations described in section other interest, will be considered an af- 501(c)(3) of the Internal Revenue Code filiate for purposes of this part, unless (26 U.S.C. 501(c)(3)) with not more than the adjudicative officer determines 500 employees; that such treatment would be unjust (2) Cooperative associations as de- and contrary to the purposes of the Act fined in section 15(a) of the Agricul- in light of the actual relationship be- tural Marketing Act (12 U.S.C. 1141j(a)) tween the affiliated entities. In addi- with not more than 500 employees; tion, the adjudicative officer may de- (3) Individuals with a net worth of termine that financial relationships of not more than $2 million; the applicant other than those de- (4) Sole owners of unincorporated scribed in this paragraph constitute businesses if the owner has a net worth special circumstances that would make of not more than $7 million, including an award unjust. both personal and business interests, (g) An applicant is not eligible if it and if the business has not more than appears from the facts and cir- 500 employees; cumstances that it has participated in (5) All other partnerships, corpora- the proceedings only or primarily on tions, associations, local governmental behalf of other persons or entities that units, and public and private organiza- are ineligible. tions with a net worth of not more than $7 million and with not more than [48 FR 45252, Oct. 4, 1983, as amended at 69 FR 500 employees; and 2846, Jan. 21, 2004] (6) Where an award is sought on the § 13.5 Standards for awards. basis stated in § 13.5(c) of this part, small entities as defined in 5 U.S.C. 601. (a) An award of fees and expenses (c) For the purpose of determining may be made either on the basis that eligibility, the net worth and number the Department’s position in the proof employees of an applicant is cal- ceeding was not substantially justified culated as of the date the proceeding or on the basis that, in a proceeding to was initiated. The net worth of an ap- enforce compliance with a statutory or plicant is determined by generally ac- regulatory requirement, the Depart- cepted accounting principles. ment’s demand substantially exceeded (d) Whether an applicant who owns the ultimate decision and was unrea- an unincorporated business will be con- sonable when compared with that deci- sidered as an ‘‘individual’’ or a ‘‘sole sion. These two bases are explained in owner of an unincorporated business’’ greater detail in paragraphs (b) and (c) will be determined by whether the ap- of this section. plicant’s participation in the pro- (b) Awards where the Department’s po- ceeding is related primarily to indi- sition was not substantially justified. (1) vidual interests or to business inter- Awards will be made on this basis only ests. where the Department’s position in the (e) The employees of an applicant in- proceeding was not substantially justi- clude all those persons regularly pro- fied. The Department’s position in- viding services for remuneration for cludes, in addition to the position the applicant, under the applicant’s di- taken by the agency in the proceeding, rection and control. Part-time employ- the agency action or failure to act that ees shall be included on a proportional was the basis for the proceeding. basis. Whether the Department’s position was (f) The net worth and number of em- substantially justified is to be deter- ployees of the applicant and all of its mined on the basis of the administra- affiliates shall be aggregated to deter- tive record as a whole. The fact that a mine eligibility. Any individual, cor- party has prevailed in a proceeding poration or other entity that directly does not create a presumption that the or indirectly controls or owns a major- Department’s position was not sub- ity of the voting shares or other inter- stantially justified. The burden of est of the applicant, or any corporation proof as to substantial justification is or other entity of which the applicant on the agency’s litigating party, which directly or indirectly owns or controls may avoid an award by showing that

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its position was reasonable in law and if special circumstances make an fact. award unjust. (2) When two or more matters are joined together for one hearing, each of [48 FR 45252, Oct. 4, 1983, as amended at 69 FR 2846, Jan. 21, 2004] which could have been heard separately (without regard to laws or rules fixing § 13.6 Allowable fees and expenses. a jurisdictional minimum amount for claims), and an applicant has prevailed (a) Awards will be limited to the with respect to one or several of the rates customarily charged by persons matters, an eligible applicant may re- engaged in the business of acting as at- ceive an award for expenses associated torneys, agents and expert witnesses. If only with the matters on which it pre- a party has already received, or is eli- vailed if the Department’s position on gible to receive, reimbursement for any those matters was not substantially expenses under another statutory pro- justified. vision or another program allowing re- (3) Awards for fees and expenses in- imbursement, its award under these curred before the date on which a pro- rules must be reduced by the amount ceeding was initiated will be made only the prevailing party has already re- if the applicant can demonstrate that ceived, or is eligible to receive, from they were reasonably incurred in prep- the Federal government. aration for the proceeding. (b) An award for the fees of an attor- (4) Awards will be reduced or denied ney or agent may not exceed $125.00 per if the applicant has unduly or unrea- hour, regardless of the actual rate sonably protracted the proceeding or if charged by the attorney or agent. An other special circumstances make an award unjust. award for the fees of an expert witness (c) Awards where the Department’s de- may not exceed the highest rate at mand was substantially excessive and un- which the Department pays expert wit- reasonable. (1) Awards will be made on nesses, which is $24.09 per hour, regard- this basis only where the adversary ad- less of the actual rates charged by the judication arises from the Depart- witness. These limits apply only to ment’s action to enforce a party’s com- fees; an award may include the reason- pliance with a statutory or regulatory able expenses of the attorney, agent, or requirement. An award may be made witness as a separate item, if the attor- on this basis only if the Department’s ney, agent or witness ordinarily demand that led to the proceeding was charges separately for such expenses. substantially in excess of the ultimate (c) In determining the reasonableness decision in the proceeding, and that de- of the fees sought for attorneys, agents mand is unreasonable when compared or expert witnesses, the adjudicative with that decision, given all the facts officer must consider factors bearing and circumstances of the case. on the request, which include, but are (2) Any award made on this basis not limited to: shall be limited to the fees and ex- (1) If the attorney, agent or witness penses that are primarily related to de- is in private practice, his or her cus- fending against the excessive nature of tomary fee for like services; if the at- the demand. An award shall not include fees and expenses that are pri- torney, agent or witness is an em- marily related to defending against the ployee of the applicant, the fully allo- merits of charges, or fees and expenses cated cost of service; that are primarily related to defending (2) The prevailing rate for similar against the portion of the demand that services in the community in which the was not excessive, to the extent that attorney, agent or witness ordinarily these fees and expenses are distinguish- performs services; able from the fees and expenses pri- (3) The time actually spent in the marily related to defending against the representation of the applicant; excessive nature of the demand. (4) The time reasonably spent in light (3) Awards will be denied if the party of the difficulty or complexity of the has committed a willful violation of issues in the proceeding; and law or otherwise acted in bad faith, or

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(5) Such other factors as may bear on where an award is sought solely on the the value of the services provided. basis stated in § 13.5(c) of this part, the applicant need not state the number of [48 FR 45252, Oct. 4, 1983, as amended at 69 FR 2846, Jan. 21, 2004] its employees; (4) A description of any affiliated in- § 13.7 Studies, exhibits, analyses, engi- dividuals or entities, as the term ‘‘af- neering reports, tests and projects. filiate’’ is defined in § 13.4(f), or a state- The reasonable cost (or the reason- ment that none exist; able portion of the cost) for any study, (5) A statement that the applicant’s exhibit, analysis, engineering report, net worth as of the date on which the test, project or similar matter prepared proceeding was initiated did not exceed on behalf of a party may be awarded to the appropriate limits as stated in the extent that: § 13.4(b) of this part. However, an appli- (a) The charge for the service does cant may omit this statement if: not exceed the prevailing rate payable (i) It attaches a copy of a ruling by for similar services, the Internal Revenue Service that it (b) The study or other matter was qualifies as an organization described necessary to the preparation for the in section 501(c)(3) of the Internal Rev- administrative proceeding, and enue Code (26 U.S.C. 501(c)(3)) or, in the case of a tax-exempt organization not (c) The study or other matter was required to obtain a ruling from the In- prepared for use in connection with the ternal Revenue Service on its exempt administrative proceeding. No award status, a statement that describes the will be made for a study or other mat- basis for the applicant’s belief that it ter which was necessary to satisfy stat- qualified under such section; utory or regulatory requirements, or (ii) It states that it is a cooperative which would ordinarily be conducted as association as defined in section 15(a) part of the party’s business irrespec- of the Agricultural Marketing Act (12 tive of the administrative proceeding. U.S.C. 1141j(a)); or (iii) It states that it is applying for Subpart B—Information Required an award solely on the basis stated in from Applicants § 13.5(c) of this part, and that it is a small entity as defined in 5 U.S.C. 601, § 13.10 Contents of application. and it describes the basis for its belief (a) Applications for an award of fees that it qualifies as a small entity under and expenses must include: that section. (1) The name of the applicant and the (6) A statement of the amount of fees identification of the proceeding; and expenses for which an award is (2) Where an award is sought on the sought; basis stated in § 13.5(b) of this part, a (7) A declaration that the applicant declaration that the applicant believes has not received, has not applied for, it has prevailed, and an identification and does not intend to apply for reim- of the position of the Department that bursement of the cost of items listed in the applicant alleges was not substan- the Statement of Fees and Expenses tially justified. Where an award is under any other program or statute; or sought on the basis stated in § 13.5(c) of if the applicant has received or applied this part, an identification of the stat- for or will receive or apply for reim- utory or regulatory requirement that bursement of those expenses under an- the applicant alleges the Department other program or statute, a statement was seeking to enforce, and an identi- of the amount of reimbursement re- fication of the Department’s demand ceived or applied for or intended to be and of the document or documents con- applied for; and taining that demand; (8) Any other matters the applicant (3) Unless the applicant is an indi- wishes the Department to consider in vidual, a statement of the number of determining whether and in what its employees on the date on which the amount an award should be made. proceeding was initiated, and a brief (b) All applications must be signed by description of the type and purpose of the applicant or by an authorized offi- its organization or business. However, cer or attorney of the applicant. It

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shall also contain or be accompanied and believes there are legal grounds for by a written verification under oath or withholding it from disclosure may under penalty of perjury that the infor- submit that portion of the exhibit di- mation provided in the application is rectly to the adjudicative officer in a true and correct. sealed envelope labeled ‘‘Confidential Financial Information,’’ accompanied (Approved by the Office of Management and Budget under control number 0990–0118) by a motion to withhold the information from public disclosure. The mo- [48 FR 45252, Oct. 4, 1983, as amended at 69 FR tion shall describe the information 2846, Jan. 21, 2004] sought to be withheld and explain, in § 13.11 Net worth exhibits. detail, why it falls within one or more of the specific exemptions from manda- (a) Each applicant must provide with tory disclosure under the Freedom of its application a detailed exhibit show- Information Act, 5 U.S.C. 552(b)(1)–(9), ing the net worth of the applicant and why public disclosure of the informa- any affiliates (as defined in § 13.4(f) of tion would adversely affect the appli- this part) when the proceeding was ini- cant, and why disclosure is not re- tiated. This requirement does not quired in the public interest. The mate- apply to a qualified tax-exempt organi- rial in question shall be served on zation or cooperative association. Nor counsel representing the agency does it apply to a party that states against which the applicant seeks an that it is applying for an award solely award, but need not be served on any on the basis stated in § 13.5(c) of this other party to the proceeding. If the part. If any individual, corporation, or adjudicative officer finds that the in- other entity directly or indirectly con- formation should not be withheld from trols or owns a majority of the voting disclosure, it shall be placed in the shares or other interest of the appli- public record of the proceeding. Other- cant, or if the applicant directly or in- wise, the officer will omit the material directly owns or controls a majority of from the public record. In that case, the voting shares or other interest of any decision regarding disclosure of any corporation or other entity, the the material (whether in response to a exhibit must include a showing of the request from an agency or person out- net worth of all such affiliates or of the side the Department or on the Depart- applicant including the affiliates. The ment’s own initiative) will be made in exhibit may be in any form convenient accordance with applicable statutes to the applicant that provides full dis- and Department rules and procedures closure of the applicant’s and its affili- for commercial and financial records ates’ assets and liabilities and is suffi- which the submitter claims are con- cient to determine whether the appli- fidential or privileged. In particular, cant qualifies under the standards in this regulation is not a basis for a this part. The adjudicative officer may promise or obligation of confiden- require an applicant to file additional tiality. information to determine its eligibility for an award. (Approved by the Office of Management and (b) The net worth exhibit shall de- Budget under control number 0990–0118) scribe any transfers of assets from, or [48 FR 45252, Oct. 4, 1983, as amended at 69 FR obligations incurred by, the applicant 2846, Jan. 21, 2004] or any affiliate, occurring in the one year period prior to the date on which § 13.12 Documentation of fees and ex- the proceeding was initiated, that re- penses. duced the net worth of the applicant (a) All applicants must be accom- and its affiliates below the applicable panied by full documentation of the net worth ceiling. If there were no such fees and expenses, including the cost of transactions, the applicant shall so any study, exhibit, analysis, report, state. test or other similar item, for which (c) Ordinarily, the net worth exhibit the applicant seeks reimbursement. will be included in the public record of (b) The documentation shall include the proceeding. However, an applicant an affidavit from each attorney, agent, that objects to public disclosure of in- or expert witness representing or ap- formation in any portion of the exhibit pearing in behalf of the party, stating

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the actual time expended, the rate at Subpart C—Procedures for which fees and other expenses were Considering Applications computed, a description of the specific services performed, the total amount § 13.21 Filing and service of pleadings. claimed, and the total amount paid or All pleadings, including applications payable by the applicant or by any for an award of fees, answers, com- other person or entity for the services ments, and other pleadings related to provided. Where the adversary adju- the applications, shall be filed in the dication includes covered proceedings same manner as other pleadings in the (as described in § 13.3) as well as ex- proceeding and served on all other par- cluded proceedings, or two or more ties and participants, except as pro- matters, each of which could have been vided in § 13.11(b) of this part con- heard separately, the fees and expenses cerning confidential financial informa- shall be shown separately for each pro- tion. ceeding or matter, and the basis for allocating expenses among the pro- § 13.22 When an application may be ceedings or matters shall be indicated. filed. (1) The affidavit shall itemize in de- (a) The applicant must file and serve tail the services performed by the date, its application no later than 30 cal- number of hours per date and the serv- endar days after the Department’s final ices performed during those hours. In disposition of the proceeding which order to establish the hourly rate, the makes the applicant a prevailing party. affidavit shall state the hourly rate (b) For purposes of this rule, final which is billed and paid by the major- disposition means the date on which a ity of clients during the relevant time decision or order disposing of the mer- periods. its of the proceeding or any other com- (2) If no hourly rate is paid by the plete resolution of the proceeding, such majority of clients because, for in- as a settlement or voluntary dismissal, stance, the attorney or agent rep- becomes final and unappealable, both resents most clients on a contingency within the agency and to the courts. basis, the attorney or agent shall pro- (c) For purposes of this rule, an appli- vide affidavits from two attorneys or cant has prevailed when the agency has agents with similar experience, who made a final disposition favorable to perform similar work, stating the the applicant with respect to any mat- hourly rate which they bill and are ter which could have been heard as a paid by the majority of their clients separate proceeding, regardless of whether it was joined with other mat- during a comparable time period. ters for hearing. (c) If the applicant seeks reimburse- (d) If review or reconsideration is ment of any expenses not covered by sought or taken, whether within the the affidavit described in paragraph agency or to the courts, of a decision (b), the documentation must also in- as to which an applicant believes it has clude an affidavit describing all such prevailed, proceedings on the applica- expenses and stating the amounts paid tion shall be stayed pending final dis- or payable by the applicant or by any position of the underlying controversy. other person or entity for the services provided. [48 FR 45252, Oct. 4, 1983, as amended at 69 FR 2847, Jan. 21, 2004] (d) The adjudicative officer may require the applicant to provide vouch- § 13.23 Responsive pleadings. ers, receipts, or other substantiation for any fees or expenses claimed, pursu- (a) The agency’s litigating party ant to § 13.25 of this part. shall file an answer within 30 calendar days after service of the application or, (Approved by the Office of Management and where the proceeding is stayed as pro- Budget under control number 0990–0118) vided in § 13.22(d) of this part, within 30 [48 FR 45252, Oct. 4, 1983, as amended at 69 FR calendar days after the final disposi- 2847, Jan. 21, 2004] tion of the underlying controversy. The answer shall either consent to the

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award or explain in detail any objec- (b) A request that the adjudicative tions to the award requested and iden- officer order additional written sub- tify the facts relied on in support of missions or oral testimony shall iden- the agency’s position. The adjudicative tify the information sought and shall officer may for good cause grant an ex- explain why the information is nec- tension of time for filing an answer. essary to decide the issues. (b) Within 15 calendar days after (c) The adjudicative officer may im- service of an answer, the applicant may pose sanctions on any party for failure file a reply. If the reply is based on any to comply with his or her order to file alleged facts not already in the record pleadings, produce documents, or of the proceeding, the applicant shall present witnesses for oral examination. include with the reply either sup- These sanctions may include but are porting affidavits or a request for fur- not limited to granting the application ther proceedings under § 13.25. partly or completely, dismissing the (c) Any party to or participant in a application, and diminishing the award proceeding may file comments on an granted. application within 30 calendar days, or [48 FR 45252, Oct. 4, 1983, as amended at 69 FR on an answer within 15 calendar days 2847, Jan. 21, 2004] after service of the application or answer. § 13.26 Decisions. [48 FR 45252, Oct. 4, 1983, as amended at 69 FR The adjudicative officer shall issue 2847, Jan. 21, 2004] an initial decision on the application as promptly as possible after the filing § 13.24 Settlements. of the last document or conclusion of The applicant and the agency’s liti- the hearing. The decision must include gating party may agree on a proposed written findings and conclusions on the settlement of the award at any time applicant’s eligibility and status as a prior to final action on the application. prevailing party, including a finding on If the parties agree on a proposed set- the net worth of the applicant. Where tlement of an award before an applica- the adjudicative officer has determined tion has been filed, the application under § 13.11(b) that the applicant’s net shall be filed with the proposed settle- worth information is exempted from ment. All settlements must be ap- disclosure under the Freedom of Infor- proved by the adjudicative officer and mation Act, the finding on net worth the head of the agency or office or his shall be kept confidential. The decision or her designee before becoming final. shall also include, if at issue, findings on whether the agency’s position was § 13.25 Further proceedings. substantially justified, whether the ap- (a) Ordinarily, a decision on an appli- plicant unduly protracted the pro- cation will be made on the basis of the ceedings, an explanation of any dif- hearing record and pleadings related to ference between the amount requested the application. However, at the re- and the amount awarded, and whether quest of either the applicant or the any special circumstances make the agency’s litigating party, or on his or award unjust. her own initiative, the adjudicative officer may order further proceedings, in- § 13.27 Agency review. cluding an informal conference, oral (a) The appellate authority for any argument, additional written submis- proceedings shall be the official or sions, or an evidentiary hearing. Such component that would have jurisdic- further proceedings shall be held only tion over an appeal of the merits. when necessary for full and fair resolu- (b) If either the applicant or the tion of the issues arising from the ap- agency’s litigating party seeks review plication, and shall be conducted as of the adjudicative officer’s decision on promptly as possible. In no such fur- the fee application, it shall file and ther proceeding shall evidence be intro- serve exceptions within 30 days after duced from outside the administrative issuance of the initial decision. Within record in order to prove that the De- another 30 days after receipt of such partment’s position was, or was not, exceptions, the opposing party, if it has substantially justified. not done so previously, may file its

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own exceptions to the adjudicative offi- award shall submit to that finance officer’s decision. The appellate authority cer a copy of the final decision grant- shall issue a final decision on the appli- ing the award, accompanied by a state- cation as soon as possible or remand ment that the applicant will not seek the application to the adjudicative offi- review of the decision in the United cer for further proceedings. Any party States courts. The Department will that does not file and serve exceptions pay the amount awarded to the appli- within the stated time limit loses the cant within 60 days, unless judicial re- opportunity to do so. view of the award or of the underlying [69 FR 2847, Jan. 21, 2004] decision of the adversary adjudication has been sought by the applicant or § 13.28 Judicial review. any other party to the proceedings. Judicial review of final agency decisions on awards may be obtained as § 13.30 Designation of adjudicative of- provided in 5 U.S.C. 504(c)(2). ficer. Upon the filing of an application pur- § 13.29 Payment of award. suant to § 13.11(a), the officer who pre- The notification to an applicant of a sided over the taking of evidence in the final decision that an award will be proceeding which gave rise to the ap- made shall contain the name and ad- plication will, if available, be auto- dress of the appropriate Departmental matically designated as the adjudica- finance office that will pay the award. tive officer for the handling of the ap- An applicant seeking payment of an plication.

APPENDIX A TO PART 13

Proceedings covered Statutory authority Applicable regulations

Office of Inspector General

1. Proceedings to impose civil monetary penalties, 42 U.S.C. 1320a–7a(c)(2); 1320b– 42 CFR Part 1003; 42 CFR Part assessments, or exclusions from Medicare and 10(c); 1395i–3(b)(3)(B)(ii), 1005. State 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 Medicare and State 42 U.S.C. 1320a–7(f); 1395l (h)(5)(D); 42 CFR Part 1001; 42 CFR Part health care programs and/or other programs 1395m(a)(11)(A), (b)(5)(C); 1005. under the Social Security Act. 1395u(j)(2), (k), (l )(3), (m)(3), (n)(3), (p)(3)(B). 3. Appeal of exclusions from programs under the 42 U.S.C. 1320c–5(b)(4), (5) ...... 42 CFR Part 1004; 42 CFR Part Social Security Act, for which services may be 1005. provided on the recommendation of a Peer Re- view Organization. 4. Proceedings to impose civil penalties and as- 31 U.S.C. 3803 ...... 45 CFR Part 79. sessments for false claims and statements.

Centers for Medicare & Medicaid Services

1. Proceedings to suspend or revoke licenses of 42 U.S.C. 263a(i); 1395w–2 ...... 42 CFR Part 493, Subpart R. clinical laboratories. 2. Proceedings provided to a fiscal intermediary be- 42 U.S.C. 1395h(e)(1)–(3) ...... 42 CFR 421.114, 421.128. fore assigning or reassigning Medicare providers to a different fiscal intermediary. 3. Appeals of determinations that an institution or 42 U.S.C. 1395cc(h); 1395dd(d)(1)(A) 42 CFR 489.53(d); 42 CFR Part agency is not a Medicare provider of services, 498. and appeals of terminations or nonrenewals of Medicare provider agreements.

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Proceedings covered Statutory authority Applicable regulations

4. Proceedings before the Provider Reimbursement 42 U.S.C. 1395oo ...... 42 CFR Part 405, Subpart R. Review Board when Department employees appear as counsel for the intermediary. 5. Appeals of CMS determinations that an inter- 42 U.S.C. 1396i ...... 42 CFR Part 498. mediate care facility for the mentally retarded (ICFMR) no longer qualifies as an ICFMR for Medicaid purposes. 6. Proceedings to impose civil monetary penalties, 42 U.S.C. 1395i–3(h)(2)(B)(ii); 42 CFR Part 1003. assessments, or exclusions from Medicare and 1395l(q)(2)(B)(i); 1395m(a)(11)(A), State 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 Medicare and State 42 U.S.C. 1395l(q)(2)(B)(ii); 42 CFR Part 498; 42 CFR health care programs and/or other programs 1395m(a)(11)(A), (c)(5)(C); 1395w– 1001.107. under the Social Security Act. 4(g)(1), (g)(3)(B), (g)(4)(B)(ii).

Food and Drug Administration

1. Proceedings to withdraw approval of new drug 21 U.S.C. 355(e)...... 21 CFR Part 12; 21 CFR applications. 314.200. 2. Proceedings to withdraw approval of new animal 21 U.S.C. 360b(e), (m) ...... 21 CFR Part 12; 21 CFR Part drug applications and medicated feed applica- 514, Subpart B. tions. 3. Proceedings to withdraw approval of medical de- 21 U.S.C. 306e(e), (g) ...... 21 CFR Part 12. vice premarket approval applications.

Office for Civil Rights

1. Proceedings to enforce Title VI of the Civil Rights 42 U.S.C. 2000d–1 ...... 45 CFR 80.9. 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 section 504 of the Reha- 29 U.S.C. 794a; 42 U.S.C. 2000d–1 .. 45 CFR 84.61. bilitation Act of 1973, which prohibits discrimination on the basis of handicap by recipients of Federal financial assistance. 3. Proceedings to enforce the Age Discrimination 42 U.S.C. 6104(a) ...... 45 CFR 91.47. Act of 1975, which prohibits discrimination on the basis of age by recipients of Federal financial assistance. 4. Proceedings to enforce Title IX of the Education 20 U.S.C. 1682 ...... 45 CFR 86.71. 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] § 15.1 Uniform relocation assistance and real property acquisition. PART 15—UNIFORM RELOCATION Regulations and procedures for com- ASSISTANCE AND REAL PROP- plying with the Uniform Relocation ERTY ACQUISITION FOR FEDERAL Assistance and Real Property Acquisi- AND FEDERALLY ASSISTED PRO- tion Policies Act of 1970 (Pub. L. 91–646, GRAMS 84 Stat. 1894, 42 U.S.C. 4601 et seq.), as amended by the Surface Transpor- tation and Uniform Relocation Assist- AUTHORITY: Sec. 213, Uniform Relocation ance Act of 1987 (Title IV of Pub. L. Assistance and Real Property Acquisition Policies Act of 1970, Pub. L. 91–646, 84 Stat. 100–17, 101 Stat. 246–256, 42 U.S.C. 4601 1894 (42 U.S.C. 4633) as amended by the Sur- note) are set forth in 49 CFR Part 24. face Transportation and Uniform Relocation [52 FR 48026, Dec. 17, 1987 and 54 FR 8912, Assistance Act of 1987, Title IV of Pub. L. Mar. 2, 1989] 100–17, 101 Stat. 246–256 (42 U.S.C. 4601 note).

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PART 16—PROCEDURES OF THE DE- other Board member, or Board staff PARTMENTAL GRANT APPEALS acting at the direction of a Board BOARD member. In certain instances, the provisions restrict action to particular Board personnel, such as the Chair or a Sec. 16.1 What this part does. Board member assigned to a case. 16.2 Definitions. (b) Other terms shall have the mean- 16.3 When these procedures become avail- ing set forth in Part 74 of this title, unable. less the context below otherwise re- 16.4 Summary of procedures below. quires. 16.5 How the Board operates. 16.6 Who represents the parties. § 16.3 When these procedures become 16.7 The first steps in the appeal process: available. The notice of appeal and the Board’s response. Before the Board will take an appeal, 16.8 The next step in the appeal process: three circumstances must be present: Preparation of an appeal file and written (a) The dispute must arise under a argument. program which uses the Board for dis- 16.9 How the Board will promote develop- pute resolution, and must meet any ment of the record. special conditions established for that 16.10 Using a conference. program. An explanation is contained 16.11 Hearing. in Appendix A. 16.12 The expedited process. 16.13 Powers and responsibilities. (b) The appellant must have received 16.14 How Board review is limited. a final written decision, and must ap- 16.15 Failure to meet deadlines and other peal that decision within 30 days after requirements. receiving it. Details of how final deci- 16.16 Parties to the appeal. sions are developed and issued, and 16.17 Ex parte communications (commu- what must be in them, are contained in nications outside the record). 45 CFR 74.304. 16.18 Mediation. (c) The appellant must have ex- 16.19 How to calculate deadlines. 16.20 How to submit material to the Board. hausted any preliminary appeal process 16.21 Record and decisions. required by regulation. For example, 16.22 The effect of an appeal. see 42 CFR part 50 (subpart D) for Pub- 16.23 How long an appeal takes. lic Health Service programs. In such APPENDIX A TO PART 16—WHAT DISPUTES THE cases, the final written decision required BOARD REVIEWS for the Board’s review is the decision AUTHORITY: 5 U.S.C. 301 and secs. 1, 5, 6, resulting from the preliminary review and 7 of Reorganization Plan No. 1 of 1953, 18 or appeal process. Appendix A contains FR 2053, 67 Stat. 631 and authorities cited in further details. the Appendix. [46 FR 43817, Aug. 31, 1981, as amended at 62 SOURCE: 46 FR 43817, Aug. 31, 1981, unless FR 38218, July 17, 1997] otherwise noted. § 16.4 Summary of procedures below. § 16.1 What this part does. The Board’s basic process is review of This part contains requirements and a written record (which both parties procedures applicable to certain dis- are given ample opportunity to de- putes arising under the HHS programs velop), consisting of relevant docu- described in Appendix A. This part is ments and statements submitted by designed to provide a fair, impartial, both parties (see § 16.8). In addition, the quick and flexible process for appeal Board may hold an informal conference from written final decisions. This part (see § 16.10). The informal conference supplements the provisions in Part 74 primarily involves questioning of the of this title. participants by a presiding Board member. Conferences may be conducted by § 16.2 Definitions. telephone conference call. The written (a) Board means the Departmental record review also may be supple- Grant Appeals Board of the Depart- mented by a hearing involving an opment of Health and Human Services. portunity for examining evidence and Reference below to an action of the witnesses, cross-examination, and oral Board means an action of the Chair, an- argument (see § 16.11). A hearing is

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more expensive and time-consuming dress and telephone number of the ap- than a determination on the written pellant’s representative. In its first record alone or with an informal con- submission to the Board and the appel- ference. Generally, therefore, the lant, the respondent (i.e., the federal Board will schedule a hearing only if party to the appeal) should specify the the Board determines that there are name, address and telephone number of complex issues or material facts in dis- the respondent’s representative. pute, or that the Board’s review would otherwise be significantly enhanced by § 16.7 The first steps in the appeal a hearing. Where the amount in dispute process: The notice of appeal and is $25,000 or less, there are special expe- the Board’s response. dited procedures (see § 16.12 of this (a) As explained in 45 CFR 74.304, a part). In all cases, the Board has the prospective appellant must submit a flexibility to modify procedures to en- notice of appeal to the Board within 30 sure fairness, to avoid delay, and to ac- days after receiving the final decision. commodate the peculiar needs of a The notice of appeal must include a given case. The Board makes maximum copy of the final decision, a statement feasible use of preliminary informal of the amount in dispute in the appeal, steps to refine issues and to encourage and a brief statement of why the deci- resolution by the parties. The Board sion is wrong. also has the capability to provide me- (b) Within ten days after receiving diation services (see § 16.18). the notice of appeal, the Board will send an acknowledgment, enclose a § 16.5 How the Board operates. copy of these procedures, and advise (a) The Board’s professional staff the appellant of the next steps. The consists of a Chair (who is also a Board Board will also send a copy of the no- member) and full- and part-time Board tice of appeal, its attachments, and the members, all appointed by the Sec- Board’s acknowledgment to the re- retary; and a staff of employees and spondent. If the Board Chair has deter- consultants who are attorneys or per- mined that the appeal does not meet sons from other relevant disciplines, the conditions of § 16.3 or if further in- such as accounting. formation is needed to make this de- (b) The Chair will assign a Board termination, the Board will notify the member to have lead responsibility for parties at this point. each case (the ‘‘presiding Board member’’). The presiding Board member § 16.8 The next step in the appeal proc- will conduct the conference or hearing, ess: Preparation of an appeal file if one is held. Each decision of the and written argument. Board is issued by the presiding Board Except in expedited cases (generally member and two other Board members. those of $25,000 or less; see § 16.12 for de- (c) The Board staff assists the pre- tails), the appellant and the respondent siding Board member, and may request each participate in developing an ap- information from the parties; conduct peal file for the Board to review. Each telephone conference calls to request also submits written argument in sup- information, to clarify issues, or to port of its position. The responsibil- schedule events; and assist in devel- ities of each are as follows: oping decisions and other documents in (a) The appellant’s responsibility. With- a case. in 30 days after receiving the acknowl- (d) The Chair will assure that no edgment of the appeal, the appellant Board or staff member will participate shall submit the following to the Board in a case where his or her impartiality (with a copy to the respondent): could reasonably be questioned. (1) An appeal file containing the doc- (e) The Board’s powers and respon- uments supporting the claim, tabbed sibilities are set forth in § 16.13. and organized chronologically and accompanied by an indexed list identi- § 16.6 Who represents the parties. fying each document. The appellant The appellant’s notice of appeal, or should include only those documents the first subsequent submission to the which are important to the Board’s de- Board, should specify the name, ad- cision on the issues in the case.

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(2) A written statement of the appel- determines appropriate to develop a lant’s argument concerning why the re- prompt, sound decision. spondent’s final decision is wrong (appellant’s brief). § 16.10 Using a conference. (b) The respondent’s responsibility. (a) Once the Board has reviewed the Within 30 days after receiving the ap- appeal file, the Board may, on its own pellant’s submission under paragraph or in response to a party’s request, (a) of this section, the respondent shall schedule an informal conference. The submit the following to the Board conference will be conducted by the (with a copy to the appellant): presiding Board member. The purposes (1) A supplement to the appeal file of the conference are to give the par- containing any additional documents ties an opportunity to make an oral supporting the respondent’s position, presentation and the Board an oppor- organized and indexed as indicated tunity to clarify issues and question under paragraph (a) of this section. The both parties about matters which the respondent should avoid submitting du- Board may not yet fully understand plicates of documents submitted by the from the record. appellant. (b) If the Board has decided to hold a (2) A written statement (respondent’s conference, the Board will consult or brief) responding to the appellant’s correspond with the parties to schedule brief. the conference, identify issues, and discuss procedures. The Board will iden- (c) The appellant’s reply. Within 15 tify the persons who will be allowed to days after receiving the respondent’s participate, along with the parties’ rep- submission, the appellant may submit resentatives, in the conference. The a short reply. The appellant should parties can submit with their briefs avoid repeating arguments already under § 16.8 a list of persons who might made. participate with them, indicating how (d) Cooperative efforts. Whenever pos- each person is involved in the matter. sible, the parties should try to develop If the parties wish, they may also sug- a joint appeal file, agree to preparation gest questions or areas of inquiry of the file by one of them, agree to which the Board may wish to pursue facts to eliminate the need for some with each participant. documents, or agree that one party (c) Unless the parties and the Board will submit documents identified by otherwise agree, the following proce- the other. dures apply: (e) Voluminous documentation. Where (1) Conferences will be recorded at submission of all relevant documents Department expense. On request, a would lead to a voluminous appeal file party will be sent one copy of the tran- (for example where review of a disputed script. The presiding Board member audit finding of inadequate documenta- will insure an orderly transcript by tion might involve thousands of re- controlling the sequence and identi- ceipts), the Board will consult with the fication of speakers. parties about how to reduce the size of (2) Only in exceptional circumstances the file. will documents be received at a conference. Inquiry will focus on material § 16.9 How the Board will promote de- in the appeal file. If a party finds that velopment of the record. further documents should be in the The Board may, at the time it ac- record for the conference, the party knowledges an appeal or at any appro- should supplement the appeal file, sub- priate later point, request additional mitting a supplementary index and documents or information; request copies of the documents to the Board briefing on issues in the case; issue or- and the other party not less than ten ders to show cause why a proposed days prior to the conference. finding or decision of the Board should (3) Each party’s representative may not become final; hold preliminary make an oral presentation. Generally, conferences (generally by telephone) to the only oral communications of other establish schedules and refine issues; participants will consist of statements and take such other steps as the Board requested by the Board or responses to

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the Board’s questions. The Board will (d) Conduct of the hearing. (1) The pre- allow reply comment, and may allow siding Board member will conduct the short closing statements. On request, hearing. Hearings will be as informal the Board may allow the participants as reasonably possible, keeping in mind to question each other. the need to establish an orderly record. (4) There will be no post-conference The presiding Board member generally submissions, unless the Board deter- will admit evidence unless it is determines they would be helpful to resolve mined to be clearly irrelevant, imma- the case. The Board may require or terial or unduly repetitious, so the par- allow the parties to submit proposed ties should avoid frequent objections to findings and conclusions. questions and documents. Both sides may make opening and closing state- § 16.11 Hearing. ments, may present witnesses as agreed upon in the prehearing con- (a) Electing a hearing. If the appellant ference, and may cross-examine. Since believes a hearing is appropriate, the the parties have ample opportunity to appellant should specifically request develop a complete appeal file, a party one at the earliest possible time (in the may introduce an exhibit at the hear- notice of appeal or with the appeal ing only after explaining to the satis- file). The Board will approve a request faction of the presiding Board member (and may schedule a hearing on its own why the exhibit was not submitted ear- or in response to a later request) if it lier (for example, because the informa- finds there are complex issues or mate- tion was not available). rial facts in dispute the resolution of (2) The Board may request the par- which would be significantly aided by a ties to submit written statements of hearing, or if the Board determines witnesses to the Board and each other that its decisionmaking otherwise prior to the hearing so that the hearing would be enhanced by oral presen- will primarily be concerned with cross- tations and arguments in an adversary, examination and rebuttal. evidentiary hearing. The Board will (3) False statements of a witness may also provide a hearing if otherwise re- be the basis for criminal prosecution quired by law or regulation. under sections 287 and 1001 of Title 18 (b) Preliminary conference before the of the United States Code. hearing. The Board generally will hold (4) The hearing will be recorded at a prehearing conference (which may be Department expense. conducted by telephone conference (e) Procedures after the hearing. The call) to consider any of the following: Board will send one copy of the tran- the possibility of settlement; simpli- script to each party as soon as it is re- fying and clarifying issues; stipulations ceived by the Board. At the discretion and admissions; limitations on evi- of the Board, the parties may be re- dence and witnesses that will be pre- quired or allowed to submit post-hear- sented at the hearing; scheduling the ing briefs or proposed findings and con- hearing; and any other matter that clusions (the parties will be informed may aid in resolving the appeal. Nor- at the hearing). A party should note mally, this conference will be con- any major prejudicial transcript errors ducted informally and off the record; in an addendum to its post-hearing however, the Board, after consulting brief (or if no brief will be submitted, with the parties, may reduce results of in a letter submitted within a time the conference to writing in a docu- limit set by the Board). ment which will be made part of the record, or may transcribe proceedings § 16.12 The expedited process. and make the transcript part of the (a) Applicability. Where the amount in record. dispute is $25,000 or less, the Board will (c) Where hearings are held. Hearings use these expedited procedures, unless generally are held in Washington, DC. the Board Chair determines otherwise In exceptional circumstances, the under paragraph (b) of this section. If Board may hold the hearing at an HHS the Board and the parties agree, the Regional Office or other convenient fa- Board may use these procedures in cility near the appellant. cases of more than $25,000.

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(b) Exceptions. If there are unique or why the decision was clearly erro- unusually complex issues involved, or neous. Unless allowed by the Board other exceptional circumstances, the after consultation with the respondent, Board may use additional procedures. the appellant shall not submit further (c) Regular expedited procedures. (1) documents. Within 30 days after receiving the (ii) The respondent shall submit to Board’s acknowledgment of the appeal the Board the record in the case. If the (see § 16.7), each party shall submit to respondent has reason to believe that the Board and the other party any rel- all materials in the record already are evant background documents (orga- in the possession of the appellant, the nized as required under § 16.8), with a respondent need only send the appel- cover letter (generally not to exceed lant a list of the materials submitted ten pages) containing any arguments to the Board. the party wishes to make. (iii) The respondent may, if it wishes, (2) Promptly after receiving the par- submit a statement why the decision ties’ submissions, the presiding Board was not clearly erroneous. member will arrange a telephone con- (3) The Board, in its discretion, may ference call to receive the parties’ oral allow or require the parties to present comments in response to each other’s further arguments or information. submissions. After notice to the parties, the Board will record the call. The § 16.13 Powers and responsibilities. Board member will advise the parties In addition to powers specified else- whether any opportunities for further where in these procedures, Board mem- briefing, submissions or oral presen- bers have the power to issue orders (in- tations will be established. Cooperative cluding ‘‘show cause’’ orders); to exam- efforts will be encouraged (see § 16.8(d)). ine witnesses; to take all steps nec- (3) The Board may require the parties essary for the conduct of an orderly to submit proposed findings and con- hearing; to rule on requests and mo- clusions. tions, including motions to dismiss; to (d) Special expedited procedures where grant extensions of time for good rea- there has already been review. Some sons; to dismiss for failure to meet HHS components (for example, the deadlines and other requirements; to Public Health Service) use a board or close or suspend cases which are not other relatively independent reviewing ready for review; to order or assist the authority to conduct a formal prelimi- parties to submit relevant information; nary review process which results in a to remand a case for further action by written decision based on a record in- the respondent; to waive or modify cluding documents or statements pre- these procedures in a specific case with sented after reasonable notice and op- notice to the parties; to reconsider a portunity to present such material. In Board decision where a party promptly such cases, the following rules apply to alleges a clear error of fact or law; and appeals of $25,000 or less instead of to take any other action necessary to those under paragraph (c) of this sec- resolve disputes in accordance with the tion: objectives of these procedures. (1) Generally, the Board’s review will be restricted to whether the decision of § 16.14 How Board review is limited. the preliminary review authority was The Board shall be bound by all ap- clearly erroneous. But if the Board de- plicable laws and regulations. termines that the record is inadequate, or that the procedures under which the § 16.15 Failure to meet deadlines and record was developed in a given in- other requirements. stance were unfair, the Board will not (a) Since one of the objectives of ad- be restricted this way. ministrative dispute resolution is to (2) Within 30 days after receiving the provide a decision as fast as possible Board’s acknowledgment of appeal (see consistent with fairness, the Board will § 16.7), the parties shall submit the fol- not allow parties to delay the process lowing: unduly. The Board may grant exten- (i) The appellant shall submit to the sions of time, but only if the party Board and the respondent a statement gives a good reason for the delay.

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(b) If the appellant fails to meet any Board members and staff; communica- filing or procedural deadlines, appeal tions concerning the Board’s adminis- file or brief submission requirements, trative functions or procedures; re- or other requirements established by quests from the Board to a party for a the Board, the Board may dismiss the document (although the material sub- appeal, may issue an order requiring mitted in response also must be given the party to show cause why the appeal to the other party); and material which should not be dismissed, or may take the Board includes in the record after other action the Board considers appro- notice and an opportunity to comment. priate. (c) If the respondent fails to meet § 16.18 Mediation. any such requirements, the Board may (a) In cases pending before the Board. issue a decision based on the record If the Board decides that mediation submitted to that point or take such would be useful to resolve a dispute, other measures as the Board considers the Board, in consultation with the appropriate. parties, may suggest use of mediation § 16.16 Parties to the appeal. techniques and will provide or assist in selecting a mediator. The mediator (a) The only parties to the appeal are may take any steps agreed upon by the the appellant and the respondent. If parties to resolve the dispute or clarify the Board determines that a third per- issues. The results of mediation are not son is a real party in interest (for ex- binding on the parties unless the par- ample, where the major impact of an ties so agree in writing. The Board will audit disallowance would be on the internally insulate the mediator from grantee’s contractor, not on the grant- any Board or staff members assigned to ee), the Board may allow the third per- handle the appeal. son to present the case on appeal for (b) In other cases. In any other grants the appellant or to appear with a party dispute, the Board may, within the in the case, after consultation with the limitations of its resources, offer per- parties and if the appellant does not sons trained in mediation skills to aid object. in resolving the dispute. Mediation (b) The Board may also allow other services will only be offered at the re- participation, in the manner and by quest, or with the concurrence, of a re- the deadlines established by the Board, sponsible federal program official in where the Board decides that the inter- the program under which the dispute venor has a clearly identifiable and arises. The Board will insulate the me- substantial interest in the outcome of diator if any appeal subsequently the dispute, that participation would arises from the dispute. sharpen issues or otherwise be helpful in resolution of the dispute, and that § 16.19 How to calculate deadlines. participation would not result in substantial delay. In counting days, include Saturdays, Sundays, and holidays; but if a due § 16.17 Ex parte communications (com- date would fall on a Saturday, Sunday munications outside the record). or Federal holiday, then the due date is (a) A party shall not communicate the next Federal working day. with a Board or staff member about matters involved in an appeal without § 16.20 How to submit material to the Board. notice to the other party. If such communication occurs, the Board will dis- (a) All submissions should be ad- close it to the other party and make it dressed as follows: Departmental Grant part of the record after the other party Appeals Board, Room 2004, Switzer has an opportunity to comment. Board Building, 330 C Street SW., Wash- members and staff shall not consider ington, DC 20201. any information outside the record (see (b) All submissions after the notice of § 16.21 for what the record consists of) appeal should identify the Board’s about matters involved in an appeal. docket number (the Board’s acknowl- (b) The above does not apply to the edgement under § 16.7 will specify the following: Communications among docket number).

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(c) Unless the Board otherwise speci- in the calculation of a subsequent fies, parties shall submit to the Board grant; or an original and two copies of all mate- (4) Take other action to recover, rials. Each submission other than the withhold, or offset funds if specifically notice of appeal, must include a state- authorized by statute or regulation. ment that one copy of the materials has been sent to the other party, iden- § 16.23 How long an appeal takes. tifying when and to whom the copy was The Board has established general sent. goals for its consideration of cases, as (d) Unless hand delivered, all mate- follows (measured from the point when rials should be sent to the Board and the Board receives the first submission the other party by certified or reg- after the notice of appeal): istered mail, return receipt requested. —For regular review based on a written (e) The Board considers material to record under § 16.8, 6 months. When a con- be submitted on the date when it is ference under § 16.10 is held, the goal re- postmarked or hand delivered to the mains at 6 months, unless a requirement Board. for post-conference briefing in a particular case renders the goal unrealistic. § 16.21 Record and decisions. —For cases involving a hearing under § 16.11, 9 months. (a) Each decision is issued by three —For the expedited process under § 16.12, 3 Board members (see § 16.5(b)), who base months. their decision on a record consisting of These are goals, not rigid require- the appeal file; other submissions of ments. The paramount concern of the the parties; transcripts or other Board is to take the time needed to re- records of any meetings, conferences or view a record fairly and adequately in hearings conducted by the Board; writ- order to produce a sound decision. Fur- ten statements resulting from con- thermore, many factors are beyond the ferences; evidence submitted at hear- Board’s direct control, such as unfore- ings; and orders and other documents seen delays due to the parties’ negotia- issued by the Board. In addition, the tions or requests for extensions, how Board may include other materials many cases are filed, and Board re- (such as evidence submitted in another sources. On the other hand, the parties appeal) after the parties are given no- may agree to steps which may shorten tice and an opportunity to comment. review by the Board; for example, by (b) The Board will promptly notify waiving the right to submit a brief, by the parties in writing of any disposi- agreeing to shorten submission sched- tion of a case and the basis for the dis- ules, or by electing the expedited proc- position. ess.

§ 16.22 The effect of an appeal. APPENDIX A TO PART 16—WHAT (a) General. Until the Board disposes DISPUTES THE BOARD REVIEWS of an appeal, the respondent shall take A. What this Appendix covers. no action to implement the final deci- This appendix describes programs which sion appealed. use the Board for dispute resolution, the (b) Exceptions. The respondent may— types of disputes covered, and any conditions for Board review of final written decisions (1) Suspend funding (see § 74.114 of resulting from those disputes. Disputes this title); under programs not specified in this appen- (2) Defer or disallow other claims dix may be covered in a program regulation questioned for reasons also disputed in or in a memorandum of understanding be- the pending appeal; tween the Board and the head of the appro- (3) In programs listed in Appendix A, priate HHS operating component or other B.(a)(1), implement a decision to dis- agency responsible for administering the program. If in doubt, call the Board. Even allow Federal financial participation though a dispute may be covered here, the claimed in expenditures reported on a Board still may not be able to review it if statement of expenditures, by recov- the limits in paragraph F apply. ering, withholding or offsetting pay- B. Mandatory grant programs. ments, if the decision is issued before (a) The Board reviews the following types the reported expenditures are included of final written decisions in disputes arising

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in HHS programs authorizing the award of Public Health Service), the ‘‘final written mandatory grants: decision’’ for purposes of Board review is the (1) Disallowances under Titles I, IV, VI, X, decision issued as a result of that process. XIV, XVI(AABD), XIX, and XX of the Social D. Cost allocation and rate disputes. Security Act, including penalty disallow- The Board reviews final written decisions ances such as those under sections 403(g) and in disputes which may affect a number of 1903(g) of the Act and fiscal disallowances HHS programs because they involve cost al- based on quality control samples. location plans or rate determinations. These (2) Disallowances in mandatory grant pro- include decisions related to cost allocation grams administered by the Public Health plans negotiated with State or local govern- Service, including Title V of the Social Secu- ments and negotiated rates such as indirect rity Act. cost rates, fringe benefit rates, computer (3) Disallowances in the programs under rates, research patient care rates, and other sections 113 and 132 of the Developmental special rates. Disabilities Act. (4) Disallowances under Title III of the E. SSI agreement disputes. Older American Act. The Board reviews disputes in the Supple- (5) Decisions relating to repayment and mental Security Income (SSI) program aris- withholding under block grant programs as ing under agreements for Federal adminis- provided in 45 CFR 96.52. tration of State supplementary payments (6) Decisions relating to repayment and under section 1616 of the Social Security Act withholding under State Legalization Im- or mandatory minimum supplements under pact Assistance Grants as provided in 45 CFR section 212 of Pub. L. 93–66. In these cases, 402.24 and 402.25. the Board provides an opportunity to be (b) In some of these disputes, there is an heard and offer evidence at the Secretarial option for review by the head of the granting level of review as set out in the applicable agency prior to appeal to the Board. Where agreements. Thus, the ‘‘final written deci- an appellant has requested review by the sion’’ for purposes of Board review is that de- agency head first, the ‘‘final written deci- termination appealable to the Secretary sion’’ required by § 16.3 for purposes of Board under the agreement. review will generally be the agency head’s F. Where Board review is not available. decision affirming the disallowance. If the The Board will not review a decision if a agency head declines to review the disallow- hearing under 5 U.S.C. 554 is required by ance or if the appellant withdraws its re- statute, if the basis of the decision is a viola- quest for review by the agency head, the tion of applicable civil rights or non- original disallowance decision is the ‘‘final discrimination laws or regulations (for ex- written decision.’’ In the latter cases, the 30- ample, Title VI of the Civil Rights Act), or if day period for submitting a notice of appeal some other hearing process is established begins with the date of receipt of the notice pursuant to statute. declining review or with the date of the G. How the Board determines whether it will re- withdrawal letter. view a case. C. Direct, discretionary project programs. Under § 16.7, the Board Chair determines (a) The Board reviews the following types whether an appeal meets the requirements of of final written decisions in disputes arising this Appendix. If the Chair finds that there is in any HHS program authorizing the award some question about this, the Board will re- of direct, discretionary project grants or co- quest the written opinion of the HHS compo- operative agreements: nent which issued the decision. Unless the (1) A disallowance or other determination Chair determines that the opinion is clearly denying payment of an amount claimed erroneous, the Board will be bound by the under an award, or requiring return or set- opinion. If the HHS component does not re- off of funds already received. This does not spond within a time set by the Chair, or can- apply to determinations of award amount or not determine whether the Board clearly disposition of unobligated balances, or selec- does or does not have jurisdiction, the Board tion in the award document of an option for will take the appeal. disposition of program-related income. (2) A termination for failure to comply [46 FR 43817, Aug. 31, 1981, as amended at 47 with the terms of an award. FR 29492, July 6, 1982; 53 FR 7864, Mar. 10, (3) A denial of a noncompeting continu- 1988; 62 FR 38218, July 17, 1997] ation award under the project period system of funding where the denial is for failure to PART 17—RELEASE OF ADVERSE comply with the terms of a previous award. (4) A voiding (a decision that an award is INFORMATION TO NEWS MEDIA invalid because it was not authorized by statute or regulation or because it was Sec. fraudulently obtained). 17.1 Definition. (b) Where an HHS component uses a pre- 17.2 Basic policy. liminary appeal process (for example, the 17.3 Precautions to be taken.

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17.4 Regulatory investigations and trial- tion to news media as one of the means type proceedings. of notifying the affected public speed- 17.5 Context to be reflected. ily and accurately. However, where the 17.6 Advance notice. 17.7 Retractions or corrections. Department or principal operating component determines that public AUTHORITY: 5 U.S.C. 301. harm can be avoided by immediate dis- SOURCE: 41 FR 3, Jan. 2, 1976, unless other- continuance of an offending practice, a wise noted. respondent shall be allowed an opportunity, where feasible, to cease the § 17.1 Definition. practice (pending a legal test) in lieu of Adverse information released by an release of adverse information by the agency means any statement or release agency. by the Department or any principal op- (b) Where it is required in order to erating component made to the news bring notice of pending agency adju- media inviting public attention to an dication to persons likely to desire to action or a finding by the Department participate therein or likely to be af- or principal operating component of fected by that or a related adjudica- the Department which may adversely tion, the Department or principal oper- affect persons or organizations identi- ating component shall rely on the news fied therein. This part does not apply media to the extent necessary to pro- to nor is it affected by any disclosure vide such notice even though it may be of records to the public in response to adverse to a respondent. requests made under the Freedom of Information Act (Pub. L. 90–23). The § 17.5 Context to be reflected. criteria for such disclosures are set The authority for and the character forth in the Department’s Public Infor- of the information shall be made clear, mation Regulation (45 CFR Part 5). where appropriate, the release shall explain the nature of any studies per- § 17.2 Basic policy. formed, the sources of relevant data, All adverse information release to the areas in which administrative find- news media shall be factual in content ings of fact were made, and whether and accurate in description. Dispar- the information is based on allegations aging terminology not essential to the subject to subsequent adjudication. content and purpose of the publicity shall be avoided. § 17.6 Advance notice. Any respondent or prospective re- § 17.3 Precautions to be taken. spondent in an agency proceeding The issuing organization shall take shall, if practicable and consistent reasonable precautions to assure that with the nature of the proceeding, be information released is accurate and given advance notice of information to that its release fulfills an authorized be released about the proceeding and a purpose. reasonable opportunity to prepare in advance a response to the information § 17.4 Regulatory investigations and released. trial-type proceedings. Adverse information relating to regu- § 17.7 Retractions or corrections. latory investigations of specifically Where the Assistant Secretary for identified persons or organizations or Public Affairs finds that information to pending agency trial-type pro- released by the Department was mis- ceedings shall be released only in lim- leading or a misstatement of fact and ited circumstances in accordance with any person named therein requests a the criteria outlined below: retraction or correction, the Depart- (a) Where the Department or a prin- ment shall issue a retraction or correc- cipal operating component determines tion in the same manner to all of the that there is a significant risk that the media outlets that received the origi- public health or safety may be im- nal information (or as many of them as paired or substantial economic harm is feasible). Where information shown may occur unless the public is notified to be misleading or misstatement of immediately, it may release informa- fact has been released by a principal

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operating component of the Depart- 30.30 Termination of collection activity. ment and any person named therein re- 30.31 Exception to termination. quests a retraction or correction, the 30.32 Discharge of indebtedness; reporting agency head shall issue a retraction or requirements. correction in the same manner to all of Subpart E—Referrals to the Department of the media outlets that received the Justice original information (or as many of them as is feasible). 30.33 Prompt referral. 30.34 Claims Collection Litigation Report. PART 30—CLAIMS COLLECTION 30.35 Preservation of evidence. 30.36 Minimum amount of referrals.

Subpart A—General Provisions AUTHORITY: 31 U.S.C. 3711(d). Sec. SOURCE: 72 FR 10409, Mar. 8, 2007, unless 30.1 Purpose, authority, and scope. otherwise noted. 30.2 Definitions. 30.3 Antitrust, fraud, exception in the account of an accountable official, and Subpart A—General Provisions interagency claims excluded. 30.4 Compromise, waiver, or disposition § 30.1 Purpose, authority, and scope. under other statutes not precluded. (a) Purpose. This part prescribes the 30.5 Other administrative remedies. standards and procedures for the De- 30.6 Form of payment. partment’s use in the administrative 30.7 Subdivision of claims. 30.8 Required administrative proceedings. collection, offset, compromise, and sus- 30.9 No private rights created. pension or termination of collection activity for claims for funds or prop- Subpart B—Standards for the erty, as defined by 31 U.S.C. 3701(b) and Administrative Collection of Debts this part. Covered activities include the collection of debts in any amount; 30.10 Collection activities. 30.11 Demand for payment. the compromise and suspension or ter- 30.12 Administrative offset. mination of collection activity of debts 30.13 Debt reporting and the use of credit that do not exceed $100,000, or such reporting agencies. higher amount as the Attorney General 30.14 Contracting with private collection may prescribe, exclusive of interest, contractors and with entities that locate penalties, and administrative costs; and recover unclaimed assets. and the referral of debts to the Depart- 30.15 Suspension or revocation of eligibility ment of the Treasury (Treasury), the for loans and loan guarantees, licenses, permits or privileges. Treasury-designated debt collection 30.16 Liquidation of collateral. centers, or the Department of Justice 30.17 Collection in installments. (Justice) for collection by further ad- 30.18 Interest, penalties, and administrative ministrative action or litigation, as ap- costs. plicable. 30.19 Review of cost effectiveness of collec- (b) Authority. The Secretary is tion. issuing the regulations in this part 30.20 Taxpayer information. under the authority contained in 31 Subpart C—Debt Compromise U.S.C. 3711(d). The standards and procedures prescribed in this part are au- 30.21 Scope and application. thorized under the Federal Claims Col- 30.22 Basis for compromise. lection Act, as amended, Public Law 30.23 Enforcement policy. No. 89–508, 80 Stat. 308 (July 19, 1966), 30.24 Joint and several liability. 30.25 Further review of compromise offers. the Debt Collection Act of 1982, Public 30.26 Consideration of tax consequences to Law No. 97–365, 96 Stat. 1749 (October the Government. 25, 1982), the Debt Collection Improve- 30.27 Mutual release of the debtor and the ment Act of 1996, Public Law No. 104– Government. 134, 110 Stat. 1321, 1358 (April 26, 1996) and the Federal Claims Collection Subpart D—Suspending and Terminating Standards at 31 CFR parts 900 through Collection Activities 904. 30.28 Scope and application. (c) Scope. (1) The standards and pro- 30.29 Suspension of collection activity. cedures prescribed in this part apply to

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all officers and employees of the De- Debt or claim means an amount of partment, including officers and em- funds or other property determined by ployees of the various Operating Divi- an appropriate official of the Federal sions and Regional Offices of the De- Government to be owed to the United partment, charged with the collection States from any person, organization, and disposition of debts owed to the or entity, except another Federal agen- United States. cy. For the purpose of administrative (2) The standards and procedures set offset, the term includes an amount forth in this part will be applied except owed by an individual to a State, the where specifically excluded herein or District of Columbia, American Samoa, where a statute, regulation or contract Guam, the United States Virgin Is- prescribes different standards or proce- lands, the Commonwealth of the North- dures. ern Mariana Islands, or the Common- (3) Regulations governing the use of wealth of Puerto Rico. Debts include, certain debt collection procedures cre- but are not limited to, amounts owed ated under the Debt Collection Im- pursuant to: Loans insured or guaran- provement Act of 1996, including tax refund offset, administrative wage gar- teed by the United States; fees; leases; nishment, and Federal salary offset, rents; royalties; services; sales of real are contained in parts 31 through 33 of or personal property; Federal salary this chapter. overpayments; overpayments to program beneficiaries, contractors, pro- § 30.2. Definitions. viders, suppliers, and grantees; audit In this part— disallowance determinations; civil pen- Administrative offset means with- alties and assessments; theft or loss; holding funds payable by the United interest; fines and forfeitures (except States to, or held by the United States those arising under the Uniform Code for, a person to satisfy a debt. of Military Justice); and all other simi- Agency means a department, agency, lar sources. court, court administrative office, or Debt collection center means the De- instrumentality in the executive, judi- partment of the Treasury, or other cial, or legislative branch of the Gov- Federal agency, subagency, unit, or di- ernment, including Government cor- vision designated by the Secretary of porations. the Treasury to collect debts owed to Appropriate official means the Depart- the United States. ment official who, by statute or delega- Debtor means an individual, organization of authority, determines the exist- tion, association, partnership, corpora- ence and amount of debt. tion, or State or local government or Business day means Monday through subdivision indebted to the Govern- Friday. For purposes of computation, ment, or the person or entity with the last day of the period will be in- legal responsibility for assuming the cluded unless it is a Federal holiday, in debtor’s obligation. which case the next business day fol- Debts arising under the Social Security lowing the holiday will be considered Act are overpayments to, or contribu- the last day of the period. Claim see the definition for the term tions, reimbursements, penalties or as- ‘‘debt.’’ The terms ‘‘claim’’ and ‘‘debt’’ sessments owed by, any entity, indi- are synonymous and interchangeable. vidual, or State under the Social Secu- Creditor agency means an agency to rity Act. Such amounts include which a debt is owed, including a debt amounts owed to the Medicare program collection center acting on behalf of a under section 1862(b) of the Social Se- creditor agency. curity Act. Salary overpayments and Day means calendar day. For pur- other debts that result from the admin- poses of computation, the last day of istration of the provisions of the Social the period will be included unless it is Security Act are not deemed to ‘‘arise a Saturday, Sunday, or a Federal holi- under’’ the Social Security Act for pur- day, in which case the next business poses of this part. day will be considered the last day of Delinquent debt means a debt which the period. the debtor does not pay or otherwise

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resolve by the date specified in the ini- that may be provided by the Sec- tial demand for payment, or in an ap- retary). plicable written repayment agreement IRS means the Internal Revenue or other instrument, including a post- Service, a bureau of the Department of delinquency repayment agreement. the Treasury. Department means the Department of Late charges means interest, pen- Health and Human Services, and its alties, and administrative costs re- Operating Divisions and Regional Of- quired or permitted to be assessed on fices. delinquent debts. Disbursing official means an officer or Legally enforceable means that there employee who has authority to dis- has been a final agency determination burse public money pursuant to 31 that the debt, in the amount stated, is U.S.C. 3321 or another law. due and there are no legal bars to col- Disposable pay means that part of the lection action. debtor’s current basic, special, incen- Local government means a political tive, retired, and retainer pay, or other subdivision, instrumentality, or au- authorized pay, remaining after deduc- thority of any State, the District of tion of amounts required by law to be Columbia, American Samoa, Guam, the withheld. For purposes of calculating United States Virgin Islands, the Com- disposable pay, legally required deduc- monwealth of the Northern Mariana Is- tions that must be applied first in- lands, or the Commonwealth of Puerto clude: Tax levies pursuant to the Inter- Rico, or an Indian tribe, band or na- nal Revenue Code (title 26, United tion. States Code); properly withheld taxes, Operating Division means each sepa- FICA, Medicare; health and life insur- rate component, agency, subagency, ance premiums; and retirement con- and unit within the Department of tributions. Amounts deducted under Health and Human Services, including, garnishment orders, including child but not limited to, the Administration support garnishment orders, are not le- for Children and Families, the Admin- gally required deductions for calcu- istration on Aging, the Centers for Dis- lating disposable pay. ease Control and Prevention, the Cen- Evidence of service means information ters for Medicare & Medicaid Services, retained by the Department indicating the Food and Drug Administration, the the nature of the document to which it National Institutes of Health, Sub- pertains, the date of mailing of the stance Abuse and Mental Health Serv- document, and the address and name of ices Administration, Indian Health the debtor to whom it is being sent. A Service, Health Resources and Services copy of the dated and signed written Administration, Agency for Toxic Sub- notice provided to the debtor pursuant stances and Disease Registry, Agency to this part may be considered evidence for Healthcare Research and Quality, of service for purposes of this part. Evi- and the Office of the Secretary. dence of service may be retained elec- OPM means the Office of Personnel tronically so long as the manner of re- Management. tention is sufficient for evidentiary Payment authorizing agency means an purposes. agency that transmits a voucher to a FMS means the Financial Manage- disbursing official for the disbursement ment Service, a bureau of the Depart- of public money. ment of the Treasury. Payments made under the Social Secu- Hearing means a review of the docu- rity Act means payments by this De- mentary evidence to confirm the exist- partment or other agencies to bene- ence or amount of a debt or the terms ficiaries, providers, intermediaries, of a repayment schedule. If the Sec- physicians, suppliers, carriers, States, retary determines that the issues in or other contractors or grantees under dispute cannot be resolved by such a a Social Security Act program, includ- review, such as when the validity of ing: Title I (Grants to States for Old- the claim turns on the issue of credi- Age Assistance for the Aged); Title II bility or veracity, the Secretary may (Federal Old-Age, Survivors, and Dis- provide an oral hearing. (See 45 CFR ability Insurance Benefits); Title III 33.6(c)(2) for oral hearing procedures (Grants to States for Unemployment

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Compensation Administration); Title § 30.3 Antitrust, fraud, exception in IV (Grants to States for Aid and Serv- the account of an accountable offi- ices to Needy Families with Children cial, and interagency claims ex- and for Child-Welfare Services); Title V cluded. (Maternal and Child Health Services (a) Claims involving antitrust violations Block Grant); Title IX (Miscellaneous or fraud. (1) The standards in this part Provisions Relating to Employment relating to compromise, suspension, Security); Title X (Grants to States for and termination of collection activity Aid to the Blind); Title XI, Part B do not apply to any debt based in whole (Peer Review of the Utilization and or in part on conduct in violation of Quality of Health Care Services); Title antitrust laws, or to any debt involving XII (Advances to State Unemployment fraud, presentation of a false claim, or Funds); Title XIV (Grants to States for misrepresentation on the part of the Aid to Permanently and Totally Dis- debtor or any party having an interest abled); Title XVI (Grants to States for in the claim, unless the Department of Aid to the Aged, Blind, and Disabled); Justice returns a referred claim to the Title XVII (Grants for Planning Com- Department for further handling in ac- prehensive Action to Combat Mental cordance with parts 31 CFR 900 through Retardation); Title XVIII (Health In- 904 and this part. surance for the Aged and Disabled); (2) Upon identification of a debt sus- Title XIX (Grants to States for Medical pected of involving an antitrust viola- Assistance Programs); Title XX (Block tion or fraud, a false claim, misrepre- Grants to States for Social Services); sentation, or other criminal activity or and Title XXI (State Children’s Health misconduct, the Secretary shall refer Insurance Program). Federal employee the debt to the Office of the Inspector salaries and other payments made by General for review. the Department or other agencies in the course of administering the provi- (3) Upon the determination of the Of- sions of the Social Security Act are not fice of the Inspector General that a deemed to be ‘‘payable under’’ the So- claim is based in whole or in part on cial Security Act for purposes of this conduct in violation of the antitrust part. laws, or involves fraud, the presen- Private collection contractors means tation of a false claim, or misrepresen- private debt collection under contract tation on the part of the debtor or any with the Department to collect a party having an interest in the claim, nontax debt or claim owed to the De- the Secretary shall promptly refer the partment. The term includes private case to the Department of Justice for debt collectors, collection agencies, action. and commercial attorneys. (b) Exception in the account of an ac- Salary offset means an administrative countable official. The standards in this offset to collect a debt owed by a Fed- part do not apply to compromise of an eral employee through deductions at exception in the account of an account- one or more officially established pay able official. intervals from the current pay account (c) Interagency claims. This part does of the employee without his or her con- not apply to claims between Federal sent. agencies. The Department will attempt Secretary means the Secretary of to resolve interagency claims by nego- Health and Human Services, or the tiation in accordance with EO 12146. Secretary’s designee. Taxpayer identification number means § 30.4 Compromise, waiver, or disposi- the identifying number described under tion under other statutes not pre- section 6109 of the Internal Revenue cluded. Code of 1986 (26 U.S.C. 6109). For an in- Nothing in this part precludes the dividual, the taxpayer identifying Department from disposing of any number is the individual’s Social Secu- claim under statutes and implementing rity Number. regulations other than subchapter II of Tax refund offset means withholding chapter 37 of Title 31 of the United or reducing a tax refund payment by an States Code and the Federal Claims amount necessary to satisfy a debt. Collection Standards, 31 CFR parts 900

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through 904. Any statute and imple- any other person, nor shall the failure menting regulation specifically appli- of the Department to comply with any cable to the claims collection activi- of the provisions of this part be avail- ties of the Department will take prece- able to any debtor as a defense. dence over this part.

§ 30.5 Other administrative remedies. Subpart B—Standards for the Administrative Collection of Debts The remedies and sanctions available under this part for collecting debts are § 30.10 Collection activities. not intended to be exclusive. Nothing contained in this part precludes using (a) General rule. The Secretary shall any other administrative remedy aggressively and timely collect all which may be available for collecting debts arising out of activities of, or re- debts owed to the Department, such as ferred or transferred for collection ac- converting the method of payment tions to, the Department. Normally, an under a grant from an advancement to initial written demand for payment a reimbursement method or revoking a shall be made no later than 30 days grantee’s letter-of-credit. after a determination by an appropriate official that a debt exists. § 30.6 Form of payment. (b) Cooperation with other agencies. Claims may be paid in the form of The Department shall cooperate with money or, when a contractual basis ex- other agencies in their debt collection ists, the Department may demand the activities. return of specific property or the per- (c) Transfer of delinquent debts. (1) formance of specific services. Mandatory transfer. The Department shall transfer legally enforceable debts § 30.7 Subdivision of claims. 180 days or more delinquent to Treas- Debts may not be subdivided to avoid ury in accordance with the require- the monetary ceiling established by 31 ments of 31 CFR 285.12. This require- U.S.C. 3711(a)(2). A debtor’s liability ment does not apply to any debt that: arising from a particular transaction (i) Is in litigation or foreclosure; or contract shall be considered a single (ii) Will be disposed of under an ap- debt in determining whether the debt, proved asset sale program within one exclusive of interest, penalties and ad- year of becoming eligible for sale; ministrative costs, does not exceed (iii) Has been referred to a private $100,000, or such higher amount as pre- collection contractor for a period of scribed by the Attorney General for time acceptable to the Secretary of the purposes of compromise, or suspension Treasury; or termination of collection activity. (iv) Is at a debt collection center for a period of time acceptable to the Sec- § 30.8 Required administrative pro- retary of the Treasury (see paragraph ceedings. (c)(2) of this section); This part does not supersede, or re- (v) Will be collected under internal quire omission or duplication of admin- offset procedures within three years istrative proceedings required by con- after the debt first became delinquent; tract, or other laws or regulations. See or for example, 42 CFR part 50 (Public (vi) Is exempt from this requirement Health Service), 45 CFR part 16 (De- based on a determination by the Sec- partmental Grant Appeals Board), and retary of the Treasury that exemption 48 CFR part 33 (Federal Acquisition for a certain class of debt is in the best Regulation) and part 333 (HHS Acquisi- interest of the United States. tion Regulation). (2) Permissive transfer. The Secretary may refer debts less than 180 days de- § 30.9 No private rights created. linquent, including debts referred to The standards in this part do not cre- the Department by another agency, to ate any right or benefit, substantive or the Treasury in accordance with the procedural, enforceable at law or in eq- requirements of 31 CFR 285.12, or with uity by a party against the United the consent of the Treasury, to a States, the Department, its officers, or Treasury-designated debt collection

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center to accomplish efficient, cost ef- ment or salary offset, to request a fective debt collection. Referrals to hearing (see 45 CFR parts 32 and 33); debt collection centers shall be at the and discretion of, and for a time period ac- (B) Enter into a reasonable repay- ceptable to, the Secretary of the Treas- ment agreement. ury. Referrals may be for servicing, (v) An explanation of how the debtor collection, compromise, suspension, or may exercise any of the rights determination of collection action. scribed in paragraph (b)(1)(iv) of this section; § 30.11 Demand for payment. (vi) The name, address, and phone (a) Written demand for payment. (1) number of a contact person or office Written demand, as described in para- within the Department to address any graph (b) of this section, shall be made debt-related matters; and promptly upon a debtor in terms that (vii) The Department’s remedies to inform the debtor of the consequences enforce payment of the debt, which of failing to cooperate with the Depart- may include: ment to resolve the debt. (A) Garnishing the debtor’s wages (2) Normally, the demand letter will through administrative wage garnish- be sent no later than 30 days after the ment; appropriate official determines that (B) Offsetting any Federal payments the debt exists. The demand letter due the debtor, including income tax shall be sent by first class mail to the refunds, salary, certain benefit pay- debtor’s last known address. ments such as Social Security, retire- (3) When necessary to protect the ment, and travel reimbursements and Government’s interest, for example to advances; prevent the running of a statute of lim- (C) Referring the debt to a private itations, the written demand for pay- collection contractor; ment may be preceded by other appro- (D) Reporting the debt to a credit bu- priate action under this part, including reau or other automated database; immediate referral to Justice for liti- (E) Referring the debt to Justice for gation. litigation; and (b) Demand letters. The specific con- (F) Referring the debt to Treasury tent, timing, and number of demand for any of the collection actions de- letters shall depend upon the type and scribed in paragraphs (b)(1)(vii)(A) amount of the debt and the debtor’s re- through (E) of this section, advising sponse, if any, to the Department’s let- the debtor that such referral is manda- ters or telephone calls. Generally, one tory if the debt is 180 or more days de- demand letter should suffice; however, linquent. more may be used. (2) The written demand for payment (1) The written demand for payment should also include the following infor- shall include the following informa- mation: tion: (i) The debtor’s right to inspect and (i) The nature and amount of the copy all records of the Department per- debt, including the basis for the indebt- taining to the debt, or if the debtor or edness; the debtor’s representative cannot per- (ii) The date by which payment sonally inspect the records, to request should be made to avoid late charges and receive copies of such records; and enforced collection, which gen- (ii) The Department’s willingness to erally shall be no later than 30 days discuss with the debtor alternative from the date the demand letter is methods of payment; mailed; (iii) A debtor delinquent on a debt is (iii) The applicable standards for im- ineligible for Government loans, loan posing any interest, penalties, or ad- guarantees, or loan insurance until the ministrative costs (see § 30.18); debtor resolves the debt; (iv) The rights, if any, the debtor (iv) When seeking to collect statu- may have to: tory penalties, forfeiture or other simi- (A) Seek review of the Department’s lar types of claim, the debtor’s li- determination of the debt, and for pur- censes, permits, or other privileges poses of administrative wage garnish- may be suspended or revoked if failure

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to pay the debt is inexcusable or will- entry of judgment will not be delayed ful. Such suspension or revocation because the debtor cannot be located. shall extend to programs or activities (f) Communications from debtors. The administered by the States on behalf of Secretary should respond promptly to the Federal Government, to the extent communications from debtor, within 30 that they affect the Federal Govern- days where feasible, and should advise ment’s ability to collect money or debtors who dispute debts to furnish funds owed by debtors; available evidence to support their (v) Knowingly making false state- contentions. ments or bringing frivolous actions (g) Exception. This section does not may subject the debtor to civil or require duplication of any notice al- criminal penalties under 31 U.S.C. 3729– ready contained in a written agree- 3731, 18 U.S.C. 286, 287, 1001, and 1002, or ment, letter or other document signed any other applicable statutory author- by, or provided to, the debtor. ity, and, if the debtor is a Federal employee, to disciplinary action under 5 § 30.12 Administrative offset. CFR part 752 or other applicable au- (a) Scope. (1) Administrative offset is thority; the withholding of funds payable by (vi) Any amounts collected and ulti- the United States to, or held by the mately found not to have been owed by United States for, a person to satisfy a the debtor will be refunded; debt. (vii) For salary offset, up to 15% of (2) This section does not apply to: the debtor’s current disposable pay (i) Debts arising under the Social Se- may be deducted every pay period until curity Act, except as provided in 42 the debt is paid in full; and U.S.C. 404; (viii) Dependent upon applicable stat- (ii) Payments made under the Social utory authority, the debtor may be en- Security Act, except as provided for in titled to consideration for a waiver. 31 U.S.C. 3716(c), and implementing reg- (c) The Secretary will retain evi- ulation at 31 CFR 285.4; dence of service indicating the date of (iii) Debts arising under, or payments mailing of the demand letter. The evi- made under, the Internal Revenue Code dence of service, which may include a or the tariff laws of the United States; certificate of service, may be retained (iv) Offsets against Federal salaries electronically so long as the manner of to the extent these standards are in- retention is sufficient for evidentiary consistent with regulations published purposes. to implement such offsets under 5 (d) Prior to, during, or after the com- U.S.C. 5514 and 31 U.S.C. 3716 (see 5 CFR pletion of the demand process, if the part 550, subpart K; 31 CFR 285.7; and Secretary determines to pursue, or is part 33 of this chapter); required to pursue offset, the proce- (v) Offsets under 31 U.S.C. 3728 dures applicable to offset should be fol- against a judgment obtained by a debt- lowed (see § 30.12). The availability of or against the United States; funds for debt satisfaction by offset (vi) Offsets or recoupments under and the Secretary’s determination to common law, State law, or Federal pursue collection by offset shall release statutes specifically prohibiting offsets the Secretary from the necessity of or recoupments for particular types of further compliance with paragraphs debts; or (a), (b), and (c) of this section. (vii) Offsets in the course of judicial (e) Finding debtors. The Secretary proceedings, including bankruptcy. will use every reasonable effort to lo- (3) Unless otherwise provided for by cate debtors, using such sources as contract or law, debts or payments telephone directories, city directories, that are not subject to administrative postmasters, drivers license records, offset under 31 U.S.C. 3716 may be col- automobile title and license records in lected by administrative offset under State and local government agencies, the common law or other applicable the IRS, credit reporting agencies and statutory authority. skip locator services. Referral of a con- (4) Unless otherwise provided by law, fess-judgment note to the appropriate collection by administrative offset United States Attorney’s Office for under the authority of 31 U.S.C. 3716

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may not be conducted more than 10 (c) Non-centralized administrative off- years after the Department’s right to set. (1) Unless otherwise prohibited by collect the debt first accrued, unless law, when centralized administrative facts material to the Department’s offset under paragraph (b) of this sec- right to collect the debt were not tion is not available or appropriate, the known and could not reasonably have Secretary may collect a delinquent been known by the Secretary. This lim- debt by conducting non-centralized ad- itation does not apply to debts reduced ministrative offset internally or in co- to judgment. operation with the agency certifying or (5) Where there is reason to believe authorizing payments to the debtor. that a bankruptcy petition has been (2) Except as provided in paragraph filed with respect to a debtor, the Of- (c)(3) of this section, administrative fice of the General Counsel should be offset may be initiated only after: contacted for legal advice concerning (i) The debtor has been sent written the impact of the Bankruptcy Code, notice of the type and amount of the particularly 11 U.S.C. 106, 362 and 553, debt, the intention of the Department on pending or contemplated collections to initiate administrative offset to col- by offset. lect the debt, and an explanation of the (b) Centralized administrative offset. (1) debtor’s rights under 31 U.S.C. 3716; and Except as provided in the exceptions (ii) The debtor has been given: listed in § 30.10(c)(1), legally enforceable (A) The opportunity to inspect and debts which are 180 days delinquent copy Department records related to the shall be referred to the Secretary of debt; the Treasury for collection by central- (B) The opportunity for a review ized administrative offset pursuant to within the Department of the deter- and in accordance with 31 CFR 901.3(b). mination of indebtedness; and Debts which are less than 180 days de- (C) The opportunity to make a written agreement to repay the debt. linquent, including debts referred to (3) The due process requirements the Department by another agency, under paragraph (c)(2) of this section also may be referred to the Secretary may be omitted when: of the Treasury for collection by cen- (i) Offset is in the nature of a tralized administrative offset. recoupment, i.e., the debt and the pay- (2) When referring delinquent debts ment to be offset arise out of the same to the Secretary of the Treasury for transaction or occurrence; centralized administrative offset, the (ii) The debt arises under a contract Department must certify, in a form ac- as set forth in Cecile Industries, Inc. v. ceptable to the Secretary of the Treas- Cheney, 995 F.2d 1052 (Fed. Cir. 1993) ury, that: (notice and other procedural protec- (i) The debt is past due and legally tions set forth in 31 U.S.C. 3716(a) do enforceable; and not supplant or restrict established (ii) The Department has complied procedures for contractual offsets cov- with all due process requirements ered by the Contracts Disputes Act); or under 31 U.S.C. 3716(a) and paragraph (iii) In the case of non-centralized ad- (c)(2) of this section. ministrative offset conducted under (3) Payments that are prohibited by paragraph (c)(1) of this section, the De- law from being offset are exempt from partment first learns of the existence centralized administrative offset. The of the amount owed by the debtor when Secretary of the Treasury shall exempt there is insufficient time before pay- payments under means-tested pro- ment would be made to the debtor/ grams from centralized administrative payee to allow for prior notice and an offset when requested in writing by the opportunity for review. When prior no- head of the payment certifying or au- tice and an opportunity for review are thorizing agency. Also, the Secretary omitted, the Secretary shall give the of the Treasury may exempt other debtor such notice and an opportunity classes of payments from centralized for review as soon as practical and offset upon the written request of the shall promptly refund any money ulti- head of the payment certifying or au- mately found not to have been owed to thorizing agency. the Government.

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(4) When the debtor previously has Federal Employee Retirement System been given any of the required notice (FERS) in accordance with 5 CFR part and review opportunities with respect 845, subpart D. Upon receipt of such a to a particular debt, such as under request, OPM will identify and ‘‘flag’’ a § 30.11 of this part, the Department debtor’s account in anticipation of the need not duplicate such notice and re- time when the debtor requests, or be- view opportunities before administra- comes eligible to receive, payments tive offset may be initiated. from the Fund or under FERS. This (5) Before requesting that a payment will satisfy any requirement that offset authorizing agency to conduct non-cen- be initiated prior to the expiration of tralized administrative offset, the De- the time limitations referenced in 31 partment shall: CFR 901.3(b)(4). (i) Provide the debtor with due proc- (e) Review requirements. (1) For pur- ess as set forth in paragraph (c)(2) of poses of this section, whenever the Sec- this section; and retary is required to afford a debtor a (ii) Provide the payment authorizing review within the Department, the agency written certification that the debtor shall be provided with a reason- debtor owes the past due, legally enable opportunity for an oral hearing forceable delinquent debt in the when the debtor requests reconsider- amount stated, and that the Depart- ation of the debt and the Secretary de- ment has fully complied with this sec- termines that the question of the in- tion. debtedness cannot be resolved by re- (6) When a creditor agency requests view of the documentary evidence, for that the Department, as the payment example, when the validity of the debt authorizing agency, conduct non-cen- turns on an issue of credibility or ve- tralized administrative offset, the Sec- racity. retary shall comply with the request, (2) Unless otherwise required by law, unless the offset would not be in the an oral hearing under this section is best interest of the United States with not required to be a formal evidentiary respect to the program of the Depart- hearing, although the Department will ment, or would otherwise be contrary carefully document all significant mat- to law. Appropriate use should be made ters discussed at the hearing. of the cooperative efforts of other (3) An oral hearing is not required agencies in effecting collection by ad- with respect to debt collection systems ministrative offset, including salary where determinations of indebtedness offset. rarely involve issues of credibility or (7) When collecting multiple debts by veracity, and the Secretary has deter- non-centralized administrative offset, mined that a review of the written the Department will apply the recov- record is adequate to correct prior mis- ered amounts to those debts in accord- takes. ance with the best interests of the (4) In those cases when an oral hear- United States, as determined by the ing is not required by this section, the facts and circumstances of the par- Secretary shall accord the debtor a ticular case, particularly the applica- ‘‘paper hearing,’’ that is, a determinable statute of limitations. tion of the request for reconsideration (d) Requests to OPM to offset a debtor’s based upon a review of the written anticipated or future benefit payments record. under the Civil Service Retirement and Disability Fund and the Federal Em- § 30.13 Debt reporting and use of cred- ployee Retirement System. Upon pro- it reporting agencies. viding OPM written certification that (a) Reporting delinquent debts. (1) The a debtor has been afforded the proce- Secretary will report delinquent debts dures provided in paragraph (c)(2) of over $100 to credit bureaus or other this section, the Department may re- automated databases. Debts arising quest OPM to offset a debtor’s antici- under the Social Security Act are ex- pated or future benefit payments under cluded from paragraph (a). the Civil Service Retirement and Dis- (2) Debts owed by individuals will be ability Fund (Fund) in accordance with reported to consumer reporting agen- 5 CFR part 831, subpart R, or under the cies pursuant to 5 U.S.C. 552a(b)(12).

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(3) Once a debt has been referred to contractors to recover delinquent Treasury for collection, any subse- debts, provided that: quent reporting to or updating of a (1) The Secretary retains the author- credit bureau or other automated data- ity to resolve disputes, compromise base may be handled by the Treasury. debts, suspend or terminate collection (4) Where there is reason to believe action, and refer debts to Justice for that a bankruptcy petition has been litigation; filed with respect to a debtor, the Of- (2) The private collection contractor fice of the General Counsel should be is not allowed to offer the debtor, as an contacted for legal advice concerning incentive for payment, the opportunity the impact of the Bankruptcy Code, to pay the debt less the private collec- particularly with respect to the appli- tion contractor’s fee unless the Sec- cability of the automatic stay, 11 retary has granted such authority prior U.S.C. 362, and the procedures for ob- to the offer; taining relief from such stay prior to (3) The contract provides that the proceeding under paragraph (a) of this private collection contractor is subject section. to the Privacy Act of 1974 to the extent (5) If the debtor has not received specified in 5 U.S.C. 552a(m), and to ap- prior written notice under § 30.11(b), be- plicable Federal and State laws and fore reporting a delinquent debt under regulations pertaining to debt collec- this section, the Secretary shall pro- tion practices, including but not lim- vide the debtor at least 60 days written ited to the Fair Debt Collection Prac- notice of the amount and nature of the tices Act, 15 U.S.C. 1692; and debt; that the debt is delinquent and (4) The private collection contractor the Department intends to report the is required to account for all amounts debt to a credit bureau (including the collected. specific information that will be dis- (b) The Secretary shall use govern- closed); that the debtor has the right ment-wide debt collection contracts to to dispute the accuracy and validity of obtain debt collection services pro- the information being disclosed; and, if vided by private collection contractors. a previous opportunity was not pro- However, the Secretary may refer vided, that the debtor may request re- debts to private collection contractors view within the Department of the debt pursuant to a contract between the De- or rescheduling of payment. The Sec- partment and the private collection retary may disclose only the individ- contractor only if such debts are not ual’s name, address, and social security subject to the requirement to transfer number and the nature, amount, status debts to the Department of the Treas- and history of the debt. ury for debt collection under 31 U.S.C. (b) Use of credit reporting agencies. The 3711(g) and 31 CFR 285.12(e). Secretary may also use credit report- (c) Debts arising under the Social Se- ing agencies to obtain credit reports to curity Act (which can be collected by evaluate the financial status of loan private collection contractors only by applicants, potential contractors and Treasury after the debt has been re- grantees; to determine a debtor’s abil- ferred to Treasury for collection) are ity to repay a debt; and to locate debt- excluded from this section. ors. In the case of an individual, the (d) The Secretary may fund private Secretary may disclose, as a routine collection contractor contracts in ac- use under 5 U.S.C 552a(b)(3), only the cordance with 31 U.S.C. 3718(d), or as individual’s name, address, and Social otherwise permitted by law. A contract Security number and the purpose for under paragraph (a) of this section may which the information will be used. provide that the fee a private collection contractor charges the Depart- § 30.14 Contracting with private collec- ment for collecting the debt is payable tion contractors and with entities from the amounts collected. that locate and recover unclaimed (e) The Department may enter into assets. contracts for locating and recovering (a) Subject to the provisions of para- assets of the United States including graph (b) of this section, the Secretary unclaimed assets. However, before en- may contract with private collection tering into a contract to recover assets

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of the United States that may be held (d) Where there is reason to believe by a State government or financial in- that a bankruptcy petition has been stitution, the Department must estab- filed with respect to a debtor, before lish procedures that are acceptable to taking any action to suspend or revoke the Secretary of Treasury. under paragraph (c) of this section, the (f) The Secretary may enter into con- Office of the General Counsel should be tracts for debtor asset and income contacted for legal advice concerning search reports. In accordance with 31 the impact of the Bankruptcy Code, U.S.C. 3718(d), such contracts may pro- particularly 11 U.S.C. 362 and 525, vide that the fee a contractor charges which may restrict such action. the Department for such services may be payable from the amounts recov- § 30.16 Liquidation of collateral. ered, unless otherwise prohibited by (a)(1) The Secretary will liquidate se- statute. curity or collateral through the exercise of a power of sale in the security § 30.15 Suspension or revocation of eli- instrument or a non-judicial fore- gibility for loans and loan guaran- closure, and apply the proceeds to the tees, licenses, permits, or privileges. applicable debt(s), if the debtor fails to (a)(1) Unless waived by the Secretary, pay the debt(s) within a reasonable financial assistance in the form of time after demand and if such action is loans, loan guarantees, or loan insur- in the best interests of the United ance shall not be extended to any per- States. son delinquent on a non-tax debt owed (2) Collection from other sources, in- to the United States. This prohibition cluding liquidation of security or col- does not apply to disaster loans. lateral, is not a prerequisite to requir- Grants, cooperative agreements, and ing payment by a surety, insurer, or contracts are not considered to be guarantor unless such action is ex- loans. pressly required by statute or contract. (2) The authority to waive the appli- (3) The Secretary will give the debtor cation of this section may be delegated reasonable notice of the sale and an ac- to the Chief Financial Officer and re- counting of any surplus proceeds and delegated only to the Deputy Chief Fi- will comply with other requirements nancial Officer. under law or contract. (3) States that manage Federal ac- (b) Where there is reason to believe tivities, pursuant to approval from the that a bankruptcy petition has been Secretary, should ensure that appro- filed with respect to a debtor, the Of- priate steps are taken to safeguard fice of the General Counsel should be against issuing licences, permits, or contacted for legal advice concerning other privileges to debtors who fail to the impact of the Bankruptcy Code, pay their debts to the Federal Govern- particularly with respect to the appli- ment. cability of the automatic stay, 11 (b) The Secretary will report to U.S.C. 362, and the procedures for ob- Treasury any surety that fails to honor taining relief from such stay prior to its obligations under 31 U.S.C. 9305. proceeding under paragraph (a) of this (c) In non-bankruptcy cases, when section. seeking to collect statutory penalties, forfeitures, or other types of claims, § 30.17 Collection in installments. the Secretary may suspend or revoke (a) Whenever feasible, the total licenses, permits, or other privileges of amount of a debt shall be collected in a delinquent debtor if the failure to one lump sum payment. If a debtor is pay the debt is found to be inexcusable financially unable to pay a debt in one or willful. Such suspension or revoca- lump sum, either by funds or adminis- tion will extend to programs or activi- trative offset, the Secretary may ac- ties administered by the States on be- cept payment in regular installments. half of the Federal Government, to the The Secretary will obtain financial extent that they affect the Federal statements from debtors who represent Government’s ability to collect money that they are unable to pay in one or funds owed by debtors. lump sum and independently verify

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such representations as described in terests. Any such higher rate of inter- § 30.22(a)(1). est charged will be based on Treasury’s (b)(1) When the Secretary agrees to quarterly rate certification to the U.S. accept payments in regular install- Public Health Service for delinquencies ments, a legally enforceable written in the National Research Services agreement should be obtained from the Awards and the National Health Serv- debtor that specifies all the terms and ices Corps Scholarship Program. The conditions of the agreement, and that Department publishes this rate in the includes a provision accelerating the FEDERAL REGISTER quarterly. debt in the event of a default. (3) Unless prescribed by statute or (2) The size and frequency of the pay- contract, the rate of interest, as ini- ments should reasonably relate to the tially charged, shall remain fixed for size of the debt and the debtor’s ability the duration of the indebtedness. When to pay. Whenever feasible, the install- a debtor defaults on a repayment ment agreement will provide for full agreement and seeks to enter into a payment of the debt, including interest new agreement, the Department may and charges, in three years or less. require payment of interest at a new (3) In appropriate cases, the agree- rate that reflects the Treasury rate in ment should include a provision identi- effect at the time the new agreement is fying security obtained from the debtor executed. Interest shall not be com- for the deferred payments. pounded, that is, interest shall not be § 30.18 Interest, penalties, and admin- charged on interest, penalties, or ad- istrative costs. ministrative costs required by this section, unless prescribed by statute or (a) Generally. Except as provided in contract. If, however, the debtor de- paragraphs (g), (h), and (i) of this sec- faults on a previous repayment agree- tion, the Department shall charge in- ment, charges that accrued but were terest, penalties, and administrative not collected under the defaulted costs on delinquent debts owed to the agreement shall be added to the prin- United States. These charges shall con- cipal under the new repayment agree- tinue to accrue until the debt is paid in ment. full or otherwise resolved through compromise, termination, or waiver of the (c) Administrative costs. The Depart- charges. ment shall assess administrative costs (b) Interest. The Department shall incurred for processing and handling charge interest on delinquent debts delinquent debts. The calculation of owed the United States as follows: administrative costs should be based (1) Interest shall accrue from the on actual costs incurred or a valid esti- date of delinquency, or as otherwise mate of the actual costs. Calculation of provided by law. For debts not paid by administrative costs shall include all the date specified in the written de- direct (personnel, supplies, etc.) and in- mand for payment made under § 30.11, direct collection costs, including the the date of delinquency is the date of cost of providing a hearing or any mailing of the notice. The date of de- other form of administrative review re- linquency for an installment payment quested by a debtor, and any costs is the due date specified in the pay- charged by a collection agency under ment agreement. § 30.14. These charges will be assessed (2) Unless a different rate is pre- monthly, or per payment period, scribed by statute, contract, or a re- throughout the period that the debt is payment agreement, the rate of inter- overdue. Such costs may also be in ad- est charged shall be the rate estab- dition to other administrative costs if lished annually by the Secretary of the collection is being made for another Treasury pursuant to 31 U.S.C. 3717. Federal agency or unit. The Department may charge a higher (d) Penalty. Unless otherwise estab- rate if necessary to protect the rights lished by contract, repayment agree- of the United States and the Secretary ment, or statute, the Secretary will has determined and documented a charge a penalty of six percent a year higher rate for delinquent debt is re- on the amount due on a debt that is de- quired to protect the Government’s in- linquent for more than 90 days. This

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charge shall accrue from the date of de- (h) Review. (1) Except as provided in linquency. paragraph (h)(2) of this section, admin- (e) Cost of living adjustment. When istrative review of a debt will not sus- there is a legitimate reason to do so, pend the assessment of interest, pen- such as when calculating interest and alties, and administrative costs. While penalties on a debt would be extremely agency review of a debt is pending, the difficult because of the age of the debt, debtor either may pay the debt or be an administrative debt may be in- liable for interest and related charges creased by the cost of living adjust- on the uncollected debt. When agency ment in lieu of charging interest and review results in a final determination penalties under this section. Adminis- that any amount was properly a debt trative debt includes, but is not limited and the debtor chose to retain the to, a debt based on fines, penalties, and amount in dispute, the Secretary shall overpayments, but does not include a collect from the debtor the amount de- debt based on the extension of Govern- termined to be due, plus interest, pen- ment credit, such as those arising from alties and administrative costs on such loans and loan guaranties. The cost of debt amount, as calculated under this living adjustment is the percentage by section, starting from the date the which the Consumer Price Index for debtor was first made aware of the debt the month of June of the calendar year and ending when the debt is repaid. preceding the adjustment exceeds the (2) Exception. Interest, penalties, and Consumer Price Index for the month of administrative cost charges will not be June of the calendar year in which the imposed on a debt for periods during debt was determined or last adjusted. which collection activity has been sus- Such increases to administrative debts pended under § 30.29(c)(1) pending agen- shall be computed annually. cy review or consideration of waiver if (f) Priority. When a debt is paid in statute prohibits collection of the debt partial or installment payments, during this period. amounts received shall be applied first (i) Common law or other statutory au- to outstanding penalties, second to ad- thority. The Department may impose ministrative charges, third to interest, and waive interest and related charges and last to principal. on debts not subject to 31 U.S.C. 3717 in (g) Waiver. (1) The Secretary shall accordance with the common law or waive the collection of interest and ad- other statutory authority. ministrative charges imposed pursuant to this section on the portion of the § 30.19 Review of cost effectiveness of debt that is paid within 30 days after collection. the date on which interest began to ac- Periodically, the Secretary will com- crue. The Secretary may extend this pare costs incurred and amounts col- 30-day period on a case-by-case basis if lected. Data on costs and cor- the Secretary determines that such ac- responding recovery rates for debts of tion is in the best interest of the Gov- different types and in various dollar ernment, or otherwise warranted by eq- ranges will be used to compare the cost uity and good conscience. effectiveness of alternative collection (2) The Secretary also may waive in- techniques, establish guidelines with terest, penalties, and administrative respect to points at which costs of fur- charges charged under this section, in ther collection efforts are likely to ex- whole or in part, without regard to the ceed recoveries, assist in evaluating of- amount of the debt, based on: fers in compromise, and establish min- (i) The criteria set forth at imum debt amounts below which col- § 30.22(a)(1) through (4) for the com- lection efforts need not be taken. promise of debts; or (ii) A determination by the Secretary § 30.20 Taxpayer information. that collection of these charges is: (a) When attempting to locate a debt- (A) Against equity and good con- or in order to collect or compromise a science; or debt under this part or any other au- (B) Not in the best interest of the thority, the Secretary may send a re- United States. quest to Treasury in accordance with

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31 CFR 901.11 to obtain a debtor’s mail- (1) Inability to pay. The debtor is un- ing address from the records of the able to pay the full amount in a rea- IRS. sonable time, as verified through credit (b) Mailing addresses obtained under reports or other financial information. paragraph (a) of this section may be In determining a debtor’s inability to used to enforce collection of a delin- pay the full amount of the debt within quent debt and may be disclosed to a reasonable time, the Secretary will other agencies and to collection agen- obtain and verify the debtor’s claim of cies for collection purposes. inability to pay by using credit reports or a current financial Statement from Subpart C—Debt Compromise the debtor, executed under penalty of perjury, showing the debtor’s assets, li- § 30.21 Scope and application. abilities, income, and expenses. The Secretary may use a Departmental fi- (a) Scope. The standards set forth in nancial information form or may re- this subpart apply to the compromise quest suitable forms from Justice or of debts pursuant to 31 U.S.C. 3711. The the local United States Attorney’s Of- Secretary may exercise such com- fice. The Secretary also may consider promise authority for debts arising out other relevant factors such as: of activities of, or referred or trans- (i) Age and health of the debtor; ferred for collection services to, the (ii) Present and potential income; Department when the amount of the (iii) Inheritance prospects; debt then due, exclusive of interest, (iv) The possibility that assets have penalties, and administrative costs, been concealed or improperly trans- does not exceed $100,000, or any higher ferred by the debtor; and amount authorized by the Attorney (v) The availability of assets or in- General. come that may be realized by enforced (b) Application. Unless otherwise pro- collection proceedings. vided by law, when the principal bal- (2) Inability to collect full debt. The ance of a debt, exclusive of interest, Government is unable to collect the penalties, and administrative costs, ex- debt in full within a reasonable time by ceeds $100,000 or any higher amount au- enforced collection proceedings. thorized by the Attorney General, the (i) In determining the Government’s authority to accept a compromise rests ability to enforce collection, the Sec- with Justice. The Secretary shall retary will consider the applicable ex- evaluate the compromise offer, using emptions available to the debtor under the factors set forth in this subpart. If State and Federal law, and may also an offer to compromise any debt in ex- consider uncertainty as to the price cess of $100,000 is acceptable to the De- the collateral or other property will partment, the Secretary shall refer the bring at a forced sale. debt to the Civil Division or other ap- (ii) A compromise effected under this propriate litigating division in Justice section should be for an amount that using a Claims Collection Litigation bears a reasonable relation to the Report (CCLR), which may be obtained amount that can be recovered by en- from Justice’s National Central Intake forced collection procedures, with re- Facility. The referral shall include ap- gard to the exemptions available to the propriate financial information and a debtor and the time that collection recommendation for the acceptance of will take. the compromise offer. Justice approval (3) Cost of collection. The cost of col- is not required if the Secretary rejects lecting the debt does not justify the en- a compromise offer. forced collection of the full amount. (i) The Secretary may compromise a § 30.22 Bases for compromise. debt if the cost of collecting the debt (a) Compromise. The Secretary may does not justify the enforced collection compromise a debt if the full amount of the full amount. The amount accept- cannot be collected based upon inabil- ed in compromise of such cases may re- ity to pay, inability to collect the full flect an appropriate discount for the debt, cost of collection, or doubt debt administrative and litigation costs of can be proven in court. collection, with consideration given to

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the time it will take to effect collec- curity for repayment in the manner set tion. Collection costs may be a sub- forth in subpart B of this part. stantial factor in the settlement of small debts. § 30.23 Enforcement policy. (ii) In determining whether the costs The Secretary may compromise stat- of collection justify enforced collection utory penalties, forfeitures, or claims of the full amount, the Secretary will established as an aid to enforcement consider whether continued collection and to compel compliance if the De- of the debt, regardless of cost, is nec- partment’s enforcement policy, in essary to further an enforcement prin- terms of deterrence and securing com- cipal, such as the Government’s will- pliance, present and future, will be ade- ingness to pursue aggressively default- quately served by the Secretary’s ac- ing and uncooperative debtors. ceptance of the sum to be agreed upon. (4) Doubt debt can be proven in court. There is significant doubt concerning § 30.24 Joint and several liability. the Government’s ability to prove its case in court. (a) When two or more debtors are (i) If there is significant doubt con- jointly and severally liable, the Sec- cerning the Government’s ability to retary will pursue collection against prove its case in court for the full all debtors, as appropriate. The Sec- amount claimed, either because of the retary will not attempt to allocate the legal issues involved or because of a burden of payment between the debtors bona fide dispute as to the facts, then but will proceed to liquidate the in- the amount accepted in compromise of debtedness as quickly as possible. such cases should fairly reflect the (b) The Secretary will ensure that a probabilities of successful prosecution compromise agreement with one debtor to judgment, with due regard to the does not automatically release the De- availability of witnesses and other evi- partment’s claim against the remain- dentiary support for the Government’s ing debtor(s). The amount of a com- claim. promise with one debtor shall not be (ii) In determining the litigation considered a precedent or binding in risks involved, the Secretary will con- determining the amount that will be sider the probable amount of court required from other debtors jointly and costs and attorney fees pursuant to the severally liable on the claim. Equal Access to Justice Act, 28 U.S.C. 2412, that may be imposed against the § 30.25 Further review of compromise Government if it is unsuccessful in liti- offers. gation. If the Secretary is uncertain whether (b) Installments. The Secretary gen- to accept a firm, written, substantive erally will not accept compromises compromise offer on a debt that is payable in installments. This is not an within the Secretary’s delegated com- advantageous form of compromise in promise authority, the Secretary may terms of time and administrative ex- refer the offer to the Civil Division or pense. If, however, payment of a compromise in installments is necessary, other appropriate litigating division in the Secretary shall, except in the case Justice, using a CCLR accompanied by of compromises based on paragraph supporting data and particulars con- (a)(4) of this section, obtain a legally cerning the debt. Justice may act upon enforceable written agreement pro- such an offer or return it to the Sec- viding that, in the event of default, the retary with instructions or advice. full original principal balance of the debt prior to compromise, less sums § 30.26 Consideration of tax consequences to the Government. paid thereon, is reinstated. The Office of the General Counsel should be con- In negotiating a compromise, the sulted concerning the appropriateness Secretary will consider the tax con- of including such a requirement in the sequences to the Government. In par- case of compromises based on para- ticular, the Secretary will consider re- graph (a)(4) of this section. Whenever quiring a waiver of tax-loss-carry-for- possible, the Secretary will obtain se- ward and tax-loss-carry-back rights of

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the debtor. For information on dis- (2) If the Secretary believes that sus- charge of indebtedness reporting re- pension or termination of any debt in quirements see § 30.32. excess of $100,000 may be appropriate, the Secretary shall refer the debt to § 30.27 Mutual release of the debtor the Civil Division or other appropriate and the Government. litigating division in Justice, using the In all appropriate instances, a com- CCLR. The referral will specify the rea- promise that is accepted by the Sec- sons for the Secretary’s recommenda- retary will be implemented by means tion. If, prior to referral to Justice, the of a mutual release. The terms of such Secretary determines that a debt is mutual release shall provide that the plainly erroneous or clearly without debtor is released from further non-tax merit, the Secretary may terminate liability on the compromised debt in collection activity regardless of the consideration of payment in full of the amount involved without obtaining compromise amount and the Govern- Justice concurrence. ment and its officials, past and present, are released and discharged from any § 30.29 Suspension of collection activ- and all claims and causes of action ity. arising from the same transaction that (a) Generally. The Secretary may sus- the debtor may have. In the event a pend collection activity on a debt mutual release is not executed when a when: debt is compromised, unless prohibited (1) The Department cannot locate the by law, the debtor is still deemed to debtor; have waived any and all claims and (2) The debtor’s financial condition is causes of action against the Govern- expected to improve; or ment and its officials related to the (3) The debtor has requested a waiver transaction giving rise to the com- or review of the debt. promised debt. (b) Financial condition. Based on the current financial condition of a debtor, Subpart D—Suspending and the Secretary may suspend collection Terminating Collection Activities activity on a debt when the debtor’s future prospects justify retention of the § 30.28 Scope and application. debt for periodic review and collection (a) Scope. The standards set forth in activity, and: this subpart apply to the suspension or (1) The applicable statute of limita- termination of collection activity pur- tions has not expired; suant to 31 U.S.C. 3711 on debts that do (2) Future collection can be effected not exceed $100,000, or such other by administrative offset, notwith- amount as the Attorney General may standing the expiration of the applica- direct, exclusive of interest, penalties, ble statute of limitations for litigation and administrative costs, after deduct- of claims, with due regard to the 10- ing the amount of partial payments or year limitation for administrative off- collections, if any. Prior to referring a set prescribed by 31 U.S.C. 3716(e)(1); or debt to Justice for litigation, the Sec- (3) The debtor agrees to pay interest retary may suspend or terminate col- on the amount of the debt on which lection under this subpart with respect collection will be suspended, and such to debts arising out of activities of, or suspension is likely to enhance the referred or transferred for collection debtor’s ability to pay the full amount services to, the Department. of the principal of the debt with inter- (b) Application. (1) If, after deducting est at a later date. the amount of partial payments or col- (c) Waiver or review. (1) The Secretary lections, the principal amount of the shall suspend collection activity during debt exceeds $100,000, or such other the time required for consideration of amount as the Attorney General may the debtor’s request for waiver or ad- direct, exclusive of interest, penalties, ministrative review of the debt if the and administrative costs, the authority statute under which the request is to suspend or terminate rests solely sought prohibits the Secretary from with Justice. collecting the debt during that time.

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(2) If the statute under which the results of the collection activity, that waiver or administrative review re- the debt is uncollectible. quest is sought does not prohibit col- (2) Termination of collection activity lection activity pending consideration ceases active collection of the debt. of the request, the Secretary may use The termination of collection activity discretion, on a case-by-case basis, to does not preclude the Secretary from suspend collection. Collection action retaining a record of the account for ordinarily will be suspended upon a re- purposes of: quest for waiver or review if the Sec- (i) Selling the debt, if the Secretary retary is prohibited by statute or regu- of the Treasury determines that such lation from issuing a refund of sale is in the best interest of the amounts collected prior to agency con- United States; sideration of the debtor’s request. How- (ii) Pursuing collection at a subse- ever, collection will not be suspended quent date in the event there is a when the Secretary determines that change in the debtor’s status or a new the request for waiver or review is friv- collection tool becomes available; olous or was made primarily to delay (iii) Offsetting against future income collection. or assets not available at the time of (d) Bankruptcy. Upon learning that a termination of collection activity; or bankruptcy petition has been filed with (iv) Screening future applicants for respect to a debtor, in most cases the prior indebtedness. Secretary must suspend collection ac- (c) Generally, the Secretary shall ter- tivity on the debt, pursuant to the pro- minate collection activity on a debt visions of 11 U.S.C. 362, 1201, and 1301, that has been discharged in bank- unless the Secretary can clearly estab- ruptcy, regardless of the amount. The lish that the automatic stay has been Secretary may continue collection ac- lifted or is no longer in effect. The Of- tivity, however, subject to the provi- fice of the General Counsel should be sions of the Bankruptcy Code, for any contacted immediately for legal ad- payments provided under a plan of re- vice, and the Secretary will take the organization. Offset and recoupment necessary legal steps to ensure that no rights may survive the discharge of the funds or money are paid by the Depart- debtor in bankruptcy and, under some ment to the debtor until relief from the circumstances, claims also may sur- automatic stay is obtained. vive the discharge. For example, when the Department is a known creditor of § 30.30 Termination of collection activ- a debtor the claims of the Department ity. may survive a discharge if the Depart- ment did not receive formal notice of (a) The Secretary may terminate col- the bankruptcy proceedings. When the lection activity when: Department believes that it has claims (1) The Department is unable to col- or offsets that may have survived the lect any substantial amount through discharge of the debtor, the Office of its own efforts or through the efforts of the General Counsel should be con- others; tacted for legal advice. (2) The Department is unable to locate the debtor; § 30.31 Exception to termination. (3) Costs of collection are anticipated When a significant enforcement pol- to exceed the amount recoverable; icy is involved, or recovery of a judg- (4) The debt is legally without merit ment is a prerequisite to the imposi- or enforcement of the debt is barred by tion of administrative sanctions, the any applicable statute of limitations; Secretary may refer debts to Justice (5) The debt cannot be substantiated; for litigation even though termination or of collection activity may otherwise be (6) The debt against the debtor has appropriate. been discharged in bankruptcy. (b)(1) Collection activity will not be § 30.32 Discharge of indebtedness; re- terminated before the Secretary has porting requirements. pursued all appropriate means of col- (a)(1) Before discharging a delinquent lection and determined, based upon the debt, also referred to as close out of the

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debt, the Secretary shall take all ap- Subpart E—Referrals to the propriate steps to collect the debt in Department of Justice accordance with 31 U.S.C. 3711(g)(9), and parts 30 through 33 of this chapter, § 30.33 Prompt referral. including, as applicable, administra- (a)(1) The Secretary promptly shall tive offset; tax refund offset; Federal refer to Justice for litigation debts on salary offset; credit bureau reporting; which aggressive collection activity administrative wage garnishment; liti- has been taken in accordance with sub- gation; foreclosure; and referral to part B of this part, and that cannot be Treasury, Treasury-designated debt compromised, or on which collection collection centers, or private collection activity cannot be suspended or termi- contractors. nated, in accordance with subpart D of (2) Discharge of indebtedness is dis- this part. tinct from termination or suspension (2) The Secretary may refer to Jus- of collection activity under this sub- tice for litigation those debts arising part, and is governed by the Internal out of activities of, or referred or Revenue Code. When collection action transferred for collection services to, on a debt is suspended or terminated, the Department. the debt remains delinquent and fur- (b)(1) Debts for which the principal ther collection action may be pursued amount is over $1,000,000, or such other at a later date in accordance with the amount as the Attorney General may standards set forth in this part and 31 direct, exclusive of interest, penalties, CFR parts 900 through 904. and administrative costs shall be re- (3) When the Department discharges ferred to the Civil Division or other di- a debt in full or in part, further collec- vision responsible for litigating such tion action is prohibited. Therefore, be- debts at the Department of Justice, fore discharging a debt, the Secretary Washington DC. must: (2) Debts for which the principal (i) Make the determination that col- amount is $1,000,000 or less, or such lection action is no longer warranted; other amount as the Attorney General and may direct, exclusive of interest, pen- (ii) Terminate debt collection action. alties, and administrative costs shall (b) In accordance with 31 U.S.C. be referred to the Nationwide Central 3711(i), the Secretary shall use com- Intake Facility at Justice as required petitive procedures to sell a delinquent by the CCLR instructions. debt upon termination of collection ac- (c)(1) Consistent with aggressive tion if the Secretary of the Treasury agency collection activity and the determines such a sale is in the best in- standards contained in this part and 31 terests of the United States. Since the CFR parts 900 through 904, debts shall discharge of a debt precludes any fur- be referred to Justice as early as pos- ther collection action, including the sible, and, in any event, well within the sale of a delinquent debt, the Secretary period for initiating timely lawsuits may not discharge a debt until the re- against the debtors. quirements of 31 U.S.C. 3711(i) have (2) The Secretary shall make every been meet. effort to refer delinquent debts to Jus- (c) Upon discharge of an indebted- tice for litigation within one year of ness, the Secretary must report the the date such debts last became delin- discharge to the IRS in accordance quent. In the case of guaranteed or in- with the requirements of 26 U.S.C. sured loans, the Secretary will make 6050P and 26 CFR 1.6050P–1. The Sec- every effort to refer these delinquent retary may request that Treasury or debts to Justice for litigation within Treasury-designated debt collection one year from the date the loan was centers file such a discharge report to presented to the Department for pay- the IRS on the Department’s behalf. ment or re-insurance. (d) When discharging a debt, the Sec- (d) Justice has exclusive jurisdiction retary must request that litigation over debts referred to it pursuant to counsel release any liens of record se- this subpart. Upon referral of a debt to curing the debt. Justice, the Secretary shall:

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(1) Immediately terminate the use of debts to Justice for litigation, certified any administrative collection activi- copies of the documents that form the ties to collect the debt; basis for the claim should be provided (2) Advise Justice of the collection along with the CCLR. Upon its request, activities utilized to date, and their re- the original documents will be pro- sult; and vided to Justice. (3) Refrain from having any contact with the debtor and direct all debtor § 30.36 Minimum amount of referrals. inquiries concerning the debt to Jus- (a) Except as in paragraph (b) of this tice. section, claims of less than $2,500 ex- (e) After referral of a debt under this clusive of interest, penalties, and ad- subpart, the Secretary shall imme- ministrative costs, or such other diately notify the Department of Jus- amount as the Attorney General may tice of any payments credited by the prescribe, shall not be referred for liti- Department to the debtor’s account. Pursuant to 31 CFR 904.1(b), after refer- gation. ral of the debt under this subpart, Jus- (b) The Secretary shall not refer tice shall notify the Secretary of any claims of less than the minimum payment received from the debtor. amount unless: (1) Litigation to collect such smaller § 30.34 Claims Collection Litigation amount is important to ensure compli- Report. ance with the policies and programs of (a)(1) Unless excepted by Justice, the the Department; Secretary will complete the CCLR, ac- (2) The claim is being referred solely companied by a signed Certificate of for the purpose of securing a judgment Indebtedness, to refer all administra- against the debtor, which will be filed tively uncollectible claims to the De- as a lien against the debtor’s property partment of Justice for litigation. pursuant to 28 U.S.C. 3201 and returned (2) The Secretary shall complete all to the Department for enforcement; or of the sections of the CCLR appropriate (3) The debtor has the clear ability to to each debt as required by the CCLR pay the claim and the Government ef- instructions, and furnish such other in- fectively can enforce payment, with formation as may be required in spe- due regard for the exemptions avail- cific cases. able to the debtor under State and Fed- (b) The Secretary shall indicate eral law and the judicial remedies clearly on the CCLR the actions that available to the Government. the Department wishes Justice to take (c) The Secretary should consult with with respect to the referred debt. The the Financial Litigation Staff of the Secretary may indicate specifically Executive Office for United States At- any of a number of litigation activities torneys in Justice prior to referring which Justice may pursue, including claims valued at less than the min- enforced collection, judgement lien imum amount. only, renew judgement lien only, renew judgement lien and enforced collection, program enforcement, foreclosure only, PART 31—TAX REFUND OFFSET and foreclosure and deficiency judgment. Sec. (c) The Secretary also shall use the 31.1 Purpose and scope. CCLR to refer a debt to Justice for the 31.2 Definitions. purpose of obtaining approval of a pro- 31.3 General rule. posal to compromise the debt, or to 31.4 Certification and referral of debt. suspend or terminate administrative 31.5 Notice. collection activity of the debt. 31.6 Review of Departmental records. 31.7 Review of a determination that a debt § 30.35 Preservation of evidence. is past-due and legally enforceable. The Secretary will maintain and pre- AUTHORITY: 31 U.S.C. 3720A, 31 CFR 285.2, serve all files and records that may be E.O. 12866, E.O. 13258. needed by Justice to prove the Depart- SOURCE: 68 FR 70445, Dec. 18, 2003, unless ment’s claim in court. When referring otherwise noted.

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§ 31.1 Purpose and scope. dividual, entity, organization, associa- (a) Purpose. This part prescribes the tion, partnership, corporation, or State Department’s standards and procedures or local government or subdivision, ex- for submitting past-due, legally en- cept another Federal agency. forceable debts to the Department of Debtor means an individual, organiza- the Treasury for collection by tax re- tion, association, partnership, corpora- fund offset. tion, or State or local government or (b) Authority. These standards and subdivision indebted to the Govern- procedures are authorized under the ment, or the person or entity with tax refund offset provision of the Def- legal responsibility for assuming the icit Reduction Act of 1984, as amended debtor’s obligation. by the Debt Collection Improvement Department means the Department of Act of 1996, codified at 31 U.S.C. 3720A, Health and Human Services, and each and the implementing regulations of its Operating Divisions and regional issued by the Department of the Treas- offices. ury at 31 CFR 285.2. Evidence of service means information (c) Scope. (1) This part applies to all retained by the Department indicating Departmental Operating Divisions and the nature of the document to which it Regional Offices that administer a pro- pertains, the date of mailing of the gram that gives rise to a past-due non- document, and the address and name of tax debt owed to the United States, the debtor to whom it is being sent. A and to all officers or employees of the copy of the dated and signed written Department authorized to collect such notice of intent to offset provided to debt. This part does not apply to any the debtor pursuant to this part may debt or claim owed to the Department be considered evidence of service for of Health and Human Services by an- purposes of this regulation. Evidence of other Federal agency. service may be retained electronically (2) Nothing in this part precludes the so long as the manner of retention is Department from pursuing other debt sufficient for evidentiary purposes. collection procedures, including admin- FMS means the Financial Manage- istrative wage garnishment under part ment Service, a bureau within the De- 32 of this title, to collect a debt that partment of the Treasury. has been submitted to the Department IRS means the Internal Revenue of the Treasury under this part. The Service, a bureau of the Department of Department may use such debt collec- the Treasury. tion procedures separately or in con- Legally enforceable means that there junction with the offset collection pro- has been a final agency determination cedures of this part. that the debt, in the amount stated, is due and there are no legal bars to col- § 31.2 Definitions. lection action. In this part, unless the context oth- Operating division means each sepa- erwise requires: rate component, within the Depart- Administrative offset means with- ment of Health and Human Services, holding funds payable by the United including, but not limited to, the Ad- States (including funds payable by the ministration for Children and Fami- United States on behalf of a State gov- lies, Administration on Aging, the Cen- ernment) to, or held by the United ters for Disease Control and Preven- States for, a person to satisfy a claim. tion, the Centers for Medicare & Med- Day means calendar day. For pur- icaid Services, the Food and Drug Ad- poses of computation, the last day of ministration, the National Institutes the period will be included unless it is of Health, and the Office of the Sec- a Saturday, Sunday, or a Federal legal retary. holiday, in which case the next busi- Past-due debt means a debt which the ness day will be considered the last day debtor does not pay or otherwise re- of the period. solve by the date specified in the ini- Debt or claim means an amount of tial demand for payment, or in an ap- money, funds, or other property deter- plicable written repayment agreement mined by an appropriate official to be or other instrument, including a post- owed to the United States from any in- delinquency repayment agreement.

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Secretary means the Secretary of the that collections are properly credited Department of Health and Human to the debt; Services, or the Secretary’s designee (2) Except in the case of a judgment within any Operating Division or Re- debt or as otherwise allowed by law, gional Office. the debt is referred within ten (10) Taxpayer identifying number means years after the Department’s right of the identifying number described under action accrues; section 6109 of the Internal Revenue (3) The Department has made reason- Code of 1986 (26 U.S.C. 6109). For an in- able efforts to obtain payment of the dividual, the taxpayer identifying debt, and has: number is the individual’s social secu- (i) Submitted the debt to FMS for rity number. collection by offset and complied with Tax refund offset means withholding the administrative offset provision of or reducing a tax refund payment by an 31 U.S.C. 3716(a) and related regula- amount necessary to satisfy a debt tions, to the extent that collection by owed to the United States by the administrative offset is not prohibited payee(s) of a tax refund payment. by statute; Tax refund payment means any over- (ii) Notified, or made a reasonable at- payment of Federal taxes to be re- tempt to notify, the debtor that the funded to the person making the over- debt is past-due, and unless paid within payment after the IRS makes the ap- 60 days of the date of the notice, the propriate credits as provided in 26 debt may be referred to Treasury for U.S.C. 6402 for any liabilities for any tax refund offset. For purposes of this tax on the part of the person who made regulation, the Department has made a the overpayment. reasonable attempt to notify the debt- or if the agency uses the current ad- § 31.3 General rule. dress information contained in the De- (a) Any past-due, legally enforceable partment’s records related to the debt. debt of at least $25, or such other min- If address validation is desired or nec- imum amount as determined by the essary, the Department may obtain in- Secretary of the Treasury, shall be sub- formation from the IRS pursuant to 26 mitted to FMS for collection by tax re- U.S.C. 6103(m)(2)(4) or (5). fund offset. (iii) Given the debtor at least 60 days (b) FMS will compare tax refund pay- to present evidence that all or part of ment records, as certified by the IRS, the debt is not past-due or not legally with records of debts submitted by the enforceable, considered any evidence Department under this part. A match presented by the debtor, and deter- will occur when the taxpayer identi- mined that the debt is past-due and le- fication number and name of a pay- gally enforceable; and ment certification record are the same (iv) Provided the debtor with an op- as the taxpayer identifying number and portunity to make a written agreement name control of a debtor record. When to repay the debt; and a match occurs and all other require- (4) The debt is at least $25. ments for tax refund offset have been (b) Referral. (1) The Secretary shall met, FMS will reduce the amount of submit past-due, legally enforceable any tax refund payment payable to a debt information for tax refund offset debtor by the amount of any past-due in the time and manner prescribed by legally enforceable debt. Any amounts the Department of the Treasury. not offset will be paid to the payee(s) (2) For each debt referred under this listed in the payment certification part, the Secretary will include the fol- record. lowing information: (i) The name and taxpayer identi- § 31.4 Certification and referral of fying number, as defined in 26 U.S.C. debt. 6109, of the debtor responsible for the (a) Certification. The Secretary shall debt; certify to FMS that: (ii) The amount of such past-due and (1) The debt is past-due and legally legally enforceable debt; enforceable in the amount submitted (iii) The date on which the debt be- and that the Department will ensure came past-due; and

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(iv) The designation of the Depart- the manner of retention is sufficient ment referring the debt. for evidentiary purposes (c) Correcting and updating referral. (1) After referring a debt under this part, § 31.6 Review of Departmental records. the Secretary shall promptly notify (a) To inspect or copy Departmental the Department of the Treasury if: records relating to the debt, the debtor (i) An error was made with respect to must send a written request to the ad- information transmitted to the Depart- dress designated in the notice described ment of the Treasury; in section 31.5. The request must be re- (ii) The Department receives a pay- ceived by the Department within 60 ment or credits a payment to the ac- days from the date of the notice. count of a debtor referred for tax re- (b) In response to a timely request as fund offset; or described in paragraph (a) of this sec- (iii) The debt amount is otherwise in- tion, the designated Department offi- correct. cial shall notify the debtor of the loca- (2) The Department shall provide the tion and time when the debtor may in- certification required under paragraph spect and copy such records. If the (a) of this section for any increases to debtor is unable to personally inspect amounts owed. such records as the result of geo- (d) Rejection of certification. If the De- graphical or other constraints, the De- partment of Treasury rejects a certifi- partment will arrange to send copies of cation because it does not comply with the records to the debtor. the requirements of paragraph (a) of this section, upon notification of the § 31.7 Review of a determination that a rejection and the reason(s) for rejec- debt is past-due and legally enforce- tion, the Secretary will resubmit the able. debt with a corrected certification. (a) Requesting a review. (1) If the debt- or believes that all or part of the debt § 31.5 Notice. is not past-due or not legally enforce- (a) Requirements. If not previously in- able, the debtor may request a review cluded in the initial demand letter pro- by the Department by sending a writ- vided under section 30.11, at least 60 ten request to the address provided in days before referring a debt for tax re- the notice. The written request must fund offset, the Secretary shall mail, be received by the Department within by first class mail to the debtor’s last 60 days from the date of the notice or, known address, written notice inform- if the debtor has requested to inspect ing the debtor of: the records, within 30 days from the (1) The nature and amount of the debtor’s inspection of the records or debt; the Department’s mailing of the (2) The determination that the debt records under section 31.6(b), whichever is past-due and legally enforceable, and is later. unless paid within 60 days after the (2) The request for review must be date of the notice, the Secretary in- signed by the debtor, state the amount tends to enforce collection by referring disputed, and fully identify and explain the debt the Department of the Treas- the evidence that the debtor believes ury for tax refund offset; and supports the debtor’s position. The (3) The debtor’s rights to: debtor must submit with the request (i) Inspect and copy Department any documents that the debtor wishes records relating to the debt; to be considered, or the debtor must (ii) Enter into written agreement to state in the request that additional in- repay the amount of the debt; formation will be submitted within the (iii) Request review and present evi- above specified time period. dence that all or part of the debt is not (3) Failure to timely request a review past-due or not legally enforceable. will be deemed an admission by the (b) The Secretary will retain evi- debtor that the debt is past-due and le- dence of service indicating the date of gally enforceable, and will result in a mailing of the notice. The notice may referral of the debt to the Department be retained electronically so long as of the Treasury without further action.

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(b) Review. Upon the timely submis- gram that gives rise to a delinquent sion of evidence by the debtor, the De- non-tax debt owed to the United States partment shall review the dispute and and to all officers or employees of the shall consider its records and any docu- Department authorized to collect such mentation and evidence submitted by debt. the debtor. The Department shall make (2) This part shall apply notwith- a determination based on the review of standing any provision of State law. the written record, and shall send a (3) Nothing in this part precludes the written notice of its decision to the compromise of a debt or the suspension debtor. There is no administrative ap- or termination of collection action in peal of this decision. accordance with part 30 of this title, or (c) A debt that previously has been other applicable law or regulation. reviewed pursuant to this part, or that (4) The receipt of payments pursuant has been reduced to a judgment, will to this part does not preclude the De- not be reconsidered under this part un- partment from pursuing other debt col- less the evidence presented by the debt- lection remedies, including the offset or disputes payments made or events of Federal payments to satisfy delin- occurring subsequent to the previous quent non-tax debt owed to the United review or judgment. States. The Department may pursue such debt collection remedies sepa- PART 32—ADMINISTRATIVE WAGE rately or in conjunction with adminis- GARNISHMENT trative wage garnishment. (5) This part does not apply to the Sec. collection of delinquent non-tax debts 32.1 Purpose and scope. owed to the United States from the 32.2 Definitions. wages of Federal employees from their 32.3 General rule. 32.4 Notice. Federal employment. Federal pay is 32.5 Hearing. subject to the Federal salary offset 32.6 Withholding order. procedures set forth in 5 U.S.C. 5514 and 32.7 Certification by employer. other applicable laws. 32.8 Amounts withheld. (6) Nothing in this part requires the 32.9 Financial hardship. 32.10 Refunds. Department to duplicate notices or ad- 32.11 Ending garnishment. ministrative proceedings required by 32.12 Right of action. contract or other laws or regulations.

AUTHORITY: 31 U.S.C. 3720D, 5 U.S.C. 552, § 32.2 Definitions. 553, E.O. 12866, 12988, 13808. In this part, unless the context oth- SOURCE: 68 FR 15093, Mar. 28, 2003, unless otherwise noted. erwise requires: Business day means Monday through § 32.1 Purpose and scope. Friday. For purposes of computation, (a) Purpose. This part prescribes the the last day of the period will be in- standards and procedures for the De- cluded unless it is a Federal legal holi- partment to collect money from a day, in which case the next business debtor’s disposable pay by means of ad- day following the holiday will be con- ministrative wage garnishment to sat- sidered the last day of the period. isfy delinquent non-tax debts owed to Certificate of service means a certifi- the United States. cate signed by an employee of the De- (b) Authority. These standards and partment indicating the nature of the procedures are authorized under the document to which it pertains, the wage garnishment provisions of the date of mailing of the document, and to Debt Collection Improvement Act of whom it is being sent. 1996, codified at 31 U.S.C. 3720D, and the Day means calendar day. For pur- Department of the Treasury Adminis- poses of computation, the last day of trative Wage Garnishment Regulations the period will be included unless it is at 31 CFR 285.11. a Saturday, Sunday, or a Federal legal (c) Scope. (1) This part applies to all holiday, in which case the next busi- Departmental Operating Divisions and ness day will be considered the last day Regional Offices that administer a proof the period.

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Debt or claim means an amount of term employer includes, but is not lim- money, funds, or property that has ited to, State and local Governments, been determined by the Secretary to be but does not include an agency of the owed to the United States by an indi- Federal Government as defined by 31 vidual, including debt administered by CFR 285.11(c). a third party as an agent of the Federal Garnishment means the process of Government. A debt or claim includes, withholding amounts from an employ- but is not limited to: amounts owed on ee’s disposable pay and paying those account of loans made, insured or guar- amounts to a creditor in satisfaction of anteed by the Federal Government, in- a withholding order. cluding any deficiency or difference be- Hearing means a review of the docu- tween the price obtained by the Fed- eral Government upon selling the prop- mentary evidence concerning the exist- erty and the amount owed to the Fed- ence or amount of a debt, or the terms eral Government; overpayments to proof a repayment schedule, provided such gram beneficiaries; any amount the repayment schedule is established Federal Government is authorized by other than by a written agreement en- statute to collect for the benefit of any tered into pursuant to this part. If the person; the unpaid share of any non- hearing official determines that the Federal partner in a program involving issues in dispute cannot be resolved a Federal payment, including a match- solely by review of the written record, ing or cost-sharing payment of the such as when the validity of the debt non-Federal partner; any fine, civil turns on the issue of credibility or ve- penalty or assessment; and other racity, an oral hearing may be pro- amounts or money or property owed to vided. the Federal Government. Hearing official means any qualified Debtor means an individual who owes individual, as determined by the Sec- a delinquent non-tax debt to the retary, including a Departmental Ap- United States. peals Board administrative law judge. Delinquent debt means any non-tax Secretary means the Secretary of debt that has not been paid by the date Health and Human Services, or the specified in the Department’s initial Secretary’s designee within the De- written demand for payment, or appli- partment. cable payment agreement or instrument, unless other satisfactory pay- Withholding order for purposes of this ment arrangements have been made. part means ‘‘Wage Garnishment Order For purposes of this part, ‘‘delinquent’’ (SF329B).’’ Also for purposes of this and ‘‘overdue’’ have the same meaning. part, the terms ‘‘wage garnishment Department means the United States order’’ and ‘‘garnishment order’’ have Department of I-Iealth and 1—luman the same meaning as ‘‘withholding Services, including each of its Oper- order.’’ ating Divisions and Regional Offices. Disposable pay means that part of the § 32.3 General rule. debtor’s compensation (including, but (a) Except as provided in paragraph not limited to, salary, bonuses, com- (b) of this section, whenever a delin- missions, and vacation pay) from an quent debt is owed by an individual, employer remaining after the deduc- the Secretary, or another federal agen- tion of health insurance premiums and cy collecting a debt on the Depart- any amounts required by law to be ment’s behalf (See 45 CFR part 30), may withheld. For purposes of this part, initiate proceedings administratively ‘‘amounts required by law to be with- to garnish the wages of the delinquent held’’ include amounts for deductions debtor. such as social security taxes and withholding taxes, but do not include any (b) The Secretary may not garnish amount withheld pursuant to a court the wages of a debtor who the Sec- order. retary knows has been involuntarily Employer means a person or entity separated from employment until the that employs the services of others and that pays their wages or salaries. The

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debtor has been re-employed continu- debtor, state each issue being disputed, ously for at least 12 months. The debt- and identify and explain with reason- or has the burden of informing the Sec- able specificity all facts and evidence retary of the circumstances sur- that the debtor believes supports the rounding an involuntary separation debtor’s position. Supporting docu- from employment. mentation identified by the debtor should be attached to the request. § 32.4 Notice. (2) Effect of timely request. Subject (a) Notice requirements. At least 30 to paragraph (j) of this section, if the days before the initiation of garnish- debtor’s written request is received on ment proceedings, the Secretary shall or before the 15th business day fol- mail, by first class mail, to the debt- lowing the mailing of the written no- or’s last known address a written notice required under this part, a with- tice informing the debtor of: holding order shall not be issued under (1) The nature and amount of the § 32.6 until the debtor has been provided debt; the requested hearing and a decision in (2) The intention of the Secretary to accordance with paragraphs (g) and (h) initiate proceedings to collect the debt of this section has been rendered. through deductions from pay until the (3) Failure to timely request a hear- debt and all accumulated interest, pen- ing. If the debtor’s written request is alties, and administrative costs are received after the 15th business day fol- paid in full; lowing the mailing of the written no- (3) The debtor’s right— tice required under this part, the Sec- (i) To inspect and copy Department retary shall provide a hearing to the records related to the debt; debtor. However, the Secretary shall (ii) To enter into a written repay- not delay the issuance of a withholding ment agreement with the Department order unless the Secretary determines under terms agreeable to the Depart- that the delay in submitting such re- ment; quest was caused by factors beyond the (iii) To a hearing, in accordance with control of the debtor, or the Secretary § 32.5, concerning the existence or the receives information that the Sec- amount of the debt or the terms of the retary determines justifies a delay or proposed repayment schedule under the cancellation of the withholding order. garnishment order, except that the (c) Oral hearing. (1) For purposes of debtor is not entitled to a hearing con- this section, a debtor shall be provided cerning the proposed repayment sched- a reasonable opportunity for an oral ule if the terms were established by hearing when the hearing official de- written agreement pursuant to para- termines that the issues in dispute can- graph (a)(3)(ii) of this section; and not be resolved by review of the docu- (4) The time frames within which the mentary evidence, such as when the va- debtor may exercise his or her rights. lidity of the claim turns on the issue of (b) The Secretary will keep a copy of credibility or veracity. the dated notice. The notice may be re- (2) If the hearing official determines tained electronically so long as the an oral hearing is appropriate, the manner of retention is sufficient for hearing official will establish the date, evidentiary purposes. time and location of the hearing. At the debtor’s option, the oral hearing § 32.5 Hearing. may be conducted in person or by tele- (a) In general. Upon timely written phone conference. The hearing official request of the debtor, the Secretary will notify the debtor of the date, time, shall provide a hearing, which at the and in the case of an in-person hearing, Department’s option may be oral or the location of the hearing. All travel written, concerning the existence or expenses incurred by the debtor in con- amount of the debt, or the terms of a nection with an in-person hearing will repayment schedule established other be borne by the debtor. than by written agreement under (d) Paper hearing. (1) If the hearing § 32.4(a)(3)(ii). official determines an oral hearing is (b) Request for hearing. (1) The request not required by this section, the hear- for a hearing must be signed by the ing official shall afford the debtor a

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paper hearing, that is, the issues in dis- agency action for the purposes of judi- pute will be decided based upon a re- cial review under the Administrative view of the written record. Procedure Act. 5 U.S.C. 701 et seq. (2) The hearing official shall notify (j) Failure to appear. In the absence of the debtor of the deadline for the sub- good cause shown, a debtor who fails to mission of additional evidence if nec- appear at a hearing will be deemed as essary for a review of the record. not having timely filed a request for a (e) Burden of proof. (1) The Secretary hearing. has the initial burden of proving the existence or amount of the debt. § 32.6 Withholding order. (2) Thereafter, if the debtor disputes (a) Unless the Secretary receives in- the existence or amount of the debt, formation that the Secretary deter- the debtor must present by a prepon- mines justifies a delay or cancellation derance of the evidence that no debt of a withholding order, the Secretary exists or that the amount is incorrect. shall send, by first class mail, an SF– When challenging the terms of a repay- 329A ‘‘Letter to Employer & Important ment schedule, the debtor must estab- Notice to Employer,’’ an SF–329B lish by a preponderance of the evidence ‘‘Wage Garnishment Order,’’ an SF– that the terms of the repayment sched- 329C ‘‘Wage Garnishment Worksheet,’’ ule are unlawful, would cause financial and an SF–329D ‘‘Employer Certifi- hardship to the debtor, or that collec- cation,’’ to the debtor’s employer with- tion of the debt may not be pursued in 30 days after the debtor fails to due to operation of law. make a timely request for a hearing, (f) Record. The hearing official shall i.e., within 15 business days after mail- maintain a summary record of any ing the notice required under this part, hearing provided under this part. A or, if the timely request for a hearing hearing is not required to be a formal is made by the debtor, within 30 days evidentiary-type hearing, but witnesses after a final decision is made by the who testify in an oral hearing must do Secretary to proceed with garnish- so under oath or affirmation. ment. (g) Date of decision. (1) The hearing (b) The Secretary shall keep a copy official shall issue a written decision, of the dated letter to the employer and as soon as practicable, but no later a copy of the wage garnishment order. than sixty (60) days after the date on The certificate of service may be re- which the request for the hearing was tained electronically so long as the received by the Department. manner of retention is sufficient for (2) If the hearing official is unable to evidentiary purposes. provide the debtor with a hearing and render a decision within 60 days after § 32.7 Certification by employer. the receipt of the request for such hearing: The employer must complete and re- (i) A withholding order may not be turn the SF–329D, ‘‘Employer Certifi- issued until the hearing is held and a cation’’ to the Department within 20 decision is rendered; or days of receipt. (ii) A withholding order previously issued to the debtor’s employer must § 32.8 Amounts withheld. be suspended beginning on the 61st day (a) After receipt of a withholding after the receipt of the hearing request order issued under this part, the em- and continuing until a hearing is held ployer shall deduct from all disposable and a decision is rendered. pay paid to the debtor during each pay (h) Content of decision. The written period the amount of garnishment de- decision shall include: scribed in paragraph (b) of this section. (1) A summary of the facts presented; The employer may use the SF–329C (2) The hearing official’s findings, ‘‘Wage Garnishment Worksheet’’ to analysis, and conclusions; and calculate the amount to be deducted (3) The terms of any repayment from the debtor’s disposable pay. schedule, if applicable. (b) Subject to paragraphs (c) and (d) (i) Final agency action. The hearing of this section, the amount of garnish- official’s decision will be the final ment shall be the lesser of:

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(1) The amount indicated on the gar- (h) Any assignment or allotment by nishment order up to 15% of the debt- an employee shall be void to the extent or’s disposable pay; or it interferes with or prohibits execu- (2) The amount set forth in 15 U.S.C. tion of the withholding order issued 1673(a)(2) (Maximum allowable garnish- under this part, except for any assignment). The amount set forth at 15 ment or allotment made pursuant to a U.S.C. 1673(a)(2) is the amount by family support judgment or order. which a debtor’s disposable pay exceeds (i) The employer shall withhold the an amount equivalent to thirty times appropriate amount from the debtor’s the minimum wage. See 29 CFR 870.10. wages for each pay period until the em- (c)(1) Except as provided in paragraph ployer receives notification from the (c)(2) of this section, when a debtor’s Secretary to discontinue wage with- pay is subject to multiple withholding holding. orders, unless otherwise provided by (j) The withholding order, SF–329B Federal law, withholding orders issued ‘‘Wage Garnishment Order,’’ sent to pursuant to this part shall have pri- the employer under § 32.6, requires the ority over other withholding orders employer to commence wage with- that are served later in time. holding on the first pay day after the (2) Notwithstanding the foregoing, employer receives the order. However, withholding orders for family support if the first pay day is within 10 days shall have priority over withholding after receipt of the order, the employer orders issued under this part. may begin deductions on the second (3) If amounts are being withheld pay day. from a debtor’s pay pursuant to a with- (k) An employer may not discharge, holding order served on an employer refuse to employ, or take disciplinary before a withholding order issued pur- action against any debtor as a result of suant to this part, or if a withholding the issuance of a withholding order order for family support is served on an under this part. employer at any time, the amounts withheld pursuant to a withholding [68 FR 15093, Mar. 28, 2003; 68 FR 24052, May order issued under this part shall be 6, 2003] the lesser of: (i) The amount calculated under § 32.9 Financial hardship. paragraph (b) of this section, or (a) A debtor whose wages are subject (ii) An amount equal to 25% of the to a withholding order may, at any debtor’s disposable pay less the time, request a review by the Depart- amount(s) withheld under the with- ment of the amount garnished, based holding order(s) with priority. on materially changed circumstances (d) If the debtor owes more than one such as disability, divorce, or cata- debt to the Department, the Secretary strophic illness which result in finan- may issue multiple withholding orders cial hardship. provided that the total amount gar- (b) A debtor requesting such a review nished from the debtor’s pay for such under paragraph (a) of this section orders does not exceed the amount set shall submit the basis for claiming forth in paragraph (b) of this section. that the current amount of garnish- (e) An amount greater than that set ment results in a financial hardship to forth in paragraphs (b) or (c) of this the debtor, along with supporting docu- section may be withheld upon the writ- mentation. The Secretary shall con- ten consent of the debtor. sider any information submitted in ac- (f) The employer shall promptly pay cordance with this part. to the Department all amounts with- (c) If a financial hardship is found, held in accordance with the with- the Secretary shall downwardly adjust, holding order issued pursuant to this by an amount and for a period of time part. established by the Secretary, the (g) The employer is not required to amount garnished to reflect the debt- vary its normal pay and disbursement or’s financial condition. The Secretary cycles in order to comply with the will notify the employer of any adjust- withholding order. ments to the amount to be withheld.

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§ 32.10 Refunds. garnishment order issued under this part. (a) If the hearing official, pursuant to a hearing under this part, determines that a debt is not legally due and PART 33—SALARY OFFSET owing to the United States, the Sec- retary shall promptly refund any Sec. amount collected by means of adminis- 33.1 Purpose, authority, and scope. 33.2 Definitions. trative wage garnishment. 33.3 General rule. (b) Unless required by Federal law or 33.4 Notice requirements before offset. contract, refunds under this part shall 33.5 Review of department records relating not bear interest. to the debt. 33.6 Hearings. § 32.11 Ending garnishment. 33.7 Obtaining the services of a hearing official. (a) Once the Department has fully re- 33.8 Voluntary repayment agreement in lieu covered the amounts owed by the debt- of salary offset. or, including interest, penalties, and 33.9 Special review. administrative costs assessed pursuant 33.10 Procedures for salary offset. to and in accordance with part 30 of 33.11 Salary offset when the Department is this title, the Secretary shall send the the creditor agency but not the paying debtor’s employer notification to dis- agency. continue wage withholding. 33.12 Salary offset when the Department is the paying agency but not the creditor (b) At least annually, the Secretary agency. shall review its debtors’ accounts to 33.13 Interest, penalties, and administrative ensure that garnishment has been ter- costs. minated for accounts that have been 33.14 Non-waiver of rights. paid in full. 33.15 Refunds. 33.16 Additional administrative collection.

§ 32.12 Right of action. AUTHORITY: 5 U.S.C. 5514; 5 CFR Part 550, (a) The employer of a debtor subject Subpart K. to wage withholding pursuant to this SOURCE: 72 FR 10421, Mar. 8, 2007, unless part shall pay to the Department as di- otherwise noted. rected in a withholding order issued under this part. § 33.1 Purpose, authority, and scope. (b) The Secretary may bring suit (a) Purpose. This part prescribes the against an employer for any amount Department’s standards and procedures that the employer fails to withhold for the collection of debts owed by Fed- from wages owed and payable to a debt- eral employees to the United States or in accordance with §§ 32.6 and 32.8, through involuntary salary offset. plus attorney’s fees, costs, and, if ap- (b) Authority. 5 U.S.C. 5514; 5 CFR plicable, punitive damages. Part 550, subpart K. (c) A suit under this section may not (c) Scope. (1) This part applies to in- be filed before the termination of the ternal and Government-wide collec- collection action involving a particular tions of debts owed by Federal employ- debtor, unless earlier filing is nec- ees by administrative offset from the essary to avoid expiration of any appli- current pay account of the debtor with- cable statute of limitations period. For out his or her consent. purposes of this section, ‘‘termination (2) The procedures contained in this of collection action’’ occurs when the part do not apply to any case where an Secretary has terminated collection employee consents to collection action in accordance with part 30 of through deduction(s) from the employ- this title, or other applicable law or ee’s pay account, or to debts arising regulation. under the Internal Revenue Code or the (d) Notwithstanding deemed to occur tariff laws of the United States, or if from a debtor whose paragraph (c) of where another statute explicitly pro- this section, termination of the collec- vides for, or prohibits, collection of a tion action will be a period of one (1) debt by salary offset (e.g., travel ad- year the Department does not receive vances in 5 U.S.C. 5705 and employee any payments wages were subject to a training expenses in 5 U.S.C. 4108).

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(3) This part does not preclude an em- Debt collection center means the De- ployee from requesting waiver of an er- partment of the Treasury or other Gov- roneous payment under 5 U.S.C. 5584, 10 ernment agency or division designated U.S.C. 2774, or 32 U.S.C. 716, or in any by the Secretary of the Treasury with way questioning the amount or valid- authority to collect debts on behalf of ity of a debt, in the manner prescribed creditor agencies in accordance with 31 by the Secretary. Similarly, this part U.S.C. 3711(g). does not preclude an employee from re- Debtor means a Federal employee questing waiver of the collection of a who owes a debt to the United States. debt under any other applicable statu- Delinquent debt means a debt which tory authority. the debtor does not pay or otherwise (4) Nothing in this part precludes the resolve by the date specified in the ini- compromise of the debt, or the suspen- tial demand for payment, or in an ap- sion or termination of collection ac- plicable written repayment agreement tions, in accordance with part 30 of this or other instrument, including a post- title. delinquency repayment agreement. Department means the Department of § 33.2 Definitions. Health and Human Services, its Staff In this part— Divisions, Operating Divisions, and Re- Administrative offset means with- gional Offices. holding funds payable by the United Disposable pay means that part of the States to, or held by the United States debtor’s current basic, special, incen- for, a person to satisfy a debt owed by tive, retired, and retainer pay, or other the payee. authorized pay, remaining after deduc- Agency means an executive depart- tion of amounts required by law to be ment or agency; a military depart- withheld. For purposes of calculating ment; the United States Postal Serv- disposable pay, legally required deduc- ice; the Postal Rate Commission; the tions that must be applied first in- United States Senate; the United clude: Tax levies pursuant to the Inter- States House of Representatives; and nal Revenue Code (title 26, United court, court administrative office, or States Code); properly withheld taxes, instrumentality in the judicial or leg- FICA, Medicare; health and life insur- islative branches of the Government; ance premiums; and retirement con- or a Government Corporation. tributions. Amounts deducted under Creditor agency means the agency to garnishment orders, including child which the debt is owed, including a support garnishment orders, are not le- debt collection center when acting on gally required deductions for calcu- behalf of a creditor agency in matters lating disposable pay. pertaining to the collection of a debt. Employee means any individual cur- Day means calendar day. For pur- rently employed by an agency, as de- poses of computation, the last day of fined in this section, including seasonal the period will be included unless it is and temporary employees and current a Saturday, Sunday, or a Federal holi- members of the Armed Forces or a Re- day, in which case the next business serve of the Armed Forces (Reserves). day will be considered the last day of Evidence of service means information the period. retained by the Department indicating Debt means an amount determined by the nature of the document to which it an appropriate official to be owed to pertains, the date of mailing the docu- the United States from sources which ment, and the address and name of the include loans insured or guaranteed by debtor to whom it is being sent. A copy the United States and all other of the dated and signed written notice amounts due the United States from of intent to offset provided to the debt- fees, leases, rents, royalties, services, or pursuant to this part may be consid- sales of real or personal property, over- ered evidence of service for purposes of payments, penalties, damages, interest, this part. Evidence of service may be fines and forfeitures (except those aris- retained electronically so long as the ing under the Uniform Code of Military manner of retention is sufficient for Justice), and all other similar sources. evidentiary purposes.

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Hearing means a review of the docu- charged with the responsibility to dis- mentary evidence to confirm the exist- cover and collect such debts. ence or amount of a debt or the terms (c) Except as provided in paragraph of a repayment schedule. If the Sec- (d) of this section, prior to initiating retary determines that the issues in collection through salary offset under dispute cannot be resolved by such a this part, the Secretary must first pro- review, such as when the validity of vide the employee with the following: the claim turns on the issue of credi- (1) Written notice of intent to offset bility or veracity, the Secretary may as described in § 33.4; and provide an oral hearing. (2) An opportunity to petition for a Hearing official means a Depart- hearing, and, if a hearing is provided, mental Appeals Board administrative to receive a written decision from the law judge or appropriate alternate as hearing official within 60 days on the outlined in § 33.7(a)(2). following issues: Paying agency means the agency em- (i) The determination of the Depart- ploying the individual and authorizing ment concerning the existence or the payment of his or her current pay. amount of the debt; and Salary offset means an administrative (ii) The repayment schedule, unless it offset to collect a debt under 5 U.S.C. was established by written agreement 5514 owed by a federal employee between the employee and Department. through deductions at one or more offi- (d) The provisions of paragraph (c) of cially established pay intervals from this section do not apply to: the current pay account of the em- (1) Any adjustment to pay arising out ployee without his or her consent. of an employee’s election of coverage or a change in coverage under a federal Secretary means the Secretary of benefits program requiring periodic de- Health and Human Services, or the duction from pay, if the amount to be Secretary’s designee within any Staff recovered was accumulated over four Division, Operating Division or Re- pay periods or less; gional Office. (2) A routine intra-agency adjust- Waiver means the cancellation, re- ment of pay that is made to correct an mission, forgiveness, or non-recovery overpayment of pay attributable to of a debt owed by an employee to this clerical or administrative errors or Department or another agency as re- delays in processing pay documents, if quired or permitted by 5 U.S.C. 5584, the overpayment occurred within the 8346(b), 10 U.S.C. 2774, 32 U.S.C. 716, or four pay periods preceding the adjust- any other law. ment and, at the time of such adjustment, or as soon thereafter as prac- § 33.3 General rule. tical, the individual is provided written (a) Whenever a delinquent debt is notice of the nature and the amount of owed to the Department by an em- the adjustment and point of contact for ployee, the Secretary may, subject to contesting such adjustment; or paragraphs (b) through (d) of this sec- (3) Any adjustment to collect a debt tion, involuntarily offset the amount amounting to $50 or less, if, at the time of the debt from the employee’s dispos- of such adjustment, or as soon there- able pay. after as practical, the individual is pro- (b) Unless provided by another stat- vided written notice of the nature and ute pertaining to a particular type of the amount of the adjustment and a debt (e.g., 42 U.S.C. 292r, Health profes- point of contact for contesting such ad- sionals education, 42 U.S.C. 297b, Nurse justment. education), the Department may not initiate salary offset to collect a debt § 33.4 Notice requirements before off- more than 10 years after the Govern- set. ment’s right to collect the debt first (a) At least 30 days before the initi- accrued, unless facts material to the ation of salary offset under this part, Government’s right to collect the debt the Secretary shall mail, by first class were not known and could not reason- mail, to the employee’s last known ad- ably have been known by the official or dress, a written notice informing the officials of the Government who were debtor of the following:

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(1) The Secretary has reviewed the an alternative repayment agreement, records relating to the debt and has de- and requesting a hearing; termined that a debt is owed, the (10) The name and address of the of- amount of the debt, and the facts giv- fice within the Department to which ing rise to the debt; the petition for a hearing should be (2) The Secretary’s intention to col- sent, which generally will be the Oper- lect the debt by means of deduction ating Division or Staff Division respon- from the employee’s current disposable sible for collecting the debt; pay account until the debt and all ac- (11) A timely and properly filed peti- cumulated interest, penalties, and ad- tion for a hearing will stay the com- ministrative costs are paid in full; mencement of the collection pro- (3) The amount, stated either as a ceeding; fixed dollar amount or as a percentage (12) The Department will initiate ac- of pay not to exceed 15 percent of dis- tion to effect salary offset not less posable pay, the frequency, the com- than 30 days from the date of mailing mencement date, and the duration of the notice of intent, unless the em- the intended deductions; ployee properly files a timely petition (4) An explanation of the Depart- for a hearing, ment’s policies concerning the assess- (13) A final decision on a hearing, if ment of interest, penalties, and admin- one is requested, will be issued at the earliest practical date, but not later istrative costs, stating that such as- than 60 days after the filing of the peti- sessments must be made unless waived tion requesting the hearing unless the in accordance with 31 CFR 901.9 and employee requests and the hearing offi- § 30.18 of this title; cial grants a delay in the proceeding; (5) The employee’s right to inspect (14) Knowingly false or frivolous and copy all records of the Department statements, representations or evi- pertaining to the debt or, if the em- dence may subject the employee to: ployee or the employee’s representa- (i) Disciplinary procedures appro- tive cannot personally inspect the priate under chapter 75 of title 5, records, to request and receive copies United States Code; part 752 of title 5, of such records; Code of Federal Regulations; or any (6) If not previously provided, the op- other applicable statutes or regula- portunity to establish a schedule for tions; the voluntary repayment of the debt (ii) Penalties under the False Claims through offset, or to enter into an Act, 31 U.S.C. 3729–3731, or under any agreement to establish a schedule for other applicable statutory authority; repayment of the debt in lieu of offset, and provided the agreement is in writing, (iii) Criminal penalties under 18 signed by both the employee and the U.S.C. 286, 287, 1001, and 1002, or under Department, and documented in the any other applicable statutory author- Department’s files; ity; (7) The right to a hearing conducted (15) Any other rights and remedies by an impartial hearing official with available to the employee under stat- respect to the existence and amount of utes or regulations governing the pro- the debt, or the repayment schedule, so gram for which the collection is being long as a petition is filed by the em- made; ployee as prescribed in § 33.6; (16) Unless there are applicable con- (8) Time limitations and other proce- tractual or statutory provisions to the dures or conditions for inspecting De- contrary, amounts paid on or deducted partment records pertaining to the for the debt, which are later waived or debt, establishing an alternative repay- found not owed to the United States, ment agreement, and requesting a will be promptly refunded to the em- hearing; ployee; and (9) The name, address, and telephone (17) Proceedings with respect to such number of the person or office within debt are governed by 5 U.S.C. 5514. the Department who may be contacted (b) The Secretary will retain evi- concerning the procedures for inspect- dence of service indicating the date of ing Department records, establishing mailing of the notice.

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§ 33.5 Review of department records (2) An employee waives the right to a relating to the debt. hearing, and will have his or her dis- (a) To inspect or copy Department posable pay offset in accordance with records relating to the debt, the em- the offset schedule established by the ployee must send a written request to Department, if the employee: the Department official or office des- (i) Fails to file a timely request for a ignated in the notice of intent to offset hearing, unless such failure is excused; stating his or her intention. The writ- or ten request must be received by the De- (ii) Fails to appear at an oral hear- partment within 15 days from the em- ing, of which the employee was noti- ployee’s receipt of the notice. fied, unless the hearing official deter- (b) In response to a timely request as mines that the failure to appear was described in paragraph (a) of this sec- due to circumstances beyond the em- tion, the designated Department offi- ployee’s control. cial shall notify the employee of the lo- (c) Form of hearings. (1) General. After cation and time when the employee the employee requests a hearing, the may inspect and copy such records. If hearing official shall notify the em- the employee or employee’s representa- ployee of the form of the hearing to be tive is unable to personally inspect provided. If the hearing will be oral, such records as the result of geo- the notice shall set forth the date, graphical or other constraints, the De- time, and location of the hearing. If partment shall arrange to send copies the hearing will be a review of the of such records to the employee. written record, the employee shall be notified that he or she should submit § 33.6 Hearings. evidence and arguments in writing to (a) Petitions for hearing. (1) To request the hearing official by a specified date, a hearing concerning the existence or after which the record shall be closed. amount of the debt or the offset sched- The date specified shall give the em- ule established by the Department, the ployee reasonable time to submit docu- employee must send a written petition mentation. to the office designated in the notice of (2) Oral hearing. An employee who re- intent to offset, see § 33.4(a)(10), within quests an oral hearing shall be pro- 15 days of receipt of the notice. vided an oral hearing if the hearing of- (2) The petition must: ficial determines that the matter can- (i) Be signed by the employee; not be resolved by review of documen- (ii) Fully identify and explain with tary evidence alone because an issue of reasonable specificity all the facts, evi- credibility or veracity is involved. dence, and witnesses, if any, that the Where an oral hearing is appropriate, employee believes support his or her the hearing is not an adversarial adju- position; and dication and need not take the form of (iii) Specify whether an oral or paper an evidentiary hearing, i.e., the rules hearing is requested. If an oral hearing of evidence need not apply. Oral hear- is requested, the request should explain ings may take the form of, but are not lim- why the matter cannot be resolved by ited to: review of the documentary evidence (i) Informal conferences with the alone. hearing official in which the employee (3) The timely filing of a petition for and agency representative will be given hearing shall stay any further collec- full opportunity to present evidence, tion proceedings. witnesses, and arguments; (b) Failure to timely request. (1) If the (ii) Informal meetings in which the petition for hearing is filed after the hearing official interviews the em- 15-day period provided for in paragraph ployee; or (a)(1) of this section, the Secretary (iii) Formal written submissions with may grant the request if the employee an opportunity for oral presentations. can establish that the delay was the re- (3) Paper hearing. If the hearing offi- sult of circumstances beyond the em- cial determines that an oral hearing is ployee’s control, or that the employee not necessary, the hearing official will failed to receive actual notice of the make the determination based upon a filing deadline. review of the available written record.

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(4) Record. The hearing official shall § 33.7 Obtaining the services of a hear- maintain a summary record of any ing official. hearing conducted under this part. Wit- (a)(1) When the Department is the nesses who testify in oral hearings will creditor agency, the office designated do so under oath or affirmation. in § 33.4(a)(10) shall schedule a hearing, (d) Written decision. (1) Date of deci- if one is requested by an employee, be- sion. The hearing officer shall issue a fore a hearing official. written opinion stating his or her deci- (2) When the Department cannot pro- sion, based upon documentary evidence vide a prompt and appropriate hearing and information developed at the hear- before an administrative law judge or a ing, as soon as practicable after the hearing official furnished pursuant to hearing, but not later than sixty (60) another lawful arrangement, the office days after the date on which the hear- designated in § 33.4(a)(10) may: ing petition was received by the cred- (i) When the debtor is not an em- itor agency, unless the employee re- ployee of the Department, contact an quested a delay in the proceedings, in agent of the employee’s paying agency which case the 60-day decision period designated in 5 CFR part 581, Appendix shall be extended by the number of A, to arrange for a hearing official; or days by which the hearing was post- (ii) When the debtor is an employee poned. The recipient of an employee’s of the Department, contact an agent of request for a hearing must forward the any agency designated in 5 CFR part request expeditiously to the Depart- 581, Appendix A, to arrange for a hear- mental Appeals Board so as to not ing official. jeopardize the Boards’s ability to issue (b)(1) When another agency is the a decision within this 60-day period. creditor agency, it is the responsibility (2) Content of decision. The written de- of that agency to arrange for a hearing cision shall include: if one is requested. The Department will provide a hearing official upon the (i) A statement of the facts presented request of a creditor agency when the to support the origin, nature, and debtor is employed by the Department amount of the debt; and the creditor agency cannot provide (ii) The hearing official’s findings, a prompt and appropriate hearing be- analysis, and conclusions, including a fore a hearing official furnished pursu- determination whether the employee’s ant to another lawful arrangement. petition for hearing was baseless and (2) Services rendered to a creditor resulted from an intent to delay cred- agency under paragraph (b)(1) of this itor agency collection activity; and section will be provided on a fully re- (iii) The terms of any repayment imbursable basis pursuant to the Econ- schedule, if applicable. omy Act of 1932, as amended, 31 U.S.C. (e) Failure to appear. In the absence of 1535. good cause shown, an employee who (c) The determination of a hearing fails to appear at a hearing shall be official designated under this section is deemed, for the purpose of this part, to considered to be an official certifi- admit the existence and amount of the cation regarding the existence and debt as described in the notice of in- amount of the debt for purposes of exe- tent. If the representative of the cred- cuting salary offset under 5 U.S.C. 5514 itor agency fails to appear, the hearing and this part. A creditor agency may official shall proceed with the hearing make a certification to the Secretary as scheduled and make a determination of the Treasury under 5 CFR 550.1108 or based upon oral testimony presented a paying agency under 5 CFR 550.1109 regarding the existence and amount of and the documentary evidence sub- the debt based on the certification of a mitted by both parties. With the agree- hearing official. If a hearing official de- ment of both parties, the hearing offi- termines that a debt may not be col- cial shall schedule a new hearing date, lected via salary offset, but the cred- and both parties shall be given reason- itor agency finds that the debt is still able notice of the time and place of the valid, the creditor agency may still new hearing. seek collection of the debt through

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other means, such as offset of other based on materially changed cir- Federal payments or litigation. cumstances, such as, but not limited to, catastrophic illness, divorce, death, § 33.8 Voluntary repayment agreement or disability. in lieu of salary offset. (b)(1) In determining whether an off- (a)(1) In response to the notice of in- set would prevent the employee from tent to offset, the employee may pro- meeting essential subsistence expenses, pose to establish an alternative sched- e.g., food, housing, clothing, transpor- ule for the voluntary repayment of the tation, and medical care, the employee debt by submitting a written request shall submit a detailed statement and to the Department official designated supporting documents for the em- in the notice of intent to offset. An employee, his or her spouse, and depend- ployee who wishes to repay the debt ents indicating: without salary offset shall also submit (i) Income from all sources; a proposed written repayment agree- (ii) Assets and liabilities; ment. The proposal shall admit the ex- (iii) Number of dependents; istence of the debt, and the agreement (iv) Food, housing, clothing, trans- must be in such form that it is legally portation, and medical expenses; and enforceable. The agreement must: (v) Exceptional and unusual ex- (i) Be in writing; penses, if any. (ii) Be signed by both the employee (2) When requesting a special review and the Department; under this section, the employee shall (iii) Specify all the terms of the ar- file an alternative proposed offset or rangement for payment; and payment schedule and a statement, (iv) Contain a provision accelerating with supporting documents as de- the debt in the event of default by the scribed in paragraph (b)(1) of this sec- employee, but such an increase may tion, stating why the current salary not result in a deduction that exceeds offset or payments result in an extreme 15 percent of the employee’s disposable financial hardship to the employee. pay unless the employee has agreed in (c)(1) The Secretary shall evaluate writing to deduction of a greater the statement and supporting docu- amount. ments, and determine whether the (2) Any proposal under paragraph original offset or repayment schedule (a)(1) of this section must be received imposes extreme financial hardship on by the Department within 30 days of the employee. the date of the notice of intent to off- (2) Within 30 calendar days of the re- set. ceipt of the request and supporting (b) In response to a timely request as documents, the Secretary shall notify described in paragraph (a) of this sec- the employee in writing of such deter- tion, the designated Department offi- mination, including, if appropriate, a cial shall notify the employee whether revised offset or repayment schedule. the proposed repayment schedule is ac- (d) If the special review results in a ceptable. It is within the Secretary’s revised offset or repayment schedule, discretion to accept a proposed alter- the Secretary shall provide a new cer- native repayment schedule, and to set tification to the paying agency. the necessary terms of a voluntary repayment agreement. § 33.10 Procedures for salary offset. (c) No voluntary repayment agree- (a) Method and source of deductions. ment will be binding on the Secretary Unless the employee and the Secretary unless it is in writing and signed by have agreed to an alternative repay- both the Secretary and the employee. ment arrangement under § 33.8, a debt shall be collected in lump sum or by in- § 33.9 Special review. stallment deductions at officially es- (a) A Department employee subject tablished pay intervals from an em- to salary offset or a voluntary repay- ployee’s current pay account. ment agreement may, at any time, re- (b) Limitation on amount of deduction. quest a special review by the Secretary Ordinarily, the size of installment de- of the amount of the salary offset or ductions must bear a reasonable rela- voluntary repayment installments, tionship to the size of the debt and the

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employee’s ability to pay. However, the due the former employee (e.g., lump amount deducted for any pay period sum leave payment). must not exceed 15 percent of the disposable pay from which the deduction § 33.11 Salary offset when the Depart- is made, unless the employee has ment is the creditor agency but not agreed in writing to the deduction of a the paying agency. greater amount, as outlined in § 33.8. (a) Centralized administrative offset. (1) (c) Duration of deductions. (1) Lump Under 31 U.S.C. 3716, the Department sum. If the amount of the debt is equal shall notify the Secretary of the Treas- to or less than 15 percent of the em- ury of all past-due, legally enforceable ployee’s disposable pay for an officially debts which are 180 days delinquent for established pay interval, the debt gen- purposes of collection by centralized erally will be collected in one lump- administrative offset. This includes sum deduction. debts which the Department seeks to (2) If the employee is deemed finan- recover from the pay account of an em- cially unable to pay in one lump-sum ployee of another agency via salary off- or the amount of the debt exceeds 15 set. The Secretary of the Treasury and percent of the employee’s disposable other Federal disbursing officials will pay for an officially established pay in- match payments, including Federal terval, the debt shall be collected in in- salary payments, against these debts. stallments. Except as provided in para- Where a match occurs, and all the requirements for offset have been met, graphs (e) and (f) of this section, in- the payments will be offset to collect stallment deductions must be made the debt. over a period not greater than the an- (2) Prior to offset of the pay account ticipated period of active duty or em- of an employee, the Department must ployment. comply with the requirements of 5 (d) When deductions may begin. (1) De- U.S.C. 5514; 5 CFR part 550, subpart K, ductions will begin on the date stated and this part. Specific procedures for in the notice of intent, unless an alter- notifying the Secretary of the Treas- native repayment agreement under ury of a debt for purposes of collection § 33.8 has been accepted or the em- by administrative offset, including sal- ployee has filed a timely request for a ary offset, are contained in 31 CFR hearing. parts 285 and 901 and part 30 of this (2) If the employee files a timely pe- title. tition for hearing as provided in § 33.6, (b) Non-centralized administrative off- deductions will begin after the hearing set. When salary offset through central- official has provided the employee with ized administrative offset under para- a hearing and a final written decision graph (a) of this section is not possible, has been rendered in favor of the De- the Department may attempt to col- partment. lect a debt through non-centralized ad- (e) Liquidation from final check. If an ministrative offset in accordance with employee retires, resigns, or the period part 30 of this title. of employment ends before collection (1) Format of the request. Upon comple- of the debt is completed, the remainder tion of the procedures established in this of the debt will be offset under 31 part and pursuant to 5 U.S.C. 5514, the U.S.C. 3716 from subsequent payments Department shall: of any nature (e.g., final salary pay- (i) Certify in writing to the paying ment or lump-sum leave) due the em- agency that the employee owes the ployee from the paying agency as of debt, the amount and basis of the debt, the date of separation. the date on which payment(s) is due, (f) Recovery from other payments due a the date the Government’s right to col- separated employee. If the debt cannot lect the debt first accrued, and that the be satisfied by offset from any final Departmental regulations imple- payment due the employee on the date menting 5 U.S.C. 5514 have been ap- of separation, the Secretary will liq- proved by the Office of Personnel Man- uidate the debt, where appropriate, by agement. administrative offset under 31 U.S.C. (ii) If the collection is to be made in 3716 from later payments of any kind installments, advise the paying agency

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of the number of installments to be been paid, the Department may re- collected, the amount or percentage of quest, unless otherwise prohibited, disposable pay to be collected in each that money due and payable to the em- installment, and the commencement ployee from the Civil Service Retire- date of the installments, if a date other ment and Disability Fund (5 CFR than the next officially established pay 831.1801 or 5 CFR 845.401) or other simi- period is required. lar funds, be administratively offset to (iii) Unless the employee has con- collect the debt. See 31 U.S.C. 3716 and sented in writing to the salary deduc- 31 CFR 901.3. tions or signed a statement acknowl- (iv) If the employee transfers to an- edging receipt of the required proce- other paying agency, the Department dures and this written consent or must submit a properly certified debt statement is forwarded to the paying claim to the new paying agency before agency, advise the paying agency of collection can be resumed; however, the action(s) taken under 5 U.S.C. 5514 the Department need not repeat the and this part, and give the date(s) the due process procedures described in 5 action(s) was taken. U.S.C. 5514 and this part. The Depart- (2) Requesting recovery from current ment shall review the debt to ensure paying agency. (i) Except as otherwise that collection is resumed by the new provided in this paragraph, the Depart- paying agency. ment shall submit a certified debt claim containing the information spec- § 33.12 Salary offset when the Depart- ified in paragraph (a) of this section, ment is the paying agency but not and an installment agreement, or other the creditor agency. instruction on the payment schedule, if (a) Format of the request. (1) When the applicable, to the employee’s paying Department is the paying agency and agency. another agency is the creditor agency, (ii) If the employee is in the process the creditor agency must certify, in of separating from the Federal Govern- writing, to the Department that the ment, the Department shall submit the employee owes the debt, the amount certified debt claim to the employee’s and basis of the debt, the date on which paying agency for collection as pro- payment(s) is due, the date the Govern- vided in § 33.10(e). The paying agency ment’s right to collect the debt first must certify the total amount of its accrued, and that the creditor agency’s collection on the debt and send a copy regulations implementing 5 U.S.C. 5514 of the certification to the employee have been approved by the Office of and another copy to the Department. If Personnel Management. the paying agency’s collection does not (2) If the collection is to be made in fully satisfy the debt, and the paying installments, the creditor agency must agency is aware that the employee is also advise the Department of the num- entitled to payments from the Civil ber of installments to be collected, the Service Retirement and Disability amount or percentage of disposable pay Fund, or other similar payments that to be collected in each installment, and may be due the employee from other the commencement date of the install- Federal Government sources, the payments, if a date other than the next of- ing agency will provide written notifi- ficially established pay period is re- cation of the outstanding debt to the quired. agency responsible for making such (3) Unless the employee has con- payments to the employee, stating the sented in writing to the salary deduc- employee owes a debt, the amount of tions or signed a statement acknowl- the debt, and that the provisions of edging receipt of the required proce- this section have been fully complied dures and the written consent or state- with. The Department must submit a ment is forwarded to the Department, properly certified claim to the agency the creditor agency must advise the responsible for making such payments Department of the action(s) taken before the collection can be made. under 5 U.S.C. § 5514, and give the (iii) If the employee is already sepa- date(s) the action(s) was taken. rated and all payments due from the (b) Requests for recovery. (1) Complete employee’s former paying agency have claim. When the Department receives a

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properly certified debt claim from a ment shall furnish a copy of this writ- creditor agency, deductions should be ten notification to the creditor agency scheduled to begin prospectively at the so that it can file a properly certified next officially established pay interval. debt claim with the agency responsible The employee must receive written no- for making such payments. tice as described in § 33.10 that the De- (e) Employees who transfer to another partment has received a certified debt paying agency. If, after the creditor claim from the creditor agency, includ- agency has submitted a debt claim to ing the amount, and written notice of the Department, the employee trans- the date deductions from salary will fers from the Department to a different commence and the amount of such de- paying agency before the debt is col- ductions. lected in full, the Secretary shall: (2) Incomplete claim. When the Depart- ment receives an incomplete debt (1) Certify the total amount of the claim from a creditor agency, the Sec- collection made on the debt; and retary shall return the debt claim with (2) Furnish a copy of the certification a notice that procedures under 5 U.S.C. to the employee and another copy to 5514 and 5 CFR part 550, subpart K, the creditor agency along with notice must be provided and a properly cer- of the employee’s transfer. tified debt claim received before action will be taken to collect from the em- § 33.13 Interest, penalties, and admin- ployee’s current pay account. istrative costs. (c) Review. The Secretary is not re- Debts owed to the Department shall quired or authorized to review the mer- be assessed interest, penalties and ad- its of the determination with respect ministrative costs in accordance with to the amount or validity of the debt 45 CFR 30.18. certified by the creditor agency. (d) Employees separating. If an em- § 33.14 Non-waiver of rights. ployee begins separation action before An employee’s involuntary payment the Department collects the total debt due the creditor agency, the following of all or any portion of a debt collected actions will be taken: under this part shall not be construed (1) To the extent possible, the bal- as a waiver of any rights which the em- ance owed the creditor agency will be ployee may have under 5 U.S.C. 5514 or liquidated from a final salary check, or any other provision of law or contract, other final payments of any nature due unless there are statutory or contrac- the employee from the Department; tual provisions to the contrary. (2) The Secretary will certify the total amount of the Department’s col- § 33.15 Refunds. lection on the debt and send a copy of (a) The Secretary shall promptly re- the certification to the employee and fund any amounts paid or deducted another copy to the creditor agency; under this part when: and (1) A debt is waived or otherwise (3) If the Department’s collection found not owing to the United States; does not fully satisfy the debt, and the or Secretary is aware that the employee (2) The employee’s paying agency is is entitled to payments from the Civil directed by administrative or judicial Service Retirement and Disability order to refund amount deducted from Fund, or other similar payments that may be due the employee from other the employee’s current pay. Federal Government sources, the Sec- (b) Unless required or permitted by retary will provide written notification law or contract, refunds shall not bear of the outstanding debt to the agency interest. responsible for making such payments to the employee. The written notifica- § 33.16 Additional administrative col- tion shall state that the employee owes lection action. a debt, the amount of the debt, and Nothing contained in this part is in- that the provisions of this section have tended to preclude the use of any other been fully complied with. The Depart- appropriate administrative remedy.

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PART 34—CLAIMS FILED UNDER THE Claimant means an employee who has MILITARY PERSONNEL AND CIVIL- filed a claim with the Department IAN EMPLOYEES ACT under the MPCE Act. Damage or loss means total or partial destruction or loss of the item claimed. Sec. 34.1 Purpose and scope. Department means the Department of 34.2 Definitions. Health and Human Services. 34.3 Filing procedures and time limits. Employee means an officer or em- 34.4 Allowable claims. ployee of the Department. 34.5 Unallowable claims. Quarters means a house, apartment 34.6 Reconsideration or appeal. or other residence assigned by the gov- 34.7 Payment procedures. ernment to an employee of the Depart- 34.8 Computation of award and settlement. 34.9 Claims involving carriers or insurers. ment. AUTHORITY: 31 U.S.C. 3721. § 34.3 Filing procedures and time lim- SOURCE: 69 FR 13257, Mar. 22, 2004, unless its. otherwise noted. (a) Who may file a claim. A claim may be filed by the following individuals: § 34.1 Purpose and scope. (1) An employee; (a) Purpose. This part prescribes po- (2) An authorized agent or represent- lices and procedures for handling ative of an employee or employee’s es- claims not in excess of $40,000.00 filed tate, regardless of whether the claim by employees against the Department arose before or concurrent with an em- of Health and Human Services under ployee’s death; and the Military Personnel and Civilian (3) A former employee or his author- Employees Claims (MPCE) Act of 1964, ized agent or representative if damage 31 U.S.C. 3721, for damage to, or loss of, or loss occurred prior to the separation property against the Department. from the Department. Under the MPCE Act, the Secretary (b) Requirements. A claim submitted may approve claims made against the under this part must be presented in Government by a federal government writing to the Claims Officer (See para- employee for damage to or loss of per- graph (c) of this section). Claims may sonal property that is incident to em- be submitted on a HHS–481 form, Em- ployment when the loss or damage is ployee Claim for Loss or Damage to not due to any negligence on the part Personal Property. All claims must be of employee. signed by the claimant or his author- (b) Scope. This part applies to all De- ized agent or representative. The HHS- partmental Operating Divisions and Form can be obtained from the Claims Regional Offices that process and re- Officer or downloaded from the Pro- view claims under the MPCE Act. gram Support Center’s webpage at Nothing in this part shall be construed www.psc.gov. All claims must include to bar other types of claims that are the following: payable under other statutory author- (1) Name and address of the claimant; ity such as, but not limited to, the (2) The office in which the claimant Federal Tort Claims Act (28 U.S.C. was employed at the time of loss, cur- 2671–2680). rent office, if different, and telephone number; § 34.2 Definitions. (3) Date of loss or damage; In this part, unless the context oth- (4) Amount of claim; erwise requires: (5) Description of the property, in- Claim means any claim filed by or on cluding but not limited to type, design, behalf of an employee for damage to, or model number, date acquired, value loss of, property that is incident to the when acquired, value when lost, and es- claimant’s employment. This defini- timation of repair or replacement cost; tion includes claims where the claim- (6) Description of incident; and ant is not the legal owner of the prop- (7) If property was insured when loss erty in question, but has obtained au- or damage occurred, a statement indi- thorization from the legal owner to cating whether a claim was filed with posses or control the property. an insurance carrier.

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(c) Where to file your claim. (1) Claim- § 34.4 Allowable claims. ants employed with the Regional Of- (a) What you can claim. (1) Claims for fices should submit claims to the Chief damage or loss may be allowed where Regional Counsel, Office of the General possession of the property was lawful Counsel, within the claimant’s Region. and reasonable under circumstances. (2) All other claimants must submit (2) Claims for property damage or claims to the Office of the General loss by fire, flood, hurricane, theft, or Counsel, General Law Division, Claims other serious occurrence may be al- and Employment Law Branch, 330 Inde- lowed when the property is located in- pendence Ave., SW., Room 4760, Cohen side: Building, Washington, DC 20201. (i) Quarters that have been assigned (d) Evidence required. You must sub- or provided by the government; or mit the following: (ii) Quarters outside the United (1) Not less than two itemized signed States whether assigned by the govern- estimates for the cost of repairs, or an ment or not, except when a civilian itemized bill of repair for the damaged employee outside the U.S. is a local in- property; habitant. (2) In the event the property is not (3) Claims for damage to, or loss of, economically repairable or is totally property may be allowed when caused lost or destroyed, proof of this fact, its by: market value before or after loss, pur- (i) Marine, air disaster, enemy action chase price, and date of acquisition of or threat thereof, or other extraor- the property; dinary risks incurred incident to the (3) Proof of ownership or right to re- performance of official duties by the cover for the damage such as a receipt; claimant; and (4) Police/incident report; (ii) Efforts by the claimant to save (5) If property is insured, insurance human life or government property. information, such as insurance carrier, (4) Property used for the benefit of type of coverage, deductible, and the government. Claims may be al- whether claim has been filed and/or lowed for damage to, or loss of, prop- paid; erty used for the benefit of the govern- (6) Travel orders, if applicable; ment at the request, or with the (7) Any citations or traffic tickets, if knowledge and consent of, superior au- applicable; and thority. (8) Any other evidence required by (5) Claims for clothing and acces- the claims officer not specified above. sories may be allowed when loss or (e) Time limit. (1) A claim filed under damage was caused by faulty or defec- this section must be filed in writing tive equipment or furnishings owned or with the Department within two years managed by the Department. from the date of the incident. (6) Claims for stolen property, only if (2) If the claim accrues in the time of it is determined that the claimant ex- war or in the time of armed conflict in ercised due care in protecting his prop- which any armed forces of the United erty and there is clear evidence that a States are engaged or if such a war or burglary or theft occurred. armed conflict occurs within two years (7) Claims for automobiles, only when after the claim accrues, and if good required to perform official business or cause is shown, the claim shall be pre- parked on a government-owned or oper- sented no more than two years after ated parking lot or garage incident to that cause ceases to exist, or two years employment. This subsection does not after the war or armed conflict is ter- include claims for damage or loss when minated, whichever is earlier. traveling between place of residence (3) All required evidence in support of and duty station, or when the loss or a claim submitted under this section damage was caused by the negligence must be forwarded to the claims officer of a third party. If the automobile is a within sixty days after request. Failure total loss, the maximum amount al- to do so will be deemed as an abandon- lowed is the value of the vehicle at the ment of the claim and the claim will be time of loss as determined by the Na- disallowed. tional Automobile Dealer Association

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Appraisal Guide or similar publica- Claims Officer’s decision along with tions. any new evidence supporting the claim. (8) Claims for any other meritorious (b) A voucher or a supplemental claims in exceptional cases may be al- voucher will be prepared by the Claims lowed by the Claims Officer. Officer if it is determined that the (9) Transportation or travel losses. claimant’s request for reconsideration Damage or loss of personal property, should be allowed. including baggage and household items, while being transported by a § 34.7 Payment procedures. carrier, agent or agency of the govern- (a) For all claims that are approved ment, or private conveyance, may be in whole or part, the claims officer allowed only if the property is shipped shall prepare and mail a payment under orders or in connection with voucher to the claimant. travel orders. (b) This voucher shall be mailed to the claimant with appropriate instruc- § 34.5 Unallowable claims. tions. (a) What you cannot claim. (1) Claims (c) Upon receipt of the signed pay- for money or currency, such as intan- ment voucher, the claims officer shall gible property (i.e. bankbooks, check, sign and forward the signed voucher to money orders, promissory notes, stock the office where the claimant is or was certificates, etc.). employed for processing. (2) Worn-out or unserviceable prop- (d) Upon receipt of the signed pay- erty. ment voucher, the office in which the (3) Easily pilferable articles, such as claimant is or was employed will sub- jewelry, cameras, watches, and bin- mit the voucher for transmission to oculars when they are shipped with the Treasury Department for issuance household goods by a moving company of a check in the sum allowed. or unaccompanied baggage. This does (e) Funds paid for settlement of al- not apply to checked property or prop- lowed claims shall be made from appro- erty in personal custody of the claim- priations of the office in which the ant or his agent provided proper secu- claimant is or was employed. rity measures have been taken. (4) Government property. § 34.8 Computation of award and set- (5) Appraisal or estimate fees. tlement. (6) Automobiles, except when re- (a) The amount awarded on any item quired to perform official business or of property shall not exceed the ad- parked on a government-owned or oper- justed cost of the item based on the ated parking lot or garage incident to cost of replacing it with a similar one employment. of the same quality minus the appro- (7) Loss or damage caused in whole or priate depreciation rate. The amount in part by the negligent or wrongful normally payable on property damaged act of the claimant or his agent or em- beyond economical repair shall not ex- ployee. ceed its depreciated value. If the cost (8) Claims under $30.00. of repairs is less than the depreciated (9) Stolen property when it’s deter- value it shall be considered economi- mined that claimant failed to exercise cally repairable and the costs of repairs due care in protecting his or her prop- shall be the amount payable. erty. (b) Depreciation in value of an item (10) Sales Tax. Reimbursements for shall be determined by considering the the payment of sales tax incurred in type of article involved, its replace- connection with repairs or replacing an ment cost, condition when lost or dam- item will not be allowed. aged beyond economical repair, and the time elapsed between the date of acqui- § 34.6 Reconsideration or appeal. sition and the date of accrual of the (a) Requests for reconsideration or claim. appeal shall be forwarded to the Asso- (c) Notwithstanding any other provi- ciate General Counsel, General Law Di- sion of law, settlements of claims vision, Office of the General Counsel, under the MPCE Act are final and con- within sixty days from the date of the clusive. The acceptance of a settlement

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constitutes a complete release of any PART 35—TORT CLAIMS AGAINST claim against the United States and THE GOVERNMENT any employee of the government whose act or omission gave rise to the claim Subpart A—General by reason of the same claim. Sec. § 34.9 Claims involving carriers or in- 35.1 Scope of regulations. surers. Subpart B—Procedures (a) Carriers. (1) If property is damaged, lost or destroyed while being 35.2 Administrative claim; when presented; place of filing. shipped pursuant to authorized travel 35.3 Administrative claim; who may file. orders, the owner shall file a written 35.4 Administrative claims; evidence and in- claim for reimbursement against the formation to be submitted. carrier no later than nine months from 35.5 Investigation, examination, and deter- the date of delivery or should have mination of claims. 35.6 Final denial of claim. been made according to the terms of 35.7 Payment of approved claims. the contract. It shall be filed before or 35.8 Release. concurrent with submitting a claim 35.9 Penalties. against the government under this 35.10 Limitation on Department’s author- part. ity. (2) The demand shall be made against AUTHORITY: Sec. 1(a), 80 Stat. 306; 28 U.S.C. the responsible carrier if more than 2672; 28 CFR Part 14. one contract was issued, a separate de- SOURCE: 32 FR 14101, Oct. 11, 1967, unless mand shall be made against the last otherwise noted. carrier on each such document, unless claimant knows which carrier was in Subpart A—General possession of the property when the § 35.1 Scope of regulations. damage or loss occurred. (b) Insurers. (1) If property which is The regulations in this part shall damaged, lost, or destroyed incident to apply only to claims asserted under the the claimant’s service is insured in Federal Tort Claims Act, as amended, 28 U.S.C. sections 2671–2680, accruing on whole or in part, the claimant shall in- or after January 18, 1967, for money form the Claims Officer whether a damages against the United States for claim was made with the insurance damage to or loss of property or per- carrier. sonal injury or death caused by the (2) The claimant shall inform the negligent or wrongful act or omission claims officer if he or she received a re- of any employee of the Department of imbursement from the insurance car- Health and Human Services while act- rier for the item that was damaged or ing within the scope of his office or em- lost. The exact amount of the reim- ployment. bursement must be reported. (3) If the claimant receives a reim- Subpart B—Procedures bursement for the lost or damaged property from an insurance carrier, the § 35.2 Administrative claim; when pre- maximum amount that can be recov- sented; place of filing. ered from the Department is the dif- (a) For purposes of the regulations in ference between an appropriate award this part, a claim shall be deemed to under this regulation and the amount have been presented when the Depart- recovered from the insurance carrier. ment of Health and Human Services re- The claimant is responsible for submit- ceives, at a place designated in para- ting to the Department documentation graph (b) of this section, an executed Standard Form 95 or other written no- that identifies the exact amount of the tification of an incident accompanied reimbursement. 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

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the incident. A claim which should sert such a claim under applicable have been presented to the Department state law. but which was mistakenly addressed to (d) A claim for loss wholly com- or filed with another Federal agency, pensated by an insurer with the rights shall be deemed to be presented to the of a subrogee may be presented by the Department as of the date that the insurer. A claim for loss partially com- claim is received by the Department. A pensated by an insurer with the rights claim mistakenly addressed to or filed of a subrogee may be presented by the with the Department shall forthwith be insurer or the insured individually, as transferred to the appropriate Federal their respective interests appear, or agency, if ascertainable, or returned to jointly. Whenever an insurer presents a the claimant. claim asserting the rights of a (b) A claim presented in compliance subrogee, he shall present with his with paragraph (a) of this section may claim appropriate evidence that he has be amended by the claimant at any the rights of a subrogee. time prior to final action by the De- (e) A claim presented by an agent or partment Claims Officer or prior to the legal representative shall be presented exercise of the claimant’s option to in the name of the claimant, be signed bring suit under 28 U.S.C. 2675(a). by the agent or legal representative, Amendments shall be submitted in show the title or legal capacity of the writing and signed by the claimant or person signing, and be accompanied by his duly authorized agent or legal representative. Upon the timely filing of evidence of his authority to present a an amendment to a pending claim, the claim on behalf of the claimant as Department shall have 6 months in agent, executor, administrator, parent, which to make a final disposition of guardian, or other representative. the claim as amended and the claimant’s option under 28 U.S.C. 2675(a) § 35.4 Administrative claims; evidence and information to be submitted. shall not accrue until 6 months after the filing of an amendment. (a) Death. In support of a claim based (c) Forms may be obtained and on death, the claimant may be required claims may be filed, with the office, to submit the following evidence or in- local, regional, or headquarters, of the formation: constituent organization having juris- (1) An authenticated death certifi- diction over the employee involved in cate or other competent evidence show- the accident or incident, or with the ing cause of death, date of death, and Department of Health and Human age of the decedent. Services Claims Officer, Washington, (2) Decedent’s employment or occu- DC 20201. pation at time of death, including his monthly or yearly salary or earnings [32 FR 14101, Oct. 11, 1967, as amended at 35 FR 4517, Mar. 13, 1970] (if any), and the duration of his last employment or occupation. § 35.3 Administrative claim; who may (3) Full names, addresses, birth dates, file. kinship, and marital status of the dece- (a) A claim for injury to or loss of dent’s survivors, including identifica- property may be presented by the tion of those survivors who were de- owner of the property interest which is pendent for support upon the decedent the subject of the claim, his duly au- at the time of his death. thorized agent, or his legal representa- (4) Degree of support afforded by the tive. decedent to each survivor dependent (b) A claim for personal injury may upon him for support at the time of his be presented by the injured person, his death. duly authorized agent, or his legal rep- (5) Decedent’s general physical and resentative. mental condition before death. (c) A claim based on death may be (6) Itemized bills for medical and bur- presented by the executor or adminis- ial expenses incurred by reason of the trator of the decedent’s estate or by incident causing death, or itemized re- any other person legally entitled to as- ceipts of payments for such expenses.

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(7) If damages for pain and suffering ployed, documentary evidence showing prior to death are claimed, a physi- the amount of earnings actually lost. cian’s detailed statement specifying (6) Any other evidence or information the injuries suffered, duration of pain which may have a bearing on either the and suffering, any drugs administered responsibility of the United States for for pain and the decedent’s physical the personal injury or the damages condition in the interval between in- claimed. jury and death. (c) Property damage. In support of a (8) Any other evidence or information claim for damage to or loss of property, which may have a bearing on either the real or personal, the claimant may be responsibility of the United States for required to submit the following evi- the death or the damages claimed. dence or information: (b) Personal injury. In support of a (1) Proof of ownership. claim for personal injury, including (2) A detailed statement of the pain and suffering, the claimant may amount claimed with respect to each be required to submit the following item of property. evidence or information: (3) An itemized receipt of payment (1) A written report by his attending for necessary repairs or itemized writ- physician or dentist setting forth the ten estimates of the cost of such re- nature and extent of the injury, nature pairs. (4) A statement listing date of pur- and extent of treatment, any degree of chase, purchase price, market value of temporary or permanent disability, the the property as of date of damage, and prognosis, period of hospitalization, salvage value, where repair is not eco- and any diminished earning capacity. nomical. In addition, the claimant may be re- (5) Any other evidence or information quired to submit to a physical or men- which may have a bearing either on the tal examination by a physician em- responsibility of the United States for ployed or designated by the Depart- the injury to or loss of property or the ment or the constituent organization. damages claimed. A copy of the report of the examining (d) Time limit. All evidence required physician shall be made available to to be submitted by this section shall be the claimant upon the claimant’s writ- furnished by the claimant within a rea- ten request provided that claimant has, sonable time. Failure of a claimant to upon request, furnished the report re- furnish evidence necessary to a deter- ferred to in the first sentence of this mination of his claim within three subparagraph and has made or agrees months after a request therefor has to make available to the Department been mailed to his last known address or the operating agency any other phy- may be deemed an abandonment of the sician’s reports previously or there- claim. The claim may be thereupon after made of the physical or mental disallowed. condition which is the subject matter of his claim. § 35.5 Investigation, examination, and (2) Itemized bills for medical, dental, determination of claims. and hospital expenses incurred, or When a claim is received, the con- itemized receipts of payment for such stituent agency out of whose activities expenses. the claim arose shall make such inves- (3) If the prognosis reveals the neces- tigation as may be necessary or appro- sity for future treatment, a statement priate for a determination of the valid- of expected duration of and expenses ity of the claim and thereafter shall for such treatment. forward the claim, together with all (4) If a claim is made for loss of time pertinent material, and a recommenda- from employment, a written statement tion based on the merits of the case, from his employer showing actual time with regard to allowance or disallow- lost from employment, whether he is a ance of the claim, to the Department full or part-time employee, and wages Claims Officer to whom authority has or salary actually lost. been delegated to adjust, determine, (5) If a claim is made for loss of in- compromise and settle all claims here- come and the claimant is self-em- under.

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§ 35.6 Final denial of claim. hereunder, shall be final and conclusive (a) Final denial of an administrative on the claimant, his agent or legal rep- claim shall be in writing and sent to resentative and any other person on the claimant, his attorney, or legal whose behalf or for whose benefit the representative by certified or reg- claim has been presented, and shall istered mail. The notification of final constitute a complete release of any denial may include a statement of the claim against the United States and reasons for the denial and shall include against any employee of the Govern- a statement that, if the claimant is ment whose act or omission gave rise dissatisfied with the Department’s ac- to the claim, by reason of the same tion, he may file suit in an appropriate subject matter. U.S. District Court not later than 6 § 35.9 Penalties. months after the date of mailing of the notification. A person who files a false claim or (b) Prior to the commencement of makes a false or fraudulent statement suit and prior to the expiration of the in a claim against the United States 6-month period after the date of mail- may be liable to a fine of not more ing, by certified or registered mail of than $10,000 or to imprisonment of not notice of final denial of the claim as more than 5 years, or both (18 U.S.C. provided in 28 U.S.C. 2401(b), a claim- 287.1001), and, in addition, to a for- ant, his duly authorized agent, or legal feiture of $2,000 and a penalty of double representative, may file a written re- the loss or damage sustained by the quest with the Department for recon- United States (31 U.S.C. 231). sideration of a final denial of a claim § 35.10 Limitation on Department’s au- under paragraph (a) of this section. thority. Upon the timely filing of a request for reconsideration the Department shall (a) An award, compromise or settle- have 6 months from the date of filing ment of a claim hereunder in excess of in which to make a final disposition of $25,000 shall be effected only with the the claim and the claimant’s option prior written approval of the Attorney under 28 U.S.C. 2675(a) to bring suit General or his designee. For the pur- shall not accrue until 6 months after poses of this paragraph, a principal the filing of a request for reconsider- claim and any derivative or subrogated ation. Final Department action on a claim shall be treated as a single request for reconsideration shall be ef- claim. fected in accordance with the provi- (b) An administrative claim may be sions of paragraph (a) of this section. adjusted, determined, compromised or settled hereunder only after consulta- [32 FR 14101, Oct. 11, 1967, as amended at 35 tion with the Department of Justice FR 4517, Mar. 13, 1970] when, in the opinion of the Depart- ment: § 35.7 Payment of approved claims. (1) A new precedent or a new point of (a) Upon allowance of his claim, law is involved; or claimant or his duly authorized agent (2) A question of policy is or may be shall sign the voucher for payment, involved; or Standard Form 1145, before payment is (3) The United States is or may be made. entitled to indemnity or contribution (b) When the claimant is represented from a third party and the Department by an attorney, the voucher for pay- is unable to adjust the third party ment (SF 1145) shall designate both the claim; or claimant and his attorney as ‘‘payees.’’ (4) The compromise of a particular The check shall be delivered to the at- claim, as a practical matter, will or torney whose address shall appear on may control the disposition of a re- the voucher. lated claim in which the amount to be paid may exceed $25,000. § 35.8 Release. (c) An administrative claim may be Acceptance by the claimant, his adjusted, determined, compromised or agent or legal representative, of any settled only after consultation with award, compromise or settlement made the Department of Justice when it is

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learned that the United States or an tered against the employee or (2) pay- employee, agent or cost plus con- ment to satisfy the requirements of a tractor of the United States is involved settlement proposal. The employee in litigation based on a claim arising shall submit a written request, with out of the same incident or trans- documentation including copies of the action. verdict, judgment, award or settlement proposal, as appropriate, to the head of PART 36—INDEMNIFICATION OF his employing component, who shall HHS EMPLOYEES thereupon submit to the General Coun- sel, in a timely manner, a rec- § 36.1 Policy. ommended disposition of the request. The General Counsel shall also seek (a) The Department of Health and the views of the Department of Justice. Human Services may indemnify, in The General Counsel shall forward the whole or in part, its employees (which request, the employing component’s for the purpose of this regulation in- recommendation and the General cludes former employees) for any ver- Counsel’s recommendation to the Sec- dict, judgment or other monetary retary for decision. award which is rendered against any (f) Any payment under this section such employee, provided that the conduct giving rise to the verdict, judg- either to indemnify a Department of ment or award was taken within the Health and Human Services employee scope of his or her employment with or to settle a personal damage claim the Department and that such indem- shall be contingent upon the avail- nification is in the interest of the ability of appropriated funds of the em- United States, as determined by the ploying component of the Department Secretary, or his or her designee, in his of Health and Human Services. or her discretion. (Authority: 5 U.S.C. 301) (b) The Department of Health and [53 FR 11280, Apr. 6, 1988] Human Services may settle or compromise a personal damage claim against its employee by the payment of PART 46—PROTECTION OF HUMAN available funds, at any time, provided SUBJECTS the alleged conduct giving rise to the personal damage claim was taken with- Subpart A—Basic HHS Policy for Protection in the scope of employment and that of Human Research Subjects such settlement or compromise is in Sec. the interest of the United States, as de- 46.101 To what does this policy apply? termined by the Secretary, or his or 46.102 Definitions. her designee, in his or her discretion. 46.103 Assuring compliance with this pol- (c) Absent exceptional cir- icy—research conducted or supported by cumstances, as determined by the Sec- any Federal Department or Agency. retary or his or her designee, the De- 46.104–46.106 [Reserved] partment will not entertain a request 46.107 IRB membership. either to agree to indemnify or to set- 46.108 IRB functions and operations. tle a personal damage claim before 46.109 IRB review of research. entry of an adverse verdict, judgment 46.110 Expedited review procedures for certain kinds of research involving no more or monetary award. than minimal risk, and for minor (d) When an employee of the Depart- changes in approved research. ment of Health and Human Services be- 46.111 Criteria for IRB approval of research. comes aware that an action has been 46.112 Review by institution. filed against the employee in his or her 46.113 Suspension or termination of IRB ap- individual capacity as a result of con- proval of research. duct taken within the scope of his or 46.114 Cooperative research. her employment, the employee should 46.115 IRB records. immediately notify the Department 46.116 General requirements for informed consent. that such an action is pending. 46.117 Documentation of informed consent. (e) The employee may, thereafter, re- 46.118 Applications and proposals lacking quest either (1) indemnification to sat- definite plans for involvement of human isfy a verdict, judgment or award en- subjects.

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46.119 Research undertaken without the in- 46.407 Research not otherwise approvable tention of involving human subjects. which presents an opportunity to under- 46.120 Evaluation and disposition of applica- stand, prevent, or alleviate a serious tions and proposals for research to be problem affecting the health or welfare conducted or supported by a Federal De- of children. partment or Agency. 46.408 Requirements for permission by par- 46.121 [Reserved] ents or guardians and for assent by chil- 46.122 Use of Federal funds. dren. 46.123 Early termination of research sup- 46.409 Wards. port: Evaluation of applications and pro- AUTHORITY: 5 U.S.C. 301; 42 U.S.C. 289(a). posals. 46.124 Conditions. EDITORIAL NOTE: The Department of Health and Human Services issued a notice Subpart B—Additional Protections for Preg- of waiver regarding the requirements set nant Women, Human Fetuses and forth in part 46, relating to protection of human subjects, as they pertain to dem- Neonates Involved in Research onstration projects, approved under section 46.201 To what do these regulations apply? 1115 of the Social Security Act, which test 46.202 Definitions. the use of cost—sharing, such as deductibles, 46.203 Duties of IRBs in connection with re- copayment and coinsurance, in the Medicaid search involving pregnant women, program. For further information see 47 FR fetuses, and neonates. 9208, Mar. 4, 1982. 46.204 Research involving pregnant women or fetuses. Subpart A—Basic HHS Policy for 46.205 Research involving neonates. Protection of Human Research 46.206 Research involving, after delivery, the placenta, the dead fetus or fetal ma- Subjects terial. 46.207 Research not otherwise approvable AUTHORITY: 5 U.S.C. 301; 42 U.S.C. 289, 42 which presents an opportunity to under- U.S.C. 300v–1(b). stand, prevent, or alleviate a serious SOURCE: 56 FR 28012, 28022, June 18, 1991, problem affecting the health or welfare unless otherwise noted. of pregnant women, fetuses, or neonates. § 46.101 To what does this policy Subpart C—Additional Protections Per- apply? taining to Biomedical and Behavioral Research Involving Prisoners as Sub- (a) Except as provided in paragraph jects (b) of this section, this policy applies to all research involving human sub- 46.301 Applicability. jects conducted, supported or otherwise 46.302 Purpose. subject to regulation by any federal de- 46.303 Definitions. partment or agency which takes appro- 46.304 Composition of Institutional Review priate administrative action to make Boards where prisoners are involved. the policy applicable to such research. 46.305 Additional duties of the Institutional Review Boards where prisoners are in- This includes research conducted by volved. federal civilian employees or military 46.306 Permitted research involving pris- personnel, except that each department oners. or agency head may adopt such procedural modifications as may be appro- Subpart D—Additional Protections for priate from an administrative stand- Children Involved as Subjects in Research point. It also includes research con- 46.401 To what do these regulations apply? ducted, supported, or otherwise subject 46.402 Definitions. to regulation by the federal govern- 46.403 IRB duties. ment outside the United States. 46.404 Research not involving greater than (1) Research that is conducted or sup- minimal risk. ported by a federal department or 46.405 Research involving greater than agency, whether or not it is regulated minimal risk but presenting the prospect as defined in § 46.102(e), must comply of direct benefit to the individual sub- with all sections of this policy. jects. (2) Research that is neither con- 46.406 Research involving greater than minimal risk and no prospect of direct ducted nor supported by a federal de- benefit to individual subjects, but likely partment or agency but is subject to to yield generalizable knowledge about regulation as defined in § 46.102(e) must the subject’s disorder or condition. 128

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be reviewed and approved, in compli- tified, directly or through identifiers ance with § 46.101, § 46.102, and § 46.107 linked to the subjects. through § 46.117 of this policy, by an in- (5) Research and demonstration stitutional review board (IRB) that op- projects which are conducted by or sub- erates in accordance with the pertinent ject to the approval of department or requirements of this policy. agency heads, and which are designed (b) Unless otherwise required by de- to study, evaluate, or otherwise exam- partment or agency heads, research ac- ine: tivities in which the only involvement (i) Public benefit or service proof human subjects will be in one or grams; (ii) procedures for obtaining more of the following categories are benefits or services under those pro- exempt from this policy: grams; (iii) possible changes in or al- (1) Research conducted in established ternatives to those programs or proce- or commonly accepted educational set- dures; or (iv) possible changes in meth- tings, involving normal educational ods or levels of payment for benefits or practices, such as (i) research on reg- services under those programs. ular and special education instruc- (6) Taste and food quality evaluation tional strategies, or (ii) research on the and consumer acceptance studies, (i) if effectiveness of or the comparison wholesome foods without additives are among instructional techniques, cur- consumed or (ii) if a food is consumed ricula, or classroom management that contains a food ingredient at or methods. below the level and for a use found to (2) Research involving the use of edu- be safe, or agricultural chemical or en- cational tests (cognitive, diagnostic, vironmental contaminant at or below aptitude, achievement), survey proce- the level found to be safe, by the Food dures, interview procedures or observa- and Drug Administration or approved tion of public behavior, unless: by the Environmental Protection (i) Information obtained is recorded Agency or the Food Safety and Inspec- in such a manner that human subjects tion Service of the U.S. Department of can be identified, directly or through Agriculture. identifiers linked to the subjects; and (c) Department or agency heads re- (ii) any disclosure of the human sub- tain final judgment as to whether a jects’ responses outside the research particular activity is covered by this could reasonably place the subjects at policy. risk of criminal or civil liability or be (d) Department or agency heads may damaging to the subjects’ financial require that specific research activities standing, employability, or reputation. or classes of research activities con- (3) Research involving the use of edu- ducted, supported, or otherwise subject cational tests (cognitive, diagnostic, to regulation by the department or aptitude, achievement), survey proce- agency but not otherwise covered by dures, interview procedures, or obser- this policy, comply with some or all of vation of public behavior that is not the requirements of this policy. exempt under paragraph (b)(2) of this (e) Compliance with this policy re- section, if: quires compliance with pertinent fed- (i) The human subjects are elected or eral laws or regulations which provide appointed public officials or candidates additional protections for human sub- for public office; or (ii) federal stat- jects. ute(s) require(s) without exception that (f) This policy does not affect any the confidentiality of the personally state or local laws or regulations which identifiable information will be main- may otherwise be applicable and which tained throughout the research and provide additional protections for thereafter. human subjects. (4) Research, involving the collection (g) This policy does not affect any or study of existing data, documents, foreign laws or regulations which may records, pathological specimens, or di- otherwise be applicable and which pro- agnostic specimens, if these sources are vide additional protections to human publicly available or if the information subjects of research. is recorded by the investigator in such (h) When research covered by this a manner that subjects cannot be iden- policy takes place in foreign countries,

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procedures normally followed in the § 46.102 Definitions. foreign countries to protect human (a) Department or agency head means subjects may differ from those set the head of any federal department or forth in this policy. [An example is a agency and any other officer or em- foreign institution which complies ployee of any department or agency to with guidelines consistent with the whom authority has been delegated. World Medical Assembly Declaration (b) Institution means any public or (Declaration of Helsinki amended 1989) private entity or agency (including fed- issued either by sovereign states or by eral, state, and other agencies). an organization whose function for the (c) Legally authorized representative protection of human research subjects means an individual or judicial or is internationally recognized.] In these other body authorized under applicable circumstances, if a department or law to consent on behalf of a prospec- agency head determines that the proce- tive subject to the subject’s participa- dures prescribed by the institution af- tion in the procedure(s) involved in the ford protections that are at least research. equivalent to those provided in this (d) Research means a systematic in- policy, the department or agency head vestigation, including research devel- may approve the substitution of the opment, testing and evaluation, de- foreign procedures in lieu of the proce- signed to develop or contribute to gen- dural requirements provided in this eralizable knowledge. Activities which policy. Except when otherwise required meet this definition constitute re- by statute, Executive Order, or the de- search for purposes of this policy, partment or agency head, notices of whether or not they are conducted or these actions as they occur will be pub- supported under a program which is lished in the FEDERAL REGISTER or will considered research for other purposes. be otherwise published as provided in For example, some demonstration and department or agency procedures. service programs may include research (i) Unless otherwise required by law, activities. department or agency heads may waive (e) Research subject to regulation, and the applicability of some or all of the similar terms are intended to encom- provisions of this policy to specific re- pass those research activities for which search activities or classes of research a federal department or agency has activities otherwise covered by this specific responsibility for regulating as policy. Except when otherwise required a research activity, (for example, In- by statute or Executive Order, the de- vestigational New Drug requirements partment or agency head shall forward administered by the Food and Drug Ad- advance notices of these actions to the ministration). It does not include re- Office for Human Research Protec- search activities which are inciden- tions, Department of Health and tally regulated by a federal department Human Services (HHS), or any suc- or agency solely as part of the depart- cessor office, and shall also publish ment’s or agency’s broader responsi- them in the FEDERAL REGISTER or in bility to regulate certain types of ac- such other manner as provided in de- tivities whether research or non-re- partment or agency procedures.1 search in nature (for example, Wage [56 FR 28012, 28022, June 18, 1991; 56 FR 29756, and Hour requirements administered June 28, 1991, as amended at 70 FR 36328, by the Department of Labor). June 23, 2005] (f) Human subject means a living individual about whom an investigator 1 Institutions with HHS-approved assur- (whether professional or student) con- ances on file will abide by provisions of title ducting research obtains 45 CFR part 46 subparts A–D. Some of the (1) Data through intervention or other Departments and Agencies have incorporated all provisions of title 45 CFR part 46 interaction with the individual, or into their policies and procedures as well. However, the exemptions at 45 CFR 46.101(b) behavior, does not apply to research with do not apply to research involving prisoners, children, subpart D, except for research in- subpart C. The exemption at 45 CFR volving observations of public behavior when 46.101(b)(2), for research involving survey or the investigator(s) do not participate in the interview procedures or observation of public activities being observed.

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(2) Identifiable private information. § 46.103 Assuring compliance with this Intervention includes both physical pro- policy—research conducted or supported by any Federal Department cedures by which data are gathered (for or Agency. example, venipuncture) and manipula- tions of the subject or the subject’s en- (a) Each institution engaged in research which is covered by this policy vironment that are performed for re- and which is conducted or supported by search purposes. Interaction includes a federal department or agency shall communication or interpersonal con- provide written assurance satisfactory tact between investigator and subject. to the department or agency head that Private information includes informa- it will comply with the requirements tion about behavior that occurs in a set forth in this policy. In lieu of re- context in which an individual can rea- quiring submission of an assurance, in- sonably expect that no observation or dividual department or agency heads recording is taking place, and informa- shall accept the existence of a current tion which has been provided for spe- assurance, appropriate for the research cific purposes by an individual and in question, on file with the Office for which the individual can reasonably Human Research Protections, HHS, or expect will not be made public (for ex- any successor office, and approved for ample, a medical record). Private infor- federalwide use by that office. When mation must be individually identifi- the existence of an HHS-approved as- able (i.e., the identity of the subject is surance is accepted in lieu of requiring or may readily be ascertained by the submission of an assurance, reports investigator or associated with the in- (except certification) required by this formation) in order for obtaining the policy to be made to department and information to constitute research in- agency heads shall also be made to the volving human subjects. Office for Human Research Protec- (g) IRB means an institutional review tions, HHS, or any successor office. (b) Departments and agencies will board established in accord with and conduct or support research covered by for the purposes expressed in this pol- this policy only if the institution has icy. an assurance approved as provided in (h) IRB approval means the deter- this section, and only if the institution mination of the IRB that the research has certified to the department or has been reviewed and may be con- agency head that the research has been ducted at an institution within the reviewed and approved by an IRB pro- constraints set forth by the IRB and by vided for in the assurance, and will be other institutional and federal require- subject to continuing review by the ments. IRB. Assurances applicable to federally (i) Minimal risk means that the prob- supported or conducted research shall ability and magnitude of harm or dis- at a minimum include: comfort anticipated in the research are (1) A statement of principles gov- not greater in and of themselves than erning the institution in the discharge those ordinarily encountered in daily of its responsibilities for protecting the life or during the performance of rou- rights and welfare of human subjects of tine physical or psychological exami- research conducted at or sponsored by nations or tests. the institution, regardless of whether the research is subject to federal regu- (j) Certification means the official no- lation. This may include an appro- tification by the institution to the sup- priate existing code, declaration, or porting department or agency, in ac- statement of ethical principles, or a cordance with the requirements of this statement formulated by the institu- policy, that a research project or activ- tion itself. This requirement does not ity involving human subjects has been preempt provisions of this policy appli- reviewed and approved by an IRB in ac- cable to department- or agency-sup- cordance with an approved assurance. ported or regulated research and need not be applicable to any research exempted or waived under § 46.101 (b) or (i).

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(2) Designation of one or more IRBs pension or termination of IRB ap- established in accordance with the re- proval. quirements of this policy, and for (c) The assurance shall be executed which provisions are made for meeting by an individual authorized to act for space and sufficient staff to support the institution and to assume on behalf the IRB’s review and recordkeeping du- of the institution the obligations im- ties. posed by this policy and shall be filed (3) A list of IRB members identified in such form and manner as the depart- by name; earned degrees; representa- ment or agency head prescribes. tive capacity; indications of experience (d) The department or agency head such as board certifications, licenses, will evaluate all assurances submitted etc., sufficient to describe each mem- in accordance with this policy through ber’s chief anticipated contributions to such officers and employees of the de- IRB deliberations; and any employ- partment or agency and such experts ment or other relationship between or consultants engaged for this purpose each member and the institution; for as the department or agency head de- example: full-time employee, part-time termines to be appropriate. The depart- employee, member of governing panel ment or agency head’s evaluation will or board, stockholder, paid or unpaid take into consideration the adequacy consultant. Changes in IRB member- of the proposed IRB in light of the an- ship shall be reported to the depart- ticipated scope of the institution’s re- ment or agency head, unless in accord search activities and the types of subject populations likely to be involved, with § 46.103(a) of this policy, the exist- the appropriateness of the proposed ini- ence of an HHS-approved assurance is tial and continuing review procedures accepted. In this case, change in IRB in light of the probable risks, and the membership shall be reported to the size and complexity of the institution. Office for Human Research Protec- (e) On the basis of this evaluation, tions, HHS, or any successor office. the department or agency head may (4) Written procedures which the IRB approve or disapprove the assurance, or will follow (i) for conducting its initial enter into negotiations to develop an and continuing review of research and approvable one. The department or for reporting its findings and actions to agency head may limit the period dur- the investigator and the institution; ing which any particular approved as- (ii) for determining which projects re- surance or class of approved assurances quire review more often than annually shall remain effective or otherwise and which projects need verification condition or restrict approval. from sources other than the investiga- (f) Certification is required when the tors that no material changes have oc- research is supported by a federal de- curred since previous IRB review; and partment or agency and not otherwise (iii) for ensuring prompt reporting to exempted or waived under § 46.101 (b) or the IRB of proposed changes in a re- (i). An institution with an approved as- search activity, and for ensuring that surance shall certify that each applica- such changes in approved research, tion or proposal for research covered during the period for which IRB ap- by the assurance and by § 46.103 of this proval has already been given, may not Policy has been reviewed and approved be initiated without IRB review and by the IRB. Such certification must be approval except when necessary to submitted with the application or pro- eliminate apparent immediate hazards posal or by such later date as may be to the subject. prescribed by the department or agen- (5) Written procedures for ensuring cy to which the application or proposal prompt reporting to the IRB, appro- is submitted. Under no condition shall priate institutional officials, and the research covered by § 46.103 of the Pol- department or agency head of (i) any icy be supported prior to receipt of the unanticipated problems involving risks certification that the research has been to subjects or others or any serious or reviewed and approved by the IRB. In- continuing noncompliance with this stitutions without an approved assur- policy or the requirements or deter- ance covering the research shall certify minations of the IRB and (ii) any sus- within 30 days after receipt of a request

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for such a certification from the de- (c) Each IRB shall include at least partment or agency, that the applica- one member whose primary concerns tion or proposal has been approved by are in scientific areas and at least one the IRB. If the certification is not sub- member whose primary concerns are in mitted within these time limits, the nonscientific areas. application or proposal may be re- (d) Each IRB shall include at least turned to the institution. one member who is not otherwise affili- (Approved by the Office of Management and ated with the institution and who is Budget under Control Number 0990–0260) not part of the immediate family of a person who is affiliated with the insti- [56 FR 28012, 28022, June 18, 1991; 56 FR 29756, June 28, 1991, as amended at 70 FR 36328, tution. June 23, 2005] (e) No IRB may have a member participate in the IRB’s initial or con- §§ 46.104–46.106 [Reserved] tinuing review of any project in which the member has a conflicting interest, § 46.107 IRB membership. except to provide information re- (a) Each IRB shall have at least five quested by the IRB. members, with varying backgrounds to (f) An IRB may, in its discretion, in- promote complete and adequate review vite individuals with competence in of research activities commonly con- special areas to assist in the review of ducted by the institution. The IRB issues which require expertise beyond shall be sufficiently qualified through or in addition to that available on the the experience and expertise of its IRB. These individuals may not vote members, and the diversity of the with the IRB. members, including consideration of race, gender, and cultural backgrounds § 46.108 IRB functions and operations. and sensitivity to such issues as com- In order to fulfill the requirements of munity attitudes, to promote respect for its advice and counsel in safe- this policy each IRB shall: guarding the rights and welfare of (a) Follow written procedures in the human subjects. In addition to pos- same detail as described in § 46.103(b)(4) sessing the professional competence and, to the extent required by, necessary to review specific research § 46.103(b)(5). activities, the IRB shall be able to as- (b) Except when an expedited review certain the acceptability of proposed procedure is used (see § 46.110), review research in terms of institutional com- proposed research at convened meet- mitments and regulations, applicable ings at which a majority of the mem- law, and standards of professional con- bers of the IRB are present, including duct and practice. The IRB shall there- at least one member whose primary fore include persons knowledgeable in concerns are in nonscientific areas. In these areas. If an IRB regularly reviews order for the research to be approved, research that involves a vulnerable it shall receive the approval of a ma- category of subjects, such as children, jority of those members present at the prisoners, pregnant women, or handi- meeting. capped or mentally disabled persons, consideration shall be given to the in- § 46.109 IRB review of research. clusion of one or more individuals who are knowledgeable about and experi- (a) An IRB shall review and have au- enced in working with these subjects. thority to approve, require modifica- (b) Every nondiscriminatory effort tions in (to secure approval), or dis- will be made to ensure that no IRB approve all research activities covered consists entirely of men or entirely of by this policy. women, including the institution’s con- (b) An IRB shall require that infor- sideration of qualified persons of both mation given to subjects as part of in- sexes, so long as no selection is made formed consent is in accordance with to the IRB on the basis of gender. No § 46.116. The IRB may require that in- IRB may consist entirely of members formation, in addition to that specifi- of one profession. cally mentioned in § 46.116, be given to

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the subjects when in the IRB’s judg- (2) Minor changes in previously ap- ment the information would meaning- proved research during the period (of fully add to the protection of the rights one year or less) for which approval is and welfare of subjects. authorized. (c) An IRB shall require documenta- Under an expedited review procedure, tion of informed consent or may waive the review may be carried out by the documentation in accordance with IRB chairperson or by one or more ex- § 46.117. perienced reviewers designated by the (d) An IRB shall notify investigators chairperson from among members of and the institution in writing of its de- the IRB. In reviewing the research, the cision to approve or disapprove the pro- reviewers may exercise all of the au- posed research activity, or of modifica- thorities of the IRB except that the re- tions required to secure IRB approval viewers may not disapprove the re- of the research activity. If the IRB de- search. A research activity may be dis- cides to disapprove a research activity, approved only after review in accord- it shall include in its written notifica- ance with the non-expedited procedure tion a statement of the reasons for its set forth in § 46.108(b). decision and give the investigator an (c) Each IRB which uses an expedited opportunity to respond in person or in review procedure shall adopt a method writing. for keeping all members advised of re- (e) An IRB shall conduct continuing search proposals which have been ap- review of research covered by this pol- proved under the procedure. icy at intervals appropriate to the de- (d) The department or agency head gree of risk, but not less than once per may restrict, suspend, terminate, or year, and shall have authority to ob- choose not to authorize an institu- serve or have a third party observe the tion’s or IRB’s use of the expedited re- consent process and the research. view procedure. [56 FR 28012, 28022, June 18, 1991, as amended (Approved by the Office of Management and at 70 FR 36328, June 23, 2005] Budget under Control Number 0990–0260) [56 FR 28012, 28022, June 18, 1991, as amended § 46.111 Criteria for IRB approval of at 70 FR 36328, June 23, 2005] research. (a) In order to approve research cov- § 46.110 Expedited review procedures ered by this policy the IRB shall deter- for certain kinds of research involv- mine that all of the following require- ing no more than minimal risk, and ments are satisfied: for minor changes in approved research. (1) Risks to subjects are minimized: (i) By using procedures which are con- (a) The Secretary, HHS, has estab- sistent with sound research design and lished, and published as a Notice in the which do not unnecessarily expose sub- FEDERAL REGISTER, a list of categories jects to risk, and (ii) whenever appro- of research that may be reviewed by priate, by using procedures already the IRB through an expedited review being performed on the subjects for di- procedure. The list will be amended, as agnostic or treatment purposes. appropriate after consultation with (2) Risks to subjects are reasonable other departments and agencies, in relation to anticipated benefits, if through periodic republication by the any, to subjects, and the importance of Secretary, HHS, in the FEDERAL REG- the knowledge that may reasonably be ISTER. A copy of the list is available expected to result. In evaluating risks from the Office for Human Research and benefits, the IRB should consider Protections, HHS, or any successor of- only those risks and benefits that may fice. result from the research (as distin- (b) An IRB may use the expedited re- guished from risks and benefits of view procedure to review either or both therapies subjects would receive even if of the following: not participating in the research). The (1) Some or all of the research ap- IRB should not consider possible long- pearing on the list and found by the re- range effects of applying knowledge viewer(s) to involve no more than mini- gained in the research (for example, mal risk, the possible effects of the research on

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public policy) as among those research suspension or termination of approval risks that fall within the purview of its shall include a statement of the rea- responsibility. sons for the IRB’s action and shall be (3) Selection of subjects is equitable. reported promptly to the investigator, In making this assessment the IRB appropriate institutional officials, and should take into account the purposes the department or agency head. of the research and the setting in which the research will be conducted (Approved by the Office of Management and and should be particularly cognizant of Budget under Control Number 0990–0260) the special problems of research in- [56 FR 28012, 28022, June 18, 1991, as amended volving vulnerable populations, such as at 70 FR 36328, June 23, 2005] children, prisoners, pregnant women, mentally disabled persons, or economi- § 46.114 Cooperative research. cally or educationally disadvantaged Cooperative research projects are persons. those projects covered by this policy (4) Informed consent will be sought which involve more than one institu- from each prospective subject or the tion. In the conduct of cooperative re- subject’s legally authorized representa- search projects, each institution is re- tive, in accordance with, and to the ex- sponsible for safeguarding the rights tent required by § 46.116. and welfare of human subjects and for (5) Informed consent will be appro- complying with this policy. With the priately documented, in accordance with, and to the extent required by approval of the department or agency § 46.117. head, an institution participating in a (6) When appropriate, the research cooperative project may enter into a plan makes adequate provision for joint review arrangement, rely upon monitoring the data collected to en- the review of another qualified IRB, or sure the safety of subjects. make similar arrangements for avoid- (7) When appropriate, there are ade- ing duplication of effort. quate provisions to protect the privacy of subjects and to maintain the con- § 46.115 IRB records. fidentiality of data. (a) An institution, or when appro- (b) When some or all of the subjects priate an IRB, shall prepare and main- are likely to be vulnerable to coercion tain adequate documentation of IRB or undue influence, such as children, activities, including the following: prisoners, pregnant women, mentally (1) Copies of all research proposals re- disabled persons, or economically or viewed, scientific evaluations, if any, educationally disadvantaged persons, that accompany the proposals, ap- additional safeguards have been in- proved sample consent documents, cluded in the study to protect the progress reports submitted by inves- rights and welfare of these subjects. tigators, and reports of injuries to sub- § 46.112 Review by institution. jects. (2) Minutes of IRB meetings which Research covered by this policy that shall be in sufficient detail to show at- has been approved by an IRB may be tendance at the meetings; actions subject to further appropriate review taken by the IRB; the vote on these ac- and approval or disapproval by officials tions including the number of members of the institution. However, those officials may not approve the research if it voting for, against, and abstaining; the has not been approved by an IRB. basis for requiring changes in or dis- approving research; and a written sum- § 46.113 Suspension or termination of mary of the discussion of controverted IRB approval of research. issues and their resolution. An IRB shall have authority to sus- (3) Records of continuing review ac- pend or terminate approval of research tivities. that is not being conducted in accord- (4) Copies of all correspondence be- ance with the IRB’s requirements or tween the IRB and the investigators. that has been associated with unex- (5) A list of IRB members in the same pected serious harm to subjects. Any detail as described is § 46.103(b)(3).

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(6) Written procedures for the IRB in pation, a description of the procedures the same detail as described in to be followed, and identification of § 46.103(b)(4) and § 46.103(b)(5). any procedures which are experi- (7) Statements of significant new mental; findings provided to subjects, as re- (2) A description of any reasonably quired by § 46.116(b)(5). foreseeable risks or discomforts to the (b) The records required by this pol- subject; icy shall be retained for at least 3 (3) A description of any benefits to years, and records relating to research the subject or to others which may rea- which is conducted shall be retained sonably be expected from the research; for at least 3 years after completion of (4) A disclosure of appropriate alter- the research. All records shall be acces- native procedures or courses of treat- sible for inspection and copying by au- ment, if any, that might be advan- thorized representatives of the depart- tageous to the subject; ment or agency at reasonable times (5) A statement describing the ex- and in a reasonable manner. tent, if any, to which confidentiality of (Approved by the Office of Management and records identifying the subject will be Budget under Control Number 0990–0260) maintained; (6) For research involving more than [56 FR 28012, 28022, June 18, 1991, as amended at 70 FR 36328, June 23, 2005] minimal risk, an explanation as to whether any compensation and an ex- § 46.116 General requirements for in- planation as to whether any medical formed consent. treatments are available if injury oc- Except as provided elsewhere in this curs and, if so, what they consist of, or policy, no investigator may involve a where further information may be ob- human being as a subject in research tained; covered by this policy unless the inves- (7) An explanation of whom to con- tigator has obtained the legally effec- tact for answers to pertinent questions tive informed consent of the subject or about the research and research sub- the subject’s legally authorized rep- jects’ rights, and whom to contact in resentative. An investigator shall seek the event of a research-related injury such consent only under circumstances to the subject; and that provide the prospective subject or (8) A statement that participation is the representative sufficient oppor- voluntary, refusal to participate will tunity to consider whether or not to involve no penalty or loss of benefits to participate and that minimize the pos- which the subject is otherwise entitled, sibility of coercion or undue influence. and the subject may discontinue par- The information that is given to the ticipation at any time without penalty subject or the representative shall be or loss of benefits to which the subject in language understandable to the sub- is otherwise entitled. ject or the representative. No informed (b) Additional elements of informed consent, whether oral or written, may consent. When appropriate, one or include any exculpatory language more of the following elements of in- through which the subject or the rep- formation shall also be provided to resentative is made to waive or appear each subject: to waive any of the subject’s legal (1) A statement that the particular rights, or releases or appears to release treatment or procedure may involve the investigator, the sponsor, the insti- risks to the subject (or to the embryo tution or its agents from liability for or fetus, if the subject is or may be- negligence. come pregnant) which are currently (a) Basic elements of informed con- unforeseeable; sent. Except as provided in paragraph (2) Anticipated circumstances under (c) or (d) of this section, in seeking in- which the subject’s participation may formed consent the following informa- be terminated by the investigator tion shall be provided to each subject: without regard to the subject’s con- (1) A statement that the study in- sent; volves research, an explanation of the (3) Any additional costs to the sub- purposes of the research and the ex- ject that may result from participation pected duration of the subject’s partici- in the research;

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(4) The consequences of a subject’s order for informed consent to be le- decision to withdraw from the research gally effective. and procedures for orderly termination (f) Nothing in this policy is intended of participation by the subject; to limit the authority of a physician to (5) A statement that significant new provide emergency medical care, to the findings developed during the course of extent the physician is permitted to do the research which may relate to the so under applicable federal, state, or subject’s willingness to continue par- local law. ticipation will be provided to the sub- (Approved by the Office of Management and ject; and Budget under Control Number 0990–0260) (6) The approximate number of sub- [56 FR 28012, 28022, June 18, 1991, as amended jects involved in the study. at 70 FR 36328, June 23, 2005] (c) An IRB may approve a consent procedure which does not include, or § 46.117 Documentation of informed which alters, some or all of the ele- consent. ments of informed consent set forth (a) Except as provided in paragraph above, or waive the requirement to ob- (c) of this section, informed consent tain informed consent provided the IRB shall be documented by the use of a finds and documents that: written consent form approved by the (1) The research or demonstration IRB and signed by the subject or the project is to be conducted by or subject subject’s legally authorized representa- to the approval of state or local gov- tive. A copy shall be given to the per- ernment officials and is designed to son signing the form. study, evaluate, or otherwise examine: (b) Except as provided in paragraph (i) Public benefit of service programs; (c) of this section, the consent form (ii) procedures for obtaining benefits or may be either of the following: services under those programs; (iii) (1) A written consent document that possible changes in or alternatives to embodies the elements of informed those programs or procedures; or (iv) consent required by § 46.116. This form possible changes in methods or levels may be read to the subject or the sub- of payment for benefits or services ject’s legally authorized representa- under those programs; and tive, but in any event, the investigator (2) The research could not prac- shall give either the subject or the rep- ticably be carried out without the resentative adequate opportunity to waiver or alteration. read it before it is signed; or (d) An IRB may approve a consent (2) A short form written consent doc- procedure which does not include, or ument stating that the elements of in- which alters, some or all of the ele- formed consent required by § 46.116 ments of informed consent set forth in have been presented orally to the sub- this section, or waive the requirements ject or the subject’s legally authorized to obtain informed consent provided representative. When this method is the IRB finds and documents that: used, there shall be a witness to the (1) The research involves no more oral presentation. Also, the IRB shall than minimal risk to the subjects; approve a written summary of what is (2) The waiver or alteration will not to be said to the subject or the rep- adversely affect the rights and welfare resentative. Only the short form itself of the subjects; is to be signed by the subject or the (3) The research could not prac- representative. However, the witness ticably be carried out without the shall sign both the short form and a waiver or alteration; and copy of the summary, and the person (4) Whenever appropriate, the sub- actually obtaining consent shall sign a jects will be provided with additional copy of the summary. A copy of the pertinent information after participa- summary shall be given to the subject tion. or the representative, in addition to a (e) The informed consent require- copy of the short form. ments in this policy are not intended (c) An IRB may waive the require- to preempt any applicable federal, ment for the investigator to obtain a state, or local laws which require addi- signed consent form for some or all tional information to be disclosed in subjects if it finds either:

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(1) That the only record linking the § 46.119 Research undertaken without subject and the research would be the the intention of involving human consent document and the principal subjects. risk would be potential harm resulting In the event research is undertaken from a breach of confidentiality. Each without the intention of involving subject will be asked whether the sub- human subjects, but it is later project wants documentation linking the posed to involve human subjects in the subject with the research, and the sub- research, the research shall first be reject’s wishes will govern; or viewed and approved by an IRB, as pro- (2) That the research presents no vided in this policy, a certification sub- more than minimal risk of harm to mitted, by the institution, to the de- subjects and involves no procedures for partment or agency, and final approval given to the proposed change by the de- which written consent is normally re- partment or agency. quired outside of the research context. In cases in which the documentation § 46.120 Evaluation and disposition of requirement is waived, the IRB may re- applications and proposals for require the investigator to provide sub- search to be conducted or sup- jects with a written statement regard- ported by a Federal Department or Agency. ing the research. (a) The department or agency head (Approved by the Office of Management and will evaluate all applications and pro- Budget under Control Number 0990–0260) posals involving human subjects sub- [56 FR 28012, 28022, June 18, 1991, as amended mitted to the department or agency at 70 FR 36328, June 23, 2005] through such officers and employees of the department or agency and such ex- § 46.118 Applications and proposals perts and consultants as the depart- lacking definite plans for involvement or agency head determines to be ment of human subjects. appropriate. This evaluation will take Certain types of applications for into consideration the risks to the subgrants, cooperative agreements, or con- jects, the adequacy of protection tracts are submitted to departments or against these risks, the potential benefits of the research to the subjects and agencies with the knowledge that sub- others, and the importance of the jects may be involved within the period knowledge gained or to be gained. of support, but definite plans would not (b) On the basis of this evaluation, normally be set forth in the applica- the department or agency head may tion or proposal. These include activi- approve or disapprove the application ties such as institutional type grants or proposal, or enter into negotiations when selection of specific projects is to develop an approvable one. the institution’s responsibility; research training grants in which the ac- § 46.121 [Reserved] tivities involving subjects remain to be § 46.122 Use of Federal funds. selected; and projects in which human subjects’ involvement will depend upon Federal funds administered by a de- completion of instruments, prior ani- partment or agency may not be ex- mal studies, or purification of com- pended for research involving human pounds. These applications need not be subjects unless the requirements of this policy have been satisfied. reviewed by an IRB before an award may be made. However, except for re- § 46.123 Early termination of research search exempted or waived under support: Evaluation of applications § 46.101 (b) or (i), no human subjects and proposals. may be involved in any project sup- (a) The department or agency head ported by these awards until the may require that department or agency project has been reviewed and approved support for any project be terminated by the IRB, as provided in this policy, or suspended in the manner prescribed and certification submitted, by the in- in applicable program requirements, stitution, to the department or agency. when the department or agency head finds an institution has materially

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failed to comply with the terms of this (c) The provisions of § 46.101(c) policy. through (i) are applicable to this sub- (b) In making decisions about sup- part. Reference to State or local laws porting or approving applications or in this subpart and in § 46.101(f) is in- proposals covered by this policy the de- tended to include the laws of federally partment or agency head may take recognized American Indian and Alas- into account, in addition to all other ka Native Tribal Governments. eligibility requirements and program (d) The requirements of this subpart criteria, factors such as whether the are in addition to those imposed under applicant has been subject to a termi- the other subparts of this part. nation or suspension under paragarph (a) of this section and whether the ap- § 46.202 Definitions. plicant or the person or persons who The definitions in § 46.102 shall be ap- would direct or has have directed the plicable to this subpart as well. In ad- scientific and technical aspects of an dition, as used in this subpart: activity has have, in the judgment of (a) Dead fetus means a fetus that ex- the department or agency head, mate- hibits neither heartbeat, spontaneous rially failed to discharge responsibility respiratory activity, spontaneous for the protection of the rights and movement of voluntary muscles, nor welfare of human subjects (whether or pulsation of the umbilical cord. not the research was subject to federal (b) Delivery means complete separa- regulation). tion of the fetus from the woman by expulsion or extraction or any other § 46.124 Conditions. means. (c) Fetus means the product of con- With respect to any research project ception from implantation until deliv- or any class of research projects the de- ery. partment or agency head may impose (d) Neonate means a newborn. additional conditions prior to or at the (e) Nonviable neonate means a time of approval when in the judgment neonate after delivery that, although of the department or agency head addi- living, is not viable. tional conditions are necessary for the (f) Pregnancy encompasses the period protection of human subjects. of time from implantation until delivery. A woman shall be assumed to be Subpart B—Additional Protections pregnant if she exhibits any of the per- for Pregnant Women, Human tinent presumptive signs of pregnancy, Fetuses and Neonates In- such as missed menses, until the re- volved in Research sults of a pregnancy test are negative or until delivery. (g) Secretary means the Secretary of SOURCE: 66 FR 56778, Nov. 13, 2001, unless Health and Human Services and any otherwise noted. other officer or employee of the De- partment of Health and Human Serv- § 46.201 To what do these regulations apply? ices to whom authority has been delegated. (a) Except as provided in paragraph (h) Viable, as it pertains to the (b) of this section, this subpart applies neonate, means being able, after deliv- to all research involving pregnant ery, to survive (given the benefit of women, human fetuses, neonates of unavailable medical therapy) to the point certain viability, or nonviable neo- of independently maintaining heart- nates conducted or supported by the beat and respiration. The Secretary Department of Health and Human may from time to time, taking into ac- Services (DHHS). This includes all re- count medical advances, publish in the search conducted in DHHS facilities by FEDERAL REGISTER guidelines to assist any person and all research conducted in determining whether a neonate is in any facility by DHHS employees. viable for purposes of this subpart. If a (b) The exemptions at § 46.101(b)(1) neonate is viable then it may be in- through (6) are applicable to this sub- cluded in research only to the extent part. permitted and in accordance with the

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requirements of subparts A and D of that the father’s consent need not be this part. obtained if he is unable to consent because of unavailability, incompetence, § 46.203 Duties of IRBs in connection or temporary incapacity or the preg- with research involving pregnant nancy resulted from rape or incest. women, fetuses, and neonates. (f) Each individual providing consent In addition to other responsibilities under paragraph (d) or (e) of this sec- assigned to IRBs under this part, each tion is fully informed regarding the IRB shall review research covered by reasonably foreseeable impact of the this subpart and approve only research research on the fetus or neonate; which satisfies the conditions of all ap- (g) For children as defined in plicable sections of this subpart and § 46.402(a) who are pregnant, assent and the other subparts of this part. permission are obtained in accord with the provisions of subpart D of this part; § 46.204 Research involving pregnant (h) No inducements, monetary or women or fetuses. otherwise, will be offered to terminate Pregnant women or fetuses may be a pregnancy; involved in research if all of the fol- (i) Individuals engaged in the re- lowing conditions are met: search will have no part in any deci- (a) Where scientifically appropriate, sions as to the timing, method, or pro- preclinical studies, including studies cedures used to terminate a pregnancy; on pregnant animals, and clinical stud- and ies, including studies on nonpregnant (j) Individuals engaged in the re- women, have been conducted and pro- search will have no part in determining vide data for assessing potential risks the viability of a neonate. to pregnant women and fetuses; (b) The risk to the fetus is caused § 46.205 Research involving neonates. solely by interventions or procedures that hold out the prospect of direct (a) Neonates of uncertain viability benefit for the woman or the fetus; or, and nonviable neonates may be in- if there is no such prospect of benefit, volved in research if all of the fol- the risk to the fetus is not greater than lowing conditions are met: minimal and the purpose of the re- (1) Where scientifically appropriate, search is the development of important preclinical and clinical studies have biomedical knowledge which cannot be been conducted and provide data for as- obtained by any other means; sessing potential risks to neonates. (c) Any risk is the least possible for (2) Each individual providing consent achieving the objectives of the re- under paragraph (b)(2) or (c)(5) of this search; section is fully informed regarding the (d) If the research holds out the pros- reasonably foreseeable impact of the pect of direct benefit to the pregnant research on the neonate. woman, the prospect of a direct benefit (3) Individuals engaged in the re- both to the pregnant woman and the search will have no part in determining fetus, or no prospect of benefit for the the viability of a neonate. woman nor the fetus when risk to the (4) The requirements of paragraph (b) fetus is not greater than minimal and or (c) of this section have been met as the purpose of the research is the de- applicable. velopment of important biomedical (b) Neonates of uncertain viability. knowledge that cannot be obtained by Until it has been ascertained whether any other means, her consent is ob- or not a neonate is viable, a neonate tained in accord with the informed con- may not be involved in research cov- sent provisions of subpart A of this ered by this subpart unless the fol- part; lowing additional conditions are met: (e) If the research holds out the pros- (1) The IRB determines that: pect of direct benefit solely to the fetus (i) The research holds out the pros- then the consent of the pregnant pect of enhancing the probability of woman and the father is obtained in survival of the neonate to the point of accord with the informed consent pro- viability, and any risk is the least pos- visions of subpart A of this part, except sible for achieving that objective, or

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(ii) The purpose of the research is the accord with the requirements of sub- development of important biomedical parts A and D of this part. knowledge which cannot be obtained by other means and there will be no § 46.206 Research involving, after de- added risk to the neonate resulting livery, the placenta, the dead fetus from the research; and or fetal material. (2) The legally effective informed (a) Research involving, after deliv- consent of either parent of the neonate ery, the placenta; the dead fetus; mac- or, if neither parent is able to consent erated fetal material; or cells, tissue, because of unavailability, incom- or organs excised from a dead fetus, petence, or temporary incapacity, the shall be conducted only in accord with legally effective informed consent of any applicable Federal, State, or local either parent’s legally authorized rep- laws and regulations regarding such ac- resentative is obtained in accord with tivities. subpart A of this part, except that the (b) If information associated with consent of the father or his legally au- material described in paragraph (a) of thorized representative need not be ob- this section is recorded for research tained if the pregnancy resulted from purposes in a manner that living indi- rape or incest. viduals can be identified, directly or (c) Nonviable neonates. After deliv- through identifiers linked to those in- ery nonviable neonate may not be individuals, those individuals are re- volved in research covered by this sub- search subjects and all pertinent subpart unless all of the following addi- parts of this part are applicable. tional conditions are met: (1) Vital functions of the neonate will § 46.207 Research not otherwise ap- not be artificially maintained; provable which presents an oppor- (2) The research will not terminate tunity to understand, prevent, or al- the heartbeat or respiration of the leviate a serious problem affecting neonate; the health or welfare of pregnant (3) There will be no added risk to the women, fetuses, or neonates. neonate resulting from the research; The Secretary will conduct or fund (4) The purpose of the research is the research that the IRB does not believe development of important biomedical meets the requirements of §§ 46.204 or knowledge that cannot be obtained by 46.205 only if: other means; and (a) The IRB finds that the research (5) The legally effective informed presents a reasonable opportunity to consent of both parents of the neonate further the understanding, prevention, is obtained in accord with subpart A of or alleviation of a serious problem af- this part, except that the waiver and fecting the health or welfare of preg- alteration provisions of § 46.116(c) and nant women, fetuses or neonates; and (d) do not apply. However, if either parent is unable to consent because of un- (b) The Secretary, after consultation availability, incompetence, or tem- with a panel of experts in pertinent dis- porary incapacity, the informed con- ciplines (for example: science, medi- sent of one parent of a nonviable cine, ethics, law) and following oppor- neonate will suffice to meet the re- tunity for public review and comment, quirements of this paragraph (c)(5), ex- including a public meeting announced cept that the consent of the father in the FEDERAL REGISTER, has deter- need not be obtained if the pregnancy mined either: resulted from rape or incest. The con- (1) That the research in fact satisfies sent of a legally authorized representa- the conditions of § 46.204, as applicable; tive of either or both of the parents of or a nonviable neonate will not suffice to (2) The following: meet the requirements of this para- (i) The research presents a reasonable graph (c)(5). opportunity to further the under- (d) Viable neonates. A neonate, after standing, prevention, or alleviation of delivery, that has been determined to a serious problem affecting the health be viable may be included in research or welfare of pregnant women, fetuses only to the extent permitted by and in or neonates;

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(ii) The research will be conducted in penal institution. The term is intended accord with sound ethical principles; to encompass individuals sentenced to and such an institution under a criminal or (iii) Informed consent will be ob- civil statute, individuals detained in tained in accord with the informed con- other facilities by virtue of statutes or sent provisions of subpart A and other commitment procedures which provide applicable subparts of this part. alternatives to criminal prosecution or incarceration in a penal institution, Subpart C—Additional Protections and individuals detained pending ar- Pertaining to Biomedical and raignment, trial, or sentencing. Behavioral Research Involving (d) Minimal risk is the probability and magnitude of physical or psychological Prisoners as Subjects harm that is normally encountered in the daily lives, or in the routine med- SOURCE: 43 FR 53655, Nov. l6, l978, unless ical, dental, or psychological examina- otherwise noted. tion of healthy persons.

§ 46.301 Applicability. § 46.304 Composition of Institutional (a) The regulations in this subpart Review Boards where prisoners are are applicable to all biomedical and be- involved. havioral research conducted or sup- In addition to satisfying the require- ported by the Department of Health ments in § 46.107 of this part, an Insti- and Human Services involving pris- tutional Review Board, carrying out oners as subjects. responsibilities under this part with re- (b) Nothing in this subpart shall be spect to research covered by this sub- construed as indicating that compli- part, shall also meet the following spe- ance with the procedures set forth cific requirements: herein will authorize research involv- (a) A majority of the Board (exclu- ing prisoners as subjects, to the extent sive of prisoner members) shall have no such research is limited or barred by association with the prison(s) involved, applicable State or local law. apart from their membership on the (c) The requirements of this subpart Board. are in addition to those imposed under (b) At least one member of the Board the other subparts of this part. shall be a prisoner, or a prisoner representative with appropriate back- § 46.302 Purpose. ground and experience to serve in that Inasmuch as prisoners may be under capacity, except that where a par- constraints because of their incarcer- ticular research project is reviewed by ation which could affect their ability more than one Board only one Board to make a truly voluntary and need satisfy this requirement. uncoerced decision whether or not to [43 FR 53655, Nov. 16, 1978, as amended at 46 participate as subjects in research, it is FR 8386, Jan. 26, 1981] the purpose of this subpart to provide additional safeguards for the protec- § 46.305 Additional duties of the Insti- tion of prisoners involved in activities tutional Review Boards where pris- to which this subpart is applicable. oners are involved. (a) In addition to all other respon- § 46.303 Definitions. sibilities prescribed for Institutional As used in this subpart: Review Boards under this part, the (a) Secretary means the Secretary of Board shall review research covered by Health and Human Services and any this subpart and approve such research other officer or employee of the De- only if it finds that: partment of Health and Human Serv- (1) The research under review rep- ices to whom authority has been dele- resents one of the categories of regated. search permissible under § 46.306(a)(2); (b) DHHS means the Department of (2) Any possible advantages accruing Health and Human Services. to the prisoner through his or her par- (c) Prisoner means any individual in- ticipation in the research, when com- voluntarily confined or detained in a pared to the general living conditions,

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medical care, quality of food, amen- (1) The institution responsible for the ities and opportunity for earnings in conduct of the research has certified to the prison, are not of such a magnitude the Secretary that the Institutional that his or her ability to weigh the Review Board has approved the re- risks of the research against the value search under § 46.305 of this subpart; of such advantages in the limited and choice environment of the prison is im- (2) In the judgment of the Secretary paired; the proposed research involves solely (3) The risks involved in the research the following: are commensurate with risks that (i) Study of the possible causes, ef- would be accepted by nonprisoner vol- fects, and processes of incarceration, unteers; and of criminal behavior, provided that (4) Procedures for the selection of the study presents no more than mini- subjects within the prison are fair to mal risk and no more than inconven- all prisoners and immune from arbi- ience to the subjects; trary intervention by prison authori- (ii) Study of prisons as institutional ties or prisoners. Unless the principal structures or of prisoners as incarcer- investigator provides to the Board jus- ated persons, provided that the study tification in writing for following some presents no more than minimal risk other procedures, control subjects and no more than inconvenience to the must be selected randomly from the subjects; group of available prisoners who meet (iii) Research on conditions particu- the characteristics needed for that particular research project; larly affecting prisoners as a class (for example, vaccine trials and other re- (5) The information is presented in language which is understandable to search on hepatitis which is much the subject population; more prevalent in prisons than elsewhere; and research on social and psy- (6) Adequate assurance exists that parole boards will not take into ac- chological problems such as alco- count a prisoner’s participation in the holism, drug addiction and sexual as- research in making decisions regarding saults) provided that the study may parole, and each prisoner is clearly in- proceed only after the Secretary has formed in advance that participation in consulted with appropriate experts in- the research will have no effect on his cluding experts in penology medicine or her parole; and and ethics, and published notice, in the (7) Where the Board finds there may FEDERAL REGISTER, of his intent to ap- be a need for follow-up examination or prove such research; or care of participants after the end of (iv) Research on practices, both inno- their participation, adequate provision vative and accepted, which have the in- has been made for such examination or tent and reasonable probability of im- care, taking into account the varying proving the health or well-being of the lengths of individual prisoners’ sen- subject. In cases in which those studies tences, and for informing participants require the assignment of prisoners in of this fact. a manner consistent with protocols ap- (b) The Board shall carry out such proved by the IRB to control groups other duties as may be assigned by the which may not benefit from the re- Secretary. search, the study may proceed only (c) The institution shall certify to after the Secretary has consulted with the Secretary, in such form and man- appropriate experts, including experts ner as the Secretary may require, that in penology medicine and ethics, and the duties of the Board under this sec- published notice, in the FEDERAL REG- tion have been fulfilled. ISTER, of his intent to approve such research. § 46.306 Permitted research involving (b) Except as provided in paragraph prisoners. (a) of this section, biomedical or behav- (a) Biomedical or behavioral research ioral research conducted or supported conducted or supported by DHHS may by DHHS shall not involve prisoners as involve prisoners as subjects only if: subjects.

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Subpart D—Additional Protections treatments or procedures involved in for Children Involved as Sub- the research, under the applicable law jects in Research of the jurisdiction in which the research will be conducted. (b) Assent means a child’s affirmative SOURCE: 48 FR 9818, Mar. 8, 1983, unless oth- agreement to participate in research. erwise noted. Mere failure to object should not, ab- § 46.401 To what do these regulations sent affirmative agreement, be con- apply? strued as assent. (a) This subpart applies to all re- (c) Permission means the agreement of search involving children as subjects, parent(s) or guardian to the participa- conducted or supported by the Depart- tion of their child or ward in research. ment of Health and Human Services. (d) Parent means a child’s biological (1) This includes research conducted or adoptive parent. by Department employees, except that (e) Guardian means an individual who each head of an Operating Division of is authorized under applicable State or the Department may adopt such non- local law to consent on behalf of a substantive, procedural modifications child to general medical care. as may be appropriate from an administrative standpoint. § 46.403 IRB duties. (2) It also includes research con- In addition to other responsibilities ducted or supported by the Department assigned to IRBs under this part, each of Health and Human Services outside IRB shall review research covered by the United States, but in appropriate this subpart and approve only research circumstances, the Secretary may, which satisfies the conditions of all ap- under paragraph (e) of § 46.101 of Sub- plicable sections of this subpart. part A, waive the applicability of some or all of the requirements of these reg- § 46.404 Research not involving great- ulations for research of this type. er than minimal risk. (b) Exemptions at § 46.101(b)(1) and HHS will conduct or fund research in (b)(3) through (b)(6) are applicable to which the IRB finds that no greater this subpart. The exemption at than minimal risk to children is pre- § 46.101(b)(2) regarding educational tests sented, only if the IRB finds that ade- is also applicable to this subpart. How- quate provisions are made for solic- ever, the exemption at § 46.101(b)(2) for iting the assent of the children and the research involving survey or interview permission of their parents or guard- procedures or observations of public be- ians, as set forth in § 46.408. havior does not apply to research covered by this subpart, except for re- § 46.405 Research involving greater search involving observation of public than minimal risk but presenting behavior when the investigator(s) do the prospect of direct benefit to the not participate in the activities being individual subjects. observed. HHS will conduct or fund research in (c) The exceptions, additions, and which the IRB finds that more than provisions for waiver as they appear in minimal risk to children is presented paragraphs (c) through (i) of § 46.101 of by an intervention or procedure that Subpart A are applicable to this sub- holds out the prospect of direct benefit part. for the individual subject, or by a mon- [48 FR 9818, Mar. 8, 1983; 56 FR 28032, June 18, itoring procedure that is likely to con- 1991; 56 FR 29757, June 28, 1991] tribute to the subject’s well-being, only if the IRB finds that: § 46.402 Definitions. (a) The risk is justified by the antici- The definitions in § 46.102 of Subpart pated benefit to the subjects; A shall be applicable to this subpart as (b) The relation of the anticipated well. In addition, as used in this sub- benefit to the risk is at least as favor- part: able to the subjects as that presented (a) Children are persons who have not by available alternative approaches; attained the legal age for consent to and

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(c) Adequate provisions are made for lowing opportunity for public review soliciting the assent of the children and comment, has determined either: and permission of their parents or (1) That the research in fact satisfies guardians, as set forth in § 46.408. the conditions of § 46.404, § 46.405, or § 46.406, as applicable, or § 46.406 Research involving greater (2) The following: than minimal risk and no prospect (i) The research presents a reasonable of direct benefit to individual sub- opportunity to further the under- jects, but likely to yield generalizable knowledge about the subject’s standing, prevention, or alleviation of disorder or condition. a serious problem affecting the health or welfare of children; HHS will conduct or fund research in (ii) The research will be conducted in which the IRB finds that more than accordance with sound ethical prin- minimal risk to children is presented ciples; by an intervention or procedure that (iii) Adequate provisions are made does not hold out the prospect of direct for soliciting the assent of children and benefit for the individual subject, or by the permission of their parents or a monitoring procedure which is not guardians, as set forth in § 46.408. likely to contribute to the well-being of the subject, only if the IRB finds § 46.408 Requirements for permission that: by parents or guardians and for as- (a) The risk represents a minor in- sent by children. crease over minimal risk; (a) In addition to the determinations (b) The intervention or procedure required under other applicable sec- presents experiences to subjects that tions of this subpart, the IRB shall de- are reasonably commensurate with termine that adequate provisions are those inherent in their actual or ex- made for soliciting the assent of the pected medical, dental, psychological, children, when in the judgment of the social, or educational situations; IRB the children are capable of pro- (c) The intervention or procedure is viding assent. In determining whether likely to yield generalizable knowledge children are capable of assenting, the about the subjects’ disorder or condi- IRB shall take into account the ages, tion which is of vital importance for maturity, and psychological state of the understanding or amelioration of the children involved. This judgment the subjects’ disorder or condition; and may be made for all children to be in- (d) Adequate provisions are made for volved in research under a particular soliciting assent of the children and protocol, or for each child, as the IRB permission of their parents or guard- deems appropriate. If the IRB deter- ians, as set forth in § 46.408. mines that the capability of some or all of the children is so limited that § 46.407 Research not otherwise ap- they cannot reasonably be consulted or provable which presents an oppor- that the intervention or procedure in- tunity to understand, prevent, or al- volved in the research holds out a pros- leviate a serious problem affecting pect of direct benefit that is important the health or welfare of children. to the health or well-being of the chil- HHS will conduct or fund research dren and is available only in the con- that the IRB does not believe meets text of the research, the assent of the the requirements of § 46.404, § 46.405, or children is not a necessary condition § 46.406 only if: for proceeding with the research. Even (a) The IRB finds that the research where the IRB determines that the sub- presents a reasonable opportunity to jects are capable of assenting, the IRB further the understanding, prevention, may still waive the assent requirement or alleviation of a serious problem af- under circumstances in which consent fecting the health or welfare of chil- may be waived in accord with § 46.116 of dren; and Subpart A. (b) The Secretary, after consultation (b) In addition to the determinations with a panel of experts in pertinent dis- required under other applicable sec- ciplines (for example: science, medi- tions of this subpart, the IRB shall de- cine, education, ethics, law) and fol- termine, in accordance with and to the

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extent that consent is required by (2) Conducted in schools, camps, hos- § 46.116 of Subpart A, that adequate pro- pitals, institutions, or similar settings visions are made for soliciting the per- in which the majority of children in- mission of each child’s parents or volved as subjects are not wards. guardian. Where parental permission is (b) If the research is approved under to be obtained, the IRB may find that paragraph (a) of this section, the IRB the permission of one parent is suffi- shall require appointment of an advo- cient for research to be conducted cate for each child who is a ward, in ad- under § 46.404 or § 46.405. Where research dition to any other individual acting is covered by §§ 46.406 and 46.407 and on behalf of the child as guardian or in permission is to be obtained from par- loco parentis. One individual may serve ents, both parents must give their per- as advocate for more than one child. mission unless one parent is deceased, The advocate shall be an individual unknown, incompetent, or not reason- who has the background and experience ably available, or when only one parent to act in, and agrees to act in, the best has legal responsibility for the care interests of the child for the duration and custody of the child. of the child’s participation in the re- (c) In addition to the provisions for search and who is not associated in any waiver contained in § 46.116 of Subpart way (except in the role as advocate or A, if the IRB determines that a re- member of the IRB) with the research, search protocol is designed for condi- the investigator(s), or the guardian or- tions or for a subject population for ganization. which parental or guardian permission is not a reasonable requirement to pro- PART 50—U.S. EXCHANGE VISITOR tect the subjects (for example, ne- PROGRAM—REQUEST FOR WAIV- glected or abused children), it may ER OF THE TWO-YEAR FOREIGN waive the consent requirements in Sub- RESIDENCE REQUIREMENT part A of this part and paragraph (b) of this section, provided an appropriate Sec. mechanism for protecting the children 50.1 Authority. who will participate as subjects in the 50.2 Exchange Visitor Waiver Review Board. research is substituted, and provided 50.3 Policy. further that the waiver is not incon- 50.4 Waivers for research. sistent with Federal, state or local law. 50.5 Waivers for the delivery of health care The choice of an appropriate mecha- service. 50.6 Procedures for submission of applica- nism would depend upon the nature tion to HHS. and purpose of the activities described 50.7 Personal hardship, persecution and visa in the protocol, the risk and antici- extension considerations. pated benefit to the research subjects, 50.8 Compliance.

and their age, maturity, status, and AUTHORITY: 75 Stat. 527 (22 U.S.C. 2451 et condition. seq.); 84 Stat. 116 (8 U.S.C. 1182(e)). (d) Permission by parents or guard- SOURCE: 49 FR 9900, Mar. 16, 1984, unless ians shall be documented in accordance otherwise noted. with and to the extent required by § 46.117 of Subpart A. § 50.1 Authority. (e) When the IRB determines that as- Under the authority of Mutual Edu- sent is required, it shall also determine cational and Cultural Exchange Act of whether and how assent must be docu- 1961 (75 Stat. 527) and the Immigration mented. and Nationality Act as amended (84 Stat. 116), the Department of Health § 46.409 Wards. and Human Services is an ‘‘interested (a) Children who are wards of the United States Government agency’’ state or any other agency, institution, with the authority to request the De- or entity can be included in research partment of State to recommend to the approved under § 46.406 or § 46.407 only if Attorney General waiver of the two- such research is: year foreign residence requirement for (1) Related to their status as wards; Exchange Visitors under the Mutual or Educational and Cultural Exchange

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Program. HHS eligibility requirement divisions of the Department to consider criteria for waivers are in addition to applications for waivers based on the and independent of the existing waiver need for the delivery of health care and visa criteria established by the Im- services to underserved populations. migration and Naturalization Service [49 FR 9900, Mar. 16, 1984, as amended at 67 (INS), the Department of State, and FR 77695, Dec. 19, 2002] the Department of Labor. The waiver regulations described in this part do § 50.3 Policy. not relieve alien physicians seeking a (a) Policy for waivers. The Department waiver of the 2-year foreign residence requirement from complying with the of Health and Human Services endorses terms and conditions imposed on their the philosophy that Exchange Visitors admission to the United States. are committed to return home for at least two years after completing their [67 FR 77695, Dec. 19, 2002] program. This requirement was imposed to prevent the Program from be- § 50.2 Exchange Visitor Waiver Review coming a stepping stone to immigra- Board. tion and to ensure that Exchange Visi- (a) Establishment. The Exchange Vis- tors make available to their home itor Waiver Review Board is estab- countries their new knowledge and lished to carry out the Department’s skills obtained in the United States. responsibilities under the Exchange The Department will request waivers Visitor Program. for the delivery of health care service (b) Functions. The Exchange Visitor to carry out the Department’s mission Waiver Review Board is responsible for to increase access to care for the na- making thorough and equitable evaluation’s most medically underserved in- tions of applications submitted by individuals. However, in keeping with the stitutions, acting on behalf of Ex- philosophy of the Program, the Ex- change Visitors, to HHS for a favorable change Visitor Waiver Review Board recommendation to the Department of may determine the appropriate num- State that the two-year foreign resi- bers and geographic areas for waivers dence requirement for Exchange Visi- for the delivery of health care service. tors under the Exchange Visitor Pro- (b) Criteria for waivers. The Exchange gram be waived. Visitor Waiver Review Board carefully (c) Membership. The Exchange Visitor applies stringent and restrictive cri- Waiver Review Board consists of no teria to its consideration of requests fewer than three members and two al- that it support waivers for Exchange ternates, of whom no fewer than three Visitors. Each application is evaluated will consider any particular applica- individually based on the facts avail- tion. The Director of the Office of Glob- able. al Health Affairs, Office of the Sec- (c) Waiver for members of Exchange retary, is an ex officio member of the Visitor’s family. Where a decision is Board and serves as its Chairman. The made to request a waiver for an Ex- Director may designate a staff member change Visitor, a waiver will also be re- of the Office of the Secretary to serve quested for the spouse and children, if as member and Chairman of the Board any, if they have J–2 visa status. When in the Director’s absence. The Assist- both members of a married couple are ant Secretary for Health appoints two Exchange Visitors in their own right regularly assigned members and two (i.e., each has J–1 visa status), separate alternates to consider applications applications must be submitted for concerning health, biomedical re- each of them. search, and related fields. The Chair- man may request the heads of oper- [67 FR 77696, Dec. 19, 2002] ating divisions of the Department to appoint additional members to con- § 50.4 Waivers for research. sider applications in other fields of in- In determining whether to request a terest to the Department. The Board waiver for an Exchange Visitor en- may obtain expert advisory opinions gaged in the conduct of research, the from other sources. The Board may es- Board considers the following key fac- tablish a workgroup from the operating tors:

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(a) The program or activity at the (a) The Exchange Visitor must sub- applicant institution or organization in mit a statement that he or she does which the Exchange Visitor is em- not have pending and will not submit ployed must be of high priority and of any other ‘‘interested government national or international significance agency’’ waiver request while HHS in an area of interest to the Depart- processes the waiver request being sub- ment. mitted. (b) The Exchange Visitor must be (b) Waivers are limited to primary needed as an integral part of the pro- care physicians and general psychia- gram or activity, or of an essential trists who have completed their pri- component thereof, so that loss of his/ mary care or psychiatric residency her services would necessitate dis- continuance of the program, or a major training programs no more than12 phase of it. Specific evidence must be months before the date of commence- provided on how the loss or unavail- ment of employment under the con- ability of the individual’s services tract described in subparagraph (d). would adversely affect the initiation, This 12-month eligibility limitation is continuance, completion, or success of to ensure that the physicians’ primary the program or activity. The applicant care training is current and they are organization/institution must clearly not engaged in subspecialty training. demonstrate that a suitable replace- This HHS eligibility requirement re- ment for the Exchange Visitor cannot lates only to eligibility for an HHS be found through recruitment or any waiver request and does not relieve other means. The Board will not re- physicians of the responsibility to quest a waiver when the principal prob- maintain lawful status. Alien physi- lem appears to be one of administra- cians are strongly encouraged to begin tive, budgetary, or program inconven- the waiver process as early as they pos- ience to the institution or other em- sibly can while still in the residency ployer. training program. Early filing of the (c) The Exchange Visitor must pos- waiver request by the alien physician, sess outstanding qualifications, train- coupled with timely processing of the ing and experience well beyond the request by the relevant government usually expected accomplishments at agencies, will facilitate the timely the graduate, postgraduate, and resi- completion of the waiver process before dency levels, and must clearly dem- the authorized J–1 admission expires, onstrate the capability to make original and significant contributions to the and the physician’s subsequent applica- program. The Board will not request a tion for change of nonimmigrant status waiver simply because an individual from J–1 to H–1B. has specialized training or experience (c) Primary care physicians are de- or is occupying a senior staff position fined as: physicians practicing general in a university, hospital, or other insti- internal medicine, pediatrics, family tution. practice or obstetrics/gynecology willing to work in a primary care Health [67 FR 77696, Dec. 19, 2002] Professional Shortage Area (HPSA) or § 50.5 Waivers for the delivery of Medically Underserved Area or Popu- health care service. lation (MUA/P); and general psychia- In determining whether to request a trists who are willing to work in a waiver for an Exchange Visitor to de- Mental Health HPSA. Note: these HHS liver health care service, the Board eligibility criteria for waivers are in will consider information from and co- addition to and independent of the ex- ordinate with State Departments of isting waiver and visa criteria estab- Public Health (or the equivalent), lished by the Immigration and Natu- other ‘‘interested government agen- ralization Service (INS), the Depart- cies’’ which request waivers, and other ment of State, and the Department of relevant agencies. The Board requires Labor. the following criteria for requests for (d) The Exchange Visitor must have waivers for the delivery of health care entered a contract with the applicant service: employer. This contract must:

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(1) Require the Exchange Visitor to (2) May charge no more than the provide primary medical care in a fa- usual and customary rate prevailing in cility physically located in an HHS- the geographic area in which the serv- designated primary care HPSA or ices are provided. MUA/P, or general psychiatric care in a (3) Must provide care on a sliding fee Mental Health HPSA. scale for persons at or below 200 per- (2) Require the Exchange Visitor to cent of poverty income level. Persons complete a term of employment of not with third-party insurance may be less than three years providing pri- charged the full fee for service. mary care health services for not less (4) Must post a notice in a con- than 40 hours per week. spicuous location in the patient wait- (3) Require the Exchange Visitor to: ing area at the practice site to notify (i) Be licensed by the State where he patients of the charges for service as or she will practice; required in this paragraph. (ii) Have completed a residency in (5) Must provide evidence that the one of the following specialties: family applicant facility made unsuccessful practice, general pediatrics, obstetrics/ efforts to recruit a physician who is a gynecology, general internal medicine, United States physician for the posi- or general psychiatry; and tion to be filled by the Exchange Vis- (iii) Be either board certified or itor. board eligible in the relevant primary (6) Must provide a statement by the care discipline. head of the facility to confirm the fa- (4) Be terminable only for cause until cility is located in a specific, des- completion of the three-year commit- ignated HPSA or MUA/P, and that it ment, except that, with the agreement provides medical care to Medicaid and of the alien physician, the employer Medicare eligible patients and to the may assign the contract to another eli- uninsured indigent. gible employer with the prior approval (f) The employer and the alien physi- of HHS and compliance with all appli- cian must submit information to the cable INS and Department of Labor re- Secretary at the times and in the man- quirements. Prior to approving an as- ner that the Secretary may reasonably signment of the contract, HHS will re- require. view and consider the health care needs [67 FR 77696, Dec. 19, 2002] of the alien physician’s current and proposed new locations, as well as the § 50.6 Procedures for submission of ap- reasons for the request. plication to HHS. (5) Not contain a restrictive covenant (a) The Exchange Visitor Waiver Re- or non-compete clause which prevents view Board will review applications or discourages the physician from con- submitted by private or non-federal in- tinuing to practice in any HHS-des- stitutions, organizations, or agencies ignated primary care HPSA or MUA/P or by a component agency of HHS. The or Mental Health HPSA after the pe- Board will not accept applications sub- riod of obligation under the contract mitted by Exchange Visitors or, unless has expired. under extenuating and exceptional cir- (6) Provide that any amendment to cumstances, other U.S. Government the contract complies with all applica- Agencies. ble Federal statutes, regulations and (b) Applications, instruction sheets HHS policy. and information are available from the (7) Be consistent with all applicable Executive Secretary, Exchange Visitor Federal statutes, regulations and HHS Waiver Review Board. An authorized policy. official of the applicant institution (e) The facility or practice spon- (educational institution, hospital, lab- soring the physician: oratory, corporation, etc.) must sign (1) Must provide health services to the completed application. The appli- individuals without discriminating cant institution must send the com- against them because either they are pleted application to the address indi- unable to pay for those services or pay- cated on the instruction sheet. ment for those health services will be made under Medicare or Medicaid. [67 FR 77697, Dec. 19, 2002]

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§ 50.7 Personal hardship, persecution § 51.1 Purpose. and visa extension considerations. The purpose of this regulation is to (a) It is not within the Department’s establish criteria for review and eval- jurisdiction to consider applications uation of the comprehensive plans of for waiver based on: Graduate Medical Education Programs (1) Exceptional hardship to the ex- to reduce reliance on alien physicians, change visitor’s American or legally as required by the Immigration and resident alien spouse or child; or Nationality Act Amendments of 1981, (2) The alien’s unwillingness to re- Pub. L. 97–116, for the waiver of certain turn to the country of his/her nation- requirements for exchange visitors who ality or last residence on the grounds are coming to the United States to par- that he/she or family members would ticipate in programs of graduate med- be subject to persecution on account of ical education or training. race, religion or political opinion. (b) Likewise, this Department is not § 51.2 Application. responsible for considering requests to Materials covering procedures for ap- extend visas. plying for substantial disruption waiv- (c) Inquiries concerning the above ers (including the comprehensive plan) should be directed to the District Of- may be obtained from the Educational fice of the Immigration and Natu- Commission for Foreign Medical Grad- ralization Service which has jurisdiction over the exchange visitor’s place uates, 3624 Market Street, Philadel- of residence in the United States. phia, Pennsylvania 19104. [49 FR 9900, Mar. 16, 1984. Redesignated at 67 EXPLANATORY NOTE: The Department of FR 77696, Dec. 19, 2002] State entered into an agreement with the Educational Commission for Foreign Medical § 50.8 Compliance. Graduates in 1971 whereby the latter was designated the authority to administer the If an alien physician acquires H–1B issuance of the Form IAP–66 in all cases in- nonimmigrant status following ap- volving the admission, certification, transfer proval by the INS of a request for waiv- or extension of stay for foreign physicians in er, then he or she becomes subject not exchange visitor status who are receiving only to the terms and conditions of the graduate medical education or training. The waiver, but also the terms and condi- Commission was further designated the au- tions of the H–1B nonimmigrant status. thority (FEDERAL REGISTER, Volume 44, No. 59, March 26, 1979), to process waiver requests Failure to comply with those condi- under the ‘‘substantial disruption’’ provision tions will make that physician subject of Pub. L. 94–484, as amended, within criteria to removal from the United States by to be provided by the United States Informa- the INS. tion Agency on advice from the Department of Health and Human Services (formerly De- [67 FR 77697, Dec. 19, 2002] partment of Health, Education, and Welfare).

PART 51—CRITERIA FOR EVALU- § 51.3 Who is eligible to apply? ATING COMPREHENSIVE PLAN Sponsors which had alien physicians TO REDUCE RELIANCE ON ALIEN in their exchange visitor programs on PHYSICIANS January 10, 1978, are eligible to apply. For purposes of this regulation, the Sec. term ‘‘program’’ relates to a graduate 51.1 Purpose. medical education program having an 51.2 Application. exchange visitor program for physi- 51.3 Who is eligible to apply? cians participating in graduate medical 51.4 How will the plans be evaluated? education or training. An ‘‘exchange AUTHORITY: Sec. 212, Immigration and Na- visitor program’’ is a program of a tionality Act, Pub. L. 82–114, as amended by sponsor, designed to promote inter- Pub. L. 97–116, 95 Stat. 1611 (8 U.S.C. change of persons, knowledge and 1182(j)(2)(A)). skills, and the interchange of develop- SOURCE: 48 FR 2539, Jan. 20, 1983, unless ments in the field of education, the otherwise noted. arts and sciences, and is concerned

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with one or more categories of partici- (2) Utilization of the team approach pants to promote mutual under- to health care delivery (individuals standing between the people of the functioning as an integral part of an United States and the people of other interprofessional team of health per- countries. sonnel organized under the leadership of a physician working toward more ef- § 51.4 How will the plans be evaluated? ficient and/or more effective delivery of After consultation with the Federal health services). Substantial Disruption Waiver Board (c) The extent to which changes (in- (seven Federal representatives charged cluding improvement of educational with the responsibility of reviewing and medical services) have been consid- substantial disruption waiver applica- ered and which have been or will be ap- tions), the Secretary of Health and plied to make the program more at- Human Services will make rec- tractive to graduates of medical ommendations to the Director, United schools who are citizens of the United States Information Agency, for the States, as demonstrated, for example, purpose of granting waivers. The Sec- by: retary will consider the following fac- (1) Adding additional services to the tors in determining whether or not a existing programs to provide a broader plan is satisfactory: educational experience for residents, (a) The extent of the specific problems that the program or institution (2) Expanding affiliations with other anticipates without a waiver, includ- residency programs to offer a broader ing, for example, experience for residents, (1) Curtailment of services currently (3) Expanding undergraduate clerk- provided, ships to provide a broader educational (2) Downgrading of medical care cur- experience. rently being provided, (4) Creating or modifying administra- (3) Reduction in the number of inpa- tive units which will provide broader tients and outpatients receiving care, clinical experiences, or (4) Inadequate medical coverage for (5) Initiating research projects. population served, or (d) The adequacy of the recruitment (5) Inadequate supervision of junior efforts which have been and will be un- residents. dertaken to attract graduates of med- (b) The adequacy of the alternative ical schools who are citizens of the resources and methods (including use United States, as demonstrated, for ex- of physician assistants (as defined in 42 ample, by: CFR 57.802), nurse practitioners (as de- (1) Broad-based advertisement of the fined in 42 CFR 57.2402), and other non- program and of the institution through physician providers) that have been notices in journals, contacts with med- considered and have been and will be ical schools, etc. applied to reduce such disruption in (2) Forming committees for the pur- the delivery of health services, espe- pose of recruiting U.S. citizens. cially in primary medical care manpower shortage areas, as established (3) Working with national organiza- under section 332 of the Public Health tions which are involved with medical Service Act, and for medicaid patients. students and U.S. graduate medical This may include, for example: trainees, e.g., the American Medical (1) Greater reliance on fully licensed Student Association and the Physician physicians, and on physician assist- National House Staff Association, to ants, nurse practitioners and other attract U.S. citizens. non-physician personnel in an ex- (e) The extent to which the program panded role in the delivery of health on a year-by-year basis has phased care, such as admission patient his- down its dependence upon aliens who tories, making patient rounds, record- are graduates of foreign medical ing patient progress notes, doing the schools so that the program will not be initial and follow-up evaluation of pa- dependent upon the admission to the tients, performing routine laboratory program of any additional such aliens and related studies, or after December 31, 1983.

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PART 57—VOLUNTEER SERVICES used to supplement, but not to take the place of, personnel whose services Sec. are obtained through the usual employ- 57.1 Applicability. ment procedures. 57.2 Definitions. 57.3 Volunteer service programs. § 57.4 Acceptance and use of volunteer 57.4 Acceptance and use of volunteer serv- services. ices. The Secretary, or his designee, shall 57.5 Services and benefits available to vol- establish requirements for: Accepting unteers. volunteer services from individuals or AUTHORITY: Sec. 223, 58 Stat. 683, as amend- groups of individuals, using volunteer ed by 81 Stat. 539: 42 U.S.C. 217b. services, giving appropriate recogni- SOURCE: 34 FR 13868, Aug. 29, 1969, unless tion to volunteers, and maintaining otherwise noted. records of volunteer services.

§ 57.1 Applicability. § 57.5 Services and benefits available The regulations in this part apply to to volunteers. the acceptance of volunteer and un- (a) The following provisions of law compensated services for use in the op- may be applicable to volunteers whose eration of any health care facility of services are offered and accepted under the Department or in the provision of the regulations in this part: health care. (1) Subchapter I of Chapter 81 of Title 5 of the United States Code relating to § 57.2 Definitions. medical services for work related inju- As used in the regulations in this ries; part: (2) Title 28 of the United States Code Secretary means the Secretary of relating to tort claims; Health and Human Services. (3) Section 7903 of Title 5 of the Department means the Department of United States Code relating to protec- Health and Human Services. tive clothing and equipment; and Volunteer services are services per- (4) Section 5703 of Title 5 of the formed by individuals (hereafter called United States Code relating to travel volunteers) whose services have been and transportation expenses. offered to the Government and accept- (b) Volunteers may also be provided ed under a formal agreement on a with- such other benefits as are authorized out compensation basis for use in the by law or by administrative action of operation of a health care facility or in the Secretary or his designee. the provision of health care. Health care means services to pa- PART 60—NATIONAL PRACTITIONER tients in Department facilities, bene- DATA BANK FOR ADVERSE IN- ficiaries of the Federal Government, or FORMATION ON PHYSICIANS individuals or groups for whom health AND OTHER HEALTH CARE PRAC- services are authorized under the programs of the Department. TITIONERS Health care facility means a hospital, Subpart A—General Provisions clinic, health center, or other facility established for the purpose of providing Sec. health care. 60.1 The National Practitioner Data Bank. 60.2 Applicability of these regulations. § 57.3 Volunteer service programs. 60.3 Definitions. Programs for the use of volunteer Subpart B—Reporting of Information services may be established by the Sec- retary, or his designee, to broaden and 60.4 How information must be reported. strengthen the delivery of health serv- 60.5 When information must be reported. ices, contribute to the comfort and 60.6 Reporting errors, omissions, and revisions. well being of patients in Department 60.7 Reporting medical malpractice pay- hospitals or clinics, or expand the serv- ments. ices required in the operation of a 60.8 Reporting licensure actions taken by health care facility. Volunteers may be Boards of Medical Examiners.

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60.9 Reporting adverse actions on clinical dispute the accuracy of National Prac- privileges. titioner Data Bank information. Subpart C—Disclosure of Information by [59 FR 61555, Dec. 1, 1994] the National Practitioner Data Bank § 60.3 Definitions. 60.10 Information which hospitals must re- Act means the Health Care Quality quest from the National Practitioner Improvement Act of 1986, title IV of Data Bank. Pub. L. 99–660, as amended. 60.11 Requesting information from the Na- Adversely affecting means reducing, tional Practitioner Data Bank. 60.12 Fees applicable to requests for infor- restricting, suspending, revoking, or mation. denying clinical privileges or member- 60.13 Confidentiality of National Practi- ship in a health care entity. tioner Data Bank information. Board of Medical Examiners, or Board, 60.14 How to dispute the accuracy of Na- means a body or subdivision of such tional Practitioner Data Bank informa- body which is designated by a State for tion. the purpose of licensing, monitoring AUTHORITY: Secs. 401–432 of the Health Care and disciplining physicians or dentists. Quality Improvement Act of 1986, Pub. L. 99– This term includes a Board of Osteo- 660, 100 Stat. 3784–3794, as amended by section pathic Examiners or its subdivision, a 402 of Pub. L. 100–177, 101 Stat. 1007–1008 (42 Board of Dentistry or its subdivision, U.S.C. 11101–11152). or an equivalent body as determined by SOURCE: : 54 FR 42730, Oct. 17, 1989, unless the State. Where the Secretary, pursu- otherwise noted. ant to section 423(c)(2) of the Act, has designated an alternate entity to carry out the reporting activities of § 60.9 due Subpart A—General Provisions to a Board’s failure to comply with § 60.1 The National Practitioner Data § 60.8, the term Board of Medical Exam- Bank. iners or Board refers to this alternate entity. The Health Care Quality Improve- Clinical privileges means the author- ment Act of 1986 (the Act), title IV of ization by a health care entity to a Pub. L. 99–660, as amended, authorizes physician, dentist or other health care the Secretary to establish (either di- practitioner for the provision of health rectly or by contract) a National Prac- care services, including privileges and titioner Data Bank to collect and re- membership on the medical staff. lease certain information relating to Dentist means a doctor of dental sur- the professional competence and con- gery, doctor of dental medicine, or the duct of physicians, dentists and other equivalent who is legally authorized to health care practitioners. These regu- practice dentistry by a State (or who, lations set forth the reporting and dis- without authority, holds himself or closure requirements for the National herself out to be so authorized). Practitioner Data Bank. Formal peer review process means the conduct of professional review activi- § 60.2 Applicability of these regula- ties through formally adopted written tions. procedures which provide for adequate The regulations in this part establish notice and an opportunity for a hear- reporting requirements applicable to ing. hospitals; health care entities; Boards Health care entity means: of Medical Examiners; professional so- (a) A hospital; cieties of physicians, dentists or other (b) An entity that provides health health care practitioners which take care services, and engages in profes- adverse licensure of professional review sional review activity through a formal actions; and entities (including insur- peer review process for the purpose of ance companies) making payments as a furthering quality health care, or a result of medical malpractice actions committee of that entity; or or claims. They also establish proce- (c) A professional society or a com- dures to enable individuals or entities mittee or agent thereof, including to obtain information from the Na- those at the national, State, or local tional Practitioner Data Bank or to level, of physicians, dentists, or other

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health care practitioners that engages (2) The physician’s, dentist’s or other in professional review activity through health care practitioner’s fees or the a formal peer review process, for the physician’s, dentist’s or other health purpose of furthering quality health care practitioner’s advertising or en- care. gaging in other competitive acts in- For purposes of paragraph (b) of this tended to solicit or retain business; definition, an entity includes: a health (3) The physician’s, dentist’s or other maintenance organization which is li- health care practitioner’s participation censed by a State or determined to be in prepaid group health plans, salaried qualified as such by the Department of employment, or any other manner of Health and Human Services; and any delivering health services whether on a group or prepaid medical or dental fee-for-service or other basis; practice which meets the criteria of (4) A physician’s, dentist’s or other paragraph (b). health care practitioner’s association Health care practitioner means an indi- with, supervision of, delegation of au- vidual other than a physician or dentist, who is licensed or otherwise authority to, support for, training of, or thorized by a State to provide health participation in a private group prac- care services. tice with, a member or members of a Hospital means an entity described in particular class of health care practi- paragraphs (1) and (7) of section 1861(e) tioner or professional; or of the Social Security Act. (5) Any other matter that does not Medical malpractice action or claim relate to the competence or profes- means a written complaint or claim de- sional conduct of a physician, dentist manding payment based on a physi- or other health care practitioner. cian’s, dentists or other health care Professional review activity means an practitioner’s provision of or failure to activity of a health care entity with re- provide health care services, and inspect to an individual physician, den- cludes the filing of a cause of action tist or other health care practitioner: based on the law of tort, brought in (a) To determine whether the physi- any State or Federal Court or other ad- cian, dentist or other health care prac- judicative body. titioner may have clinical privileges Physician means a doctor of medicine with respect to, or membership in, the or osteopathy legally authorized to entity; practice medicine or surgery by a State (or who, without authority, holds him- (b) To determine the scope or condi- self or herself out to be so authorized). tions of such privileges or membership; Professional review action means an or action or recommendation of a health (c) To change or modify such privi- care entity: leges or membership. (a) Taken in the course of profes- Secretary means the Secretary of sional review activity; Health and Human Services and any (b) Based on the professional com- other officer or employee of the De- petence or professional conduct of an partment of Health and Human Serv- individual physician, dentist or other ices to whom the authority involved health care practitioner which affects has been delegated. or could affect adversely the health or State means the fifty States, the Dis- welfare of a patient or patients; and trict of Columbia, Puerto Rico, the (c) Which adversely affects or may Virgin Islands, Guam, American adversely affect the clinical privileges Samoa, and the Northern Mariana Is- or membership in a professional soci- lands. ety of the physician, dentist or other health care practitioner. [54 FR 42730, Oct. 17, 1989; 54 FR 43890, Oct. 27, (d) This term excludes actions which 1989] are primarily based on: (1) The physician’s, dentist’s or other health care practitioner’s association, or lack of association, with a professional society or association;

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Subpart B—Reporting of made under § 60.9, to the Board of Med- Information ical Examiners, as soon as possible. (b) An individual or entity which re- § 60.4 How information must be reports information on licensure or clin- ported. ical privileges under §§ 60.8 or 60.9 must Information must be reported to the also report any revision of the action Data Bank or to a Board of Medical Ex- originally reported. Revisions include aminers as required under §§ 60.7, 60.8, reversal of a professional review action and 60.9 in such form and manner as or reinstatement of a license. Revisions the Secretary may prescribe. are subject to the same time constraints and procedures of §§ 60.5, 60.8, § 60.5 When information must be re- and 60.9, as applicable to the original ported. action which was reported. Information required under §§ 60.7, (Approved by the Office of Management and 60.8, and 60.9 must be submitted to the Budget under control number 0915–0126) Data Bank within 30 days following the action to be reported, beginning with [54 FR 42730, Oct. 17, 1989, as amended at 55 FR 50004, Dec. 4, 1990] actions occurring on or after Sep- tember 1, 1990, as follows: § 60.7 Reporting medical malpractice (a) Malpractice Payments (§ 60.7). Per- payments. sons or entities must submit information to the Data Bank within 30 days (a) Who must report. Each entity, in- from the date that a payment, as de- cluding an insurance company, which scribed in § 60.7, is made. If required makes a payment under an insurance under § 60.7, this information must be policy, self-insurance, or otherwise, for submitted simultaneously to the ap- the benefit of a physician, dentist or propriate State licensing board. other health care practitioner in set- (b) Licensure Actions (§ 60.8). The tlement of or in satisfaction in whole Board must submit information within or in part of a claim or a judgment 30 days from the date the licensure ac- against such physician, dentist, or tion was taken. other health care practitioner for med- (c) Adverse Actions (§ 60.9). A health ical malpractice, must report informa- care entity must report an adverse action as set forth in paragraph (b) to the tion to the Board within 15 days from Data Bank and to the appropriate the date the adverse action was taken. State licensing board(s) in the State in The Board must submit the informa- which the act or omission upon which tion received from a health care entity the medical malpractice claim was within 15 days from the date on which based. For purposes of this section, the it received this information. If required waiver of an outstanding debt is not under § 60.9, this information must be construed as a ‘‘payment’’ and is not submitted by the Board simultaneously required to be reported. to the appropriate State licensing (b) What information must be reported. board in the State in which the health Entities described in paragraph (a) care entity is located, if the Board is must report the following information: not such licensing Board. (1) With respect to the physician, dentist or other health care practi- [54 FR 42730, Oct. 17, 1989, as amended at 55 tioner for whose benefit the payment is FR 50003, Dec. 4, 1990] made— § 60.6 Reporting errors, omissions, and (i) Name, revisions. (ii) Work address, (a) Persons and entities are respon- (iii) Home address, if known, sible for the accuracy of information (iv) Social Security number, if which they report to the Data Bank. If known, and if obtained in accordance errors or omissions are found after in- with section 7 of the Privacy Act of formation has been reported, the per- 1974, son or entity which reported it must (v) Date of birth, send an addition or correction to the (vi) Name of each professional school Data Bank or, in the case of reports attended and year of graduation,

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(vii) For each professional license: be construed as creating a presumption the license number, the field of licen- that medical malpractice has occurred. sure, and the name of the State or Ter- (Approved by the Office of Management and ritory in which the license is held, Budget under control number 0915–0126) (viii) Drug Enforcement Administra- tion registration number, if known, [54 FR 42730, Oct. 17, 1989, as amended at 59 (ix) Name of each hospital with FR 61555, Dec. 1, 1994] which he or she is affiliated, if known; § 60.8 Reporting licensure actions (2) With respect to the reporting enti- taken by Boards of Medical Exam- ty— iners. (i) Name and address of the entity making the payment, (a) What actions must be reported. (ii) Name, title, and telephone num- Each Board of Medical Examiners must ber of the responsible official submit- report to the Data Bank any action ting the report on behalf of the entity, based on reasons relating to a physi- and cian’s or dentist’s professional com- (iii) Relationship of the reporting en- petence or professional conduct– tity of the physician, dentists, or other (1) Which revokes or suspends (or health care practitioner for whose ben- otherwise restricts) a physician’s or efit the payment is made; dentist’s license, (3) With respect to the judgment or (2) Which censures, reprimands, or settlement resulting in the payment— places on probation a physician or den- (i) Where an action or claim has been tist, or filed with an adjudicative body, identi- (3) Under which a physician’s or den- fication of the adjudicative body and tist’s license is surrendered. the case number, (b) Information that must be reported. (ii) Date or dates on which the act(s) The Board must report the following or omission(s) which gave rise to the information for each action: action or claim occurred, (1) The physician’s or dentist’s name, (iii) Date of judgment or settlement, (2) The physician’s or dentist’s work (iv) Amount paid, date of payment, address, and whether payment is for a judgment (3) The physician’s or dentist’s home or a settlement, address, if known, (v) Description and amount of judg- (4) The physician’s or dentist’s Social ment or settlement and any conditions Security number, if known, and if ob- attached thereto, including terms of tained in accordance with section 7 of payment, the Privacy Act of 1974, (vi) A description of the acts or omis- (5) The physician’s or dentist’s date sions and injuries or illnesses upon of birth, which the action or claim was based, (6) Name of each professional school (vii) Classification of the acts or attended by the physician or dentist omissions in accordance with a report- and year of graduation, ing code adopted by the Secretary, and (7) For each professional license, the (viii) Other information as required physician’s or dentist’s license number, by the Secretary from time to time the field of licensure and the name of after publication in the FEDERAL REG- the State or Territory in which the li- ISTER and after an opportunity for pub- cense is held, lic comment. (8) The physician’s or dentist’s Drug (c) Sanctions. Any entity that fails to Enforcement Administration registra- report information on a payment re- tion number, if known, quired to be reported under this section (9) A description of the acts or omis- is subject to a civil money penalty of sions or other reasons for the action up to $10,000 for each such payment in- taken, volved. This penalty will be imposed (10) A description of the Board ac- pursuant to procedures at 42 CFR part tion, the date the action was taken, 1003. and its effective date, (d) Interpretation of information. A (11) Classification of the action in ac- payment in settlement of a medical cordance with a reporting code adopted malpractice action or claim shall not by the Secretary, and

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(12) Other information as required by (ii) Work address, the Secretary from time to time after (iii) Home address, if known, publication in the FEDERAL REGISTER (iv) Social Security number, if and after an opportunity for public known, and if obtained in accordance comment. with section 7 of the Privacy Act of (c) Sanctions. If, after notice of non- 1974, compliance and providing opportunity (v) Date of birth, to correct noncompliance, the Sec- (vi) Name of each professional school retary determines that a Board has attended and year of graduation, failed to submit a report as required by (vii) For each professional license: this section, the Secretary will des- the license number, the field of licen- ignate another qualified entity for the sure, and the name of the State or Ter- reporting of information under § 60.9. ritory in which the license is held, (Approved by the Office of Management and (viii) Drug Enforcement Administra- Budget under control number 0915–0126) tion registration number, if known, (ix) A description of the acts or omis- § 60.9 Reporting adverse actions on sions or other reasons for privilege clinical privileges. loss, or, if known, for surrender, (a) Reporting to the Board of Medical (x) Action taken, date the action was Examiners—(1) Actions that must be re- taken, and effective date of the action, ported and to whom the report must be and made. Each health care entity must re- (xi) Other information as required by port to the Board of Medical Examiners the Secretary from time to time after in the State in which the health care publication in the FEDERAL REGISTER entity is located the following actions: and after an opportunity for public (i) Any professional review action comment. that adversely affects the clinical (b) Reporting by the Board of Medical privileges of a physician or dentist for Examiners to the National Practitioner a period longer than 30 days; Data Bank. Each Board must report, in (ii) Acceptance of the surrender of accordance with §§ 60.4 and 60.5, the in- clinical privileges or any restriction of formation reported to it by a health such privileges by a physician or den- care entity and any known instances of tist— a health care entity’s failure to report (A) While the physician or dentist is information as required under para- under investigation by the health care graph (a)(1) of this section. In addition, entity relating to possible incom- each Board must simultaneously report petence or improper professional con- this information to the appropriate duct, or State licensing board in the State in (B) In return for not conducting such which the health care entity is located, an investigation or proceeding; or if the Board is not such licensing (iii) In the case of a health care enti- board. ty which is a professional society, (c) Sanctions—(1) Health care entities. when it takes a professional review ac- If the Secretary has reason to believe tion concerning a physician or dentist. that a health care entity has substan- (2) Voluntary reporting on other health tially failed to report information in care practitioners. A health care entity accordance with § 60.9, the Secretary may report to the Board of Medical Ex- will conduct an investigation. If the in- aminers information as described in vestigation shows that the health care paragraph (a)(3) of this section con- entity has not complied with § 60.9, the cerning actions described in paragraph Secretary will provide the entity with (a)(1) in this section with respect to a written notice describing the non- other health care practitioners. compliance, giving the health care en- (3) What information must be reported. tity an opportunity to correct the non- The health care entity must report the compliance, and stating that the entity following information concerning ac- may request, within 30 days after re- tions described in paragraph (a)(1) of ceipt of such notice, a hearing with re- this section with respect to the physi- spect to the noncompliance. The re- cian or dentist: quest for a hearing must contain a (i) Name, statement of the material factual

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issues in dispute to demonstrate that or other health care practitioner as fol- there is cause for a hearing. These lows: issues must be both substantive and (1) At the time a physician, dentist relevant. The hearing will be held in or other health care practitioner ap- the Washington, DC, metropolitan plies for a position on its medical staff area. The Secretary will deny a hearing (courtesy or otherwise), or for clinical if: privileges at the hospital; and (i) The request for a hearing is un- (2) Every 2 years concerning any phy- timely, (ii) The health care entity does not sician, dentist, or other health care provide a statement of material factual practitioner who is on its medical staff issues in dispute, or (courtesy or otherwise), or has clinical (iii) The statement of factual issues privileges at the hospital. in dispute is frivolous or inconsequen- (b) Failure to request information. Any tial. hospital which does not request the information as required in paragraph (a) In the event that the Secretary denies of this section is presumed to have a hearing, the Secretary will send a written denial to the health care entity knowledge of any information reported setting forth the reasons for denial. If to the Data Bank concerning this phy- a hearing is denied, or if as a result of sician, dentist or other health care the hearing the entity is found to be in practitioner. noncompliance, the Secretary will pub- (c) Reliance on the obtained informa- lish the name of the health care entity tion. Each hospital may rely upon the in the FEDERAL REGISTER. In such case, information provided by the Data Bank the immunity protections provided to the hospital. A hospital shall not be under section 411(a) of the Act will not held liable for this reliance unless the apply to the health care entity for pro- hospital has knowledge that the infor- fessional review activities that occur mation provided was false. during the 3-year period beginning 30 days after the date of publication of (Approved by the Office of Management and Budget under control number 0915–0126) the entity’s name in the FEDERAL REG- ISTER. § 60.11 Requesting information from (2) Board of Medical Examiners. If, the National Practitioner Data after notice of noncompliance and pro- Bank. viding opportunity to correct noncompliance, the Secretary determines (a) Who may request information and that a Board has failed to report infor- what information may be available. Infor- mation in accordance with paragraph mation in the Data Bank will be avail- (b) of this section, the Secretary will able, upon request, to the persons or designate another qualified entity for entities, or their authorized agents, as the reporting of this information. described below: (Approved by the Office of Management and (1) A hospital that requests informa- Budget under control number 0915–0126) tion concerning a physician, dentist or other health care practitioner who is [54 FR 42730, Oct. 17, 1989, as amended at 59 FR 61555, Dec. 1, 1994] on its medical staff (courtesy or otherwise) or has clinical privileges at the Subpart C—Disclosure of Informa- hospital, tion by the National Practi- (2) A physician, dentist, or other health care practitioner who requests tioner Data Bank information concerning himself or her- § 60.10 Information which hospitals self, must request from the National (3) Boards of Medical Examiners or Practitioner Data Bank. other State licensing boards, (a) When information must be re- (4) Health care entities which have quested. Each hospital, either directly entered or may be entering employ- or through an authorized agent, must ment or affiliation relationships with a request information from the Data physician, dentist or other health care Bank concerning a physician, dentist practitioner, or to which the physician,

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dentist or other health care practi- computer search time, runs, printouts, tioner has applied for clinical privi- and time of computer programmers and leges or appointment to the medical operators, or other employees, staff, (2) Photocopying or other forms of (5) An attorney, or individual rep- reproduction, such as magnetic tapes— resenting himself or herself, who has actual cost of the operator’s time, plus filed a medical malpractice action or the cost of the machine time and the claim in a State or Federal court or materials used, other adjudicative body against a hos- (3) Postage—actual cost, and pital, and who requests information regarding a specific physician, dentist, or (4) Sending information by special other health care practitioner who is methods requested by the applicant, also named in the action or claim. Pro- such as express mail or electronic vided, that this information will be dis- transfer—the actual cost of the special closed only upon the submission of evi- service. dence that the hospital failed to re- (c) Assessing and collecting fees. The quest information from the Data Bank Secretary will announce through no- as required by § 60.10(a), and may be tice in the FEDERAL REGISTER from used solely with respect to ligitation time to time the methods of payment resulting from the action or claim of Data Bank fees. In determining against the hospital,11(6) A health care these methods, the Secretary will con- entity with respect to professional re- sider efficiency, effectiveness, and con- view activity, and venience for the Data Bank users and (7) A person or entity who requests the Department. Methods may include: information in a form which does not credit card; electronic fund transfer; permit the identification of any par- check; and money order. ticular health care entity, physician, dentist, or other health care practi- [54 FR 42730, Oct. 17, 1989, as amended at 60 tioner. FR 27899, May 26, 1995; 64 FR 9922, Mar. 1, (b) Procedures for obtaining National 1999] Practitioner Data Bank information. Per- sons and entities may obtain informa- § 60.13 Confidentiality of National tion from the Data Bank by submitting Practitioner Data Bank informa- a request in such form and manner as tion. the Secretary may prescribe. These re- (a) Limitations on disclosure. Informa- quests are subject to fees as described tion reported to the Data Bank is con- in § 60.12. sidered confidential and shall not be [54 FR 42730, Oct. 17, 1989; 54 FR 43890, Oct. 27, disclosed outside the Department of 1989] Health and Human Services, except as specified in § 60.10, § 60.11 and § 60.14. § 60.12 Fees applicable to requests for Persons and entities which receive in- information. formation from the Data Bank either (a) Policy on Fees. The fees described directly or from another party must in this section apply to all requests for use it solely with respect to the pur- information from the Data Bank. pose for which it was provided. Nothing These fees are authorized by section in this paragraph shall prevent the dis- 427(b)(4) of the Health Care Quality Im- closure of information by a party provement Act of 1986 (42 U.S.C. 11137). which is authorized under applicable They reflect the costs of processing re- State law to make such disclosure. quests for disclosure and of providing (b) Penalty for violations. Any person such information. The actual fees will who violates paragraph (a) shall be sub- be announced by the Secretary in peri- ject to a civil money penalty of up to odic notices in the FEDERAL REGISTER. (b) Criteria for determining the fee. The $10,000 for each violation. This penalty amount of each fee will be determined will be imposed pursuant to procedures based on the following criteria: at 42 CFR part 1003. (1) Use of electronic data processing equipment to obtain information—the actual cost for the service, including

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§ 60.14 How to dispute the accuracy of corrected information to previous in- National Practitioner Data Bank inquirers. formation. (Approved by the Office of Management and (a) Who may dispute National Practi- Budget under control number 0915–0126) tioner Data Bank information. Any phy- [54 FR 42730, Oct. 17, 1989, as amended at 54 sician, dentist or other health care FR 43890, Oct. 27, 1989] practitioner may dispute the accuracy of information in the Data Bank con- PART 61—HEALTHCARE INTEGRITY cerning himself or herself. The Sec- AND PROTECTION DATA BANK retary will routinely mail a copy of FOR FINAL ADVERSE INFORMA- any report filed in the Data Bank to TION ON HEALTH CARE PRO- the subject individual. VIDERS, SUPPLIERS AND PRACTI- (b) Procedures for filing a dispute. A physician, dentist or other health care TIONERS practitioner has 60 days from the date Subpart A—General Provisions on which the Secretary mails the report in question to him or her in which Sec. to dispute the accuracy of the report. 61.1 The Healthcare Integrity and Protec- The procedures for disputing a report tion Data Bank. are: 61.2 Applicability of these regulations. 61.3 Definitions. (1) Informing the Secretary and the reporting entity, in writing, of the dis- Subpart B—Reporting of Information agreement, and the basis for it, (2) Requesting simultaneously that 61.4 How information must be reported. 61.5 When information must be reported. the disputed information be entered 61.6 Reporting errors, omissions, revisions, into a ‘‘disputed’’ status and be re- or whether an action is on appeal. ported to inquirers as being in a ‘‘dis- 61.7 Reporting licensure actions taken by puted’’ status, and Federal or State licensing and certifi- (3) Attempting to enter into discus- cation agencies. sion with the reporting entity to re- 61.8 Reporting Federal or State criminal convictions related to the delivery of a solve the dispute. health care item or service. (c) Procedures for revising disputed in- 61.9 Reporting civil judgments related to formation. (1) If the reporting entity re- the delivery of a health care item or vises the information originally sub- service. mitted to the Data Bank, the Sec- 61.10 Reporting exclusions from participa- retary will notify all entities to whom tion in Federal or State health care programs. reports have been sent that the origi- 61.11 Reporting other adjudicated actions or nal information has been revised. decisions. (2) If the reporting entity does not revise the reported information, the Sec- Subpart C—Disclosure of Information by retary will, upon request, review the the Healthcare Integrity and Protection written information submitted by both Data Bank parties (the physician, dentist or other 61.12 Requesting information from the health care practitioner), and the re- Healthcare Integrity and Protection porting entity. After review, the Sec- Data Bank. retary will either— 61.13 Fees applicable to requests for infor- (i) If the Secretary concludes that mation. 61.14 Confidentiality of Healthcare Integ- the information is accurate, include a rity and Protection Data Bank informa- brief statement by the physician, den- tion. tist or other health care practitioner 61.15 How to dispute the accuracy of describing the disagreement con- Healthcare Integrity and Protection cerning the information, and an expla- Data Bank information. nation of the basis for the decision that 61.16 Immunity. it is accurate, or AUTHORITY: 42 U.S.C. 1320a-7e. (ii) If the Secretary concludes that SOURCE: 64 FR 57758, Oct. 26, 1999, unless the information was incorrect, send otherwise noted.

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Subpart A—General Provisions § 61.3 Definitions. The following definitions apply to § 61.1 The Healthcare Integrity and this part: Protection Data Bank. Act means the Social Security Act. (a) Section 1128E of the Social Secu- Affiliated or associated means health rity Act (the Act) authorizes the Sec- care entities with which a subject of a retary of Health and Human Services final adverse action has a commercial (the Secretary) to implement a na- relationship, including but not limited tional health care fraud and abuse data to, organizations, associations, cor- collection program for the reporting porations, or partnerships. It also in- and disclosing of certain final adverse cludes a professional corporation or other business entity composed of a actions taken against health care pro- single individual. viders, suppliers, or practitioners. Sec- Any other negative action or finding by tion 1128E of the Act also directs the a Federal or State licensing agency Secretary to maintain a database of means any action or finding that under final adverse actions taken against the State’s law is publicly available in- health care providers, suppliers or formation, and rendered by a licensing practitioners. This data bank will be or certification authority, including known as the Healthcare Integrity and but not limited to, limitations on the Protection Data Bank (HIPDB). Settle- scope of practice, liquidations, injunc- ments in which no findings or admis- tions and forfeitures. This definition sions of liability have been made will also includes final adverse actions ren- be excluded from being reported. How- dered by a Federal or State licensing or ever, if another action is taken against certification authority, such as exclu- the provider, supplier or practitioner of sions, revocations or suspension of li- a health care item or service as a re- cense or certification that occur in sult of or in conjunction with the set- conjunction with settlements in which tlement, that action is reportable to no finding of liability has been made the HIPDB. (although such a settlement itself is not reportable under the statute). This (b) Section 1128E of the Act also re- definition excludes administrative quires the Secretary to implement the fines or citations and corrective action HIPDB in such a manner as to avoid plans and other personnel actions, un- duplication with the reporting require- less they are: ments established for the National (1) Connected to the delivery of Practitioner Data Bank (NPDB) (See 45 health care services, and CFR part 60). In accordance with the (2) Taken in conjunction with other statute, the reporter responsible for re- licensure or certification actions such porting the final adverse actions to as revocation, suspension, censure, rep- both the HIPDB and the NPDB will be rimand, probation or surrender. required to submit only one report, Civil judgment means a court-ordered provided that reporting is made action rendered in a Federal or State through the Department’s consolidated court proceeding, other than a criminal reporting mechanism that will sort the proceeding. This reporting requirement appropriate actions into the HIPDB, does not include Consent Judgments NPDB, or both. that have been agreed upon and en- (c) The regulations in this part set tered to provide security for civil set- forth the reporting and disclosure re- tlements in which there was no finding quirements for the HIPDB. or admission of liability. Criminal conviction means a convic- § 61.2 Applicability of these regulation as described in section 1128(i) of tions. the Act. Exclusion means a temporary or per- The regulations in this part establish manent debarment of an individual or reporting requirements applicable to entity from participation in any Fed- Federal and State Government agen- eral or State health-related program, cies and to health plans, as the terms in accordance with which items or are defined under § 61.3. services furnished by such person or

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entity will not be reimbursed under contract to provide such supplies, any Federal or State health-related items or ancillary services; health program. plans as defined in this section (includ- Government agency includes, but is ing employers that are self-insured); not limited to— and health insurance producers (includ- (1) The U.S. Department of Justice; ing but not limited to agents, brokers, (2) The U.S Department of Health solicitors, consultants and reinsurance and Human Services; intermediaries). (3) Any other Federal agency that ei- Health plan means a plan, program or ther administers or provides payment organization that provides health bene- for the delivery of health care services, fits, whether directly, through insur- including, but not limited to, the U.S. ance, reimbursement or otherwise, and Department of Defense and the U.S. includes but is not limited to— Department of Veterans Affairs; (1) A policy of health insurance; (4) Federal and State law enforce- (2) A contract of a service benefit or- ment agencies, including States Attor- ganization; neys General and law enforcement in- (3) A membership agreement with a vestigators; health maintenance organization or (5) State Medicaid Fraud Control other prepaid health plan; Units; and (4) A plan, program, agreement or (6) Federal or State agencies respon- other mechanism established, main- sible for the licensing and certification tained or made available by a self in- of health care providers, suppliers or li- sured employer or group of self insured censed health care practitioners. Ex- employers, a practitioner, provider or amples of such State agencies include supplier group, third party adminis- Departments of Professional Regula- trator, integrated health care delivery tion, Health, Social Services (including system, employee welfare association, State Survey and Certification and public service group or organization or Medicaid Single State agencies), Com- professional association; and merce and Insurance. (5) An insurance company, insurance Health care provider means a provider service or insurance organization that of services as defined in section 1861(u) is licensed to engage in the business of of the Act; any health care entity (in- selling health care insurance in a State cluding a health maintenance organi- and which is subject to State law zation, preferred provider organization which regulates health insurance. or group medical practice) that pro- Licensed health care practitioner, li- vides health care services and follows a censed practitioner, or practitioner formal peer review process for the pur- means, with respect to a State, an indi- pose of furthering quality health care, vidual who is licensed or otherwise au- and any other health care entity that, thorized by the State to provide health directly or through contracts, provides care services (or any individual who, health care services. without authority, holds himself or Health care supplier means a provider herself out to be so licensed or author- of medical and other health care serv- ized). ices as described in section 1861(s) of Organization name means the sub- the Act; or any individual or entity, ject’s business or employer at the time other than a provider, who furnishes, the underlying acts occurred. If more whether directly or indirectly, or pro- than one business or employer is in- vides access to, health care services, volved, the one most closely related to supplies, items, or ancillary services the underlying acts should be reported (including, but not limited to, durable in the ‘‘organization name,’’ field with medical equipment suppliers, manufac- the others being reported in the ‘‘af- turers of health care items, pharma- filiated or associated health care enti- ceutical suppliers and manufacturers, ties’’ field. health record services such as medical, Organization type means a brief de- dental and patient records, health data scription of the nature of that business suppliers, and billing and transpor- or employer. tation service suppliers). The term also Other adjudicated actions or decisions includes any individual or entity under means formal or official final actions

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taken against a health care provider, wealth of Puerto Rico, the Virgin Is- supplier or practitioner by a Federal or lands and Guam. State governmental agency or a health Voluntary surrender means a sur- plan; which include the availability of render made after a notification of in- a due process mechanism, and; are vestigation or a formal official request based on acts or omissions that affect by a Federal or State licensing or cer- or could affect the payment, provision tification authority for a health care or delivery of a health care item or provider, supplier or practitioner to service. For example, a formal or offi- surrender the license or certification cial final action taken by a Federal or (including certification agreements or State governmental agency or a health contracts for participation in Federal plan may include, but is not limited to, or State health care programs). The a personnel-related action such as sus- definition also includes those instances pensions without pay, reductions in where a health care provider, supplier pay, reductions in grade for cause, ter- or practitioner voluntarily surrenders minations or other comparable actions. a license or certification (including A hallmark of any valid adjudicated program participation agreements or action or decision is the availability of contracts) in exchange for a decision a due process mechanism. The fact that by the licensing or certification au- the subject elects not to use the due thority to cease an investigation or process mechanism provided by the au- similar proceeding, or in return for not thority bringing the action is immate- conducting an investigation or pro- rial, as long as such a process is avail- ceeding, or in lieu of a disciplinary ac- able to the subject before the adju- tion. dicated action or decision is made final. In general, if an ‘‘adjudicated ac- [64 FR 57758, Oct. 26, 1999, as amended at 65 FR 70507, Nov. 24, 2000; 70 FR 53954, Sept. 13, tion or decision’’ follows an agency’s 2005] established administrative procedures (which ensure that due process is available to the subject of the final adverse Subpart B—Reporting of action), it would qualify as a report- Information able action under this definition. This definition specifically excludes clinical § 61.4 How information must be reported. privileging actions taken by Federal or State Government agencies and similar Information must be reported to the paneling decisions made by health HIPDB as required under §§ 61.6, 61.7, plans. This definition does not include 61.8, 61.9, 61.10, 61.11 and 61.15 in such overpayment determinations made by form and manner as the Secretary may Federal or State Government pro- prescribe. grams, their contractors or health plans; and it does not include denial of § 61.5 When information must be reported. claims determinations made by Gov- ernment agencies or health plans. For (a) Information required under §§ 61.7, health plans that are not Government 61.8, 61.9, 61.10 and 61.11 must be sub- entities, an action taken following ade- mitted to the HIPDB— quate notice and the opportunity for a (1) Within 30 calendar days from the hearing that meets the standards of date the final adverse action was taken due process set out in section 412(b) of or the date when the reporting entity the HCQIA (42 U.S.C. 11112(b)) also became aware of the final adverse ac- would qualify as a reportable action tion; or under this definition. (2) By the close of the entity’s next Secretary means the Secretary of monthly reporting cycle, whichever is Health and Human Services and any later. other officer or employee of the De- (b) The date the final adverse action partment of Health and Human Serv- was taken, its effective date and dura- ices to whom the authority involved tion of the action would be contained has been delegated. in the information reported to the State means any of the fifty States, HIPDB under §§ 61.7, 61.8, 61.9, 61.10 and the District of Columbia, the Common- 61.11.

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§ 61.6 Reporting errors, omissions, re- of any such suspension), reprimand, visions or whether an action is on censure or probation; appeal. (2) Any other loss of the license or (a) If errors or omissions are found loss of the certification agreement or after information has been reported, contract for participation in Federal or the reporter must send an addition or State health care programs, or the correction to the HIPDB. The HIPDB right to apply for, or renew, a license will not accept requests for readjudica- or certification agreement or contract tion of the case. of the provider, supplier, or practi- (b) A reporter that reports informa- tioner, whether by operation of law, tion on licensure, criminal convictions, voluntary surrender, non-renewal (ex- civil or administrative judgments, excluding nonrenewals due to non- clusions, or adjudicated actions or de- payment of fees, retirement, or change cisions under §§ 61.7, 61.8, 61.9, 61.10 or to inactive status), or otherwise; and 61.11 also must report any revision of (3) Any other negative action or find- the action originally reported. Revi- ing by such Federal or State agency sions include, but are not limited to, that is publicly available information. reversal of a criminal conviction, re- (b) Entities described in paragraph versal of a judgment or other adju- (a) of this section must report the fol- dicated decisions or whether the action lowing information: is on appeal, and reinstatement of a li- (1) If the subject is an individual, per- cense. sonal identifiers, including: (c) The subject will receive a copy of (i) Name; all reports, including revisions and cor- (ii) Social Security Number (or Indi- rections to the report. vidual Taxpayer Identification Number (d) Upon receipt of a report, the sub- (ITIN)); ject— (iii) Home address or address of (1) Can accept the report as written; record; (2) May provide a statement to the (iv) Sex; and HIPDB that will be permanently ap- (v) Date of birth. pended to the report, either directly or (2) If the subject is an individual, through a designated representative that individual’s employment or pro- (The HIPDB will distribute the state- fessional identifiers, including: ment to queriers, where identifiable, (i) Organization name and type; and to the reporting entity and the (ii) Occupation and specialty, if ap- subject of the report. The HIPDB will plicable; not edit the statement; only the sub- (iii) National Provider Identifier ject can, upon request, make changes (NPI), when issued by theCenters for to the statement); or Medicare & Medicaid Services (CMS); (3) May follow the dispute process in (iv) Name of each professional school accordance with § 61.15. attended and year of graduation; and (v) With respect to the State profes- § 61.7 Reporting licensure actions sional license (including professional taken by Federal or State licensing certification and registration) on and certification agencies. which the reported action was taken, (a) What actions must be reported. Fed- the license number, the field of licen- eral and State licensing and certifi- sure, and the name of the State or ter- cation agencies must report to the ritory in which the license is held. HIPDB the following final adverse ac- (3) If the subject is an organization, tions that are taken against a health identifiers, including: care provider, supplier, or practitioner (i) Name; (regardless of whether the final adverse (ii) Business address; action is the subject of a pending ap- (iii) Federal Employer Identification peal)— Number (FEIN), or Social Security (1) Formal or official actions, such as Number (or ITIN) when used by the revocation or suspension of a license or subject as a Taxpayer Identification certification agreement or contract for Number (TIN); participation in Federal or State (iv) The NPI, when issued by CMS; health care programs (and the length (v) Type of organization; and

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(vi) With respect to the State license (3) If the subject is an organization, (including certification and registra- identifiers, including: tion) on which the reported action was (i) Other name(s) used; taken, the license and the name of the (ii) Other address(es) used; State or territory in which the license (iii) Other FEIN(s) or Social Security is held. Numbers (or ITIN) used; (4) For all subjects: (iv) Other NPI(s) used; (i) A narrative description of the acts (v) Other State license number(s) and or omissions and injuries upon which the name(s) of the State or territory in the reported action was based; which the license is held; (ii) Classification of the acts or omis- (vi) Other numbers assigned by Fed- sions in accordance with a reporting eral or State agencies, to include, but code adopted by the Secretary; not limited to Drug Enforcement Ad- (iii) Classification of the action ministration (DEA) registration num- taken in accordance with a reporting ber(s), Clinical Laboratory Improve- code adopted by the Secretary, and the ment Act (CLIA) number(s), Food and amount of any monetary penalty re- Drug Administration (FDA) number(s), sulting from the reported action; and Medicaid and Medicare provider (iv) The date the action was taken, number(s); its effective date and duration; (vii) Names and titles of principal of- (v) If the action is on appeal; ficers and owners; (vi) Name of the agency taking the (viii) Name(s) and address(es) of any action; health care entity with which the sub- (vii) Name and address of the report- ject is affiliated or associated; and ing entity; and (ix) Nature of the subject’s relation- (viii) The name, title and telephone ship to each associated or affiliated number of the responsible official sub- health care entity. mitting the report on behalf of the re- (4) For all subjects: porting entity. (i) If the subject will be automati- (c) Entities described in paragraph cally reinstated; and (a) of this section should report, if (ii) The date of appeal, if any. known, the following information: (d) Sanctions for failure to report. The (1) If the subject is an individual, per- Secretary will provide for a publication sonal identifiers, including: of a public report that identifies those (i) Other name (s) used; Government agencies that have failed (ii) Other address; to report information on adverse ac- (iii) FEIN, when used by the indi- tions as required to be reported under vidual as a TIN; and this section. (iv) If deceased, date of death. [64 FR 57758, Oct. 26, 1999, as amended at 69 (2) If the subject is an individual, FR 33868, June 17, 2004] that individual’s employment or professional identifiers, including: § 61.8 Reporting Federal or State (i) Other State professional license criminal convictions related to the number(s), field(s) of licensure, and the delivery of a health care item or name(s) of the State or territory in service. which the license is held; (a) Who must report. Federal and (ii) Other numbers assigned by Fed- State prosecutors must report criminal eral or State agencies, to include, but convictions against health care pro- not limited to Drug Enforcement Ad- viders, suppliers, and practitioners re- ministration (DEA) registration num- lated to the delivery of a health care ber(s), Unique Physician Identification item or service (regardless of whether Number(s) (UPIN), and Medicaid and the conviction is the subject of a pend- Medicare provider number(s); ing appeal). (iii) Name(s) and address(es) of any (b) Entities described in paragraph health care entity with which the sub- (a) of this section must report the fol- ject is affiliated or associated; and lowing information: (iv) Nature of the subject’s relation- (1) If the subject is an individual, per- ship to each associated or affiliated sonal identifiers, including: health care entity. (i) Name;

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(ii) Social Security Number (or (c) Entities described in paragraph ITIN); (a) of this section should report, if (iii) Home address or address of known, the following information: record; (1) If the subject is an individual, per- (iv) Sex; and sonal identifiers, including: (v) Date of birth. (i) Other name (s) used; (2) If the subject is an individual, (ii) Other address; and that individual’s employment or pro- (iii) FEIN, when used by the indi- fessional identifiers, including: vidual as a TIN. (i) Organization name and type; (2) If the subject is an individual, (ii) Occupation and specialty, if ap- that individual’s employment or pro- plicable; and fessional identifiers, including: (iii) National Provider Identifier (i) State professional license (includ- (NPI), when issued by theCenters for ing professional certification and reg- Medicare & Medicaid Services (CMS). istration) number(s), field(s) of licen- (3) If the subject is an organization, sure, and the name(s) of the State or identifiers, including: territory in which the license is held; (i) Name; (ii) Other numbers assigned by Fed- (ii) Business address; eral or State agencies, to include, but (iii) Federal Employer Number not limited to Drug Enforcement Ad- (FEIN), or Social Security Number (or ministration (DEA) registration num- ITIN) when used by the subject as a ber(s), Unique Physician Identification Taxpayer Identification Number (TIN); Number(s) (UPIN), and Medicaid and Medicare provider number(s); (iv) The NPI, when issued by CMS; (iii) Name(s) and address(es) of any and health care entity with which the sub- (v) Type of organization. ject is affiliated or associated; and (4) For all subjects: (iv) Nature of the subject’s relation- (i) A narrative description of the acts ship to each associated or affiliated or omissions and injuries upon which health care entity. the reported action was based; (3) If the subject is an organization, (ii) Classification of the acts or omis- identifiers, including: sions in accordance with a reporting (i) Other name(s) used; code adopted by the Secretary; (ii) Other address(es) used; (iii) Name and location of court or ju- (iii) Other FEIN(s) or Social Security dicial venue in which the action was Numbers(s) (or ITINs) used; taken; (iv) Other NPI(s) used; (iv) Docket or court file number; (v) State license (including certifi- (v) Type of action taken; cation and registration) number(s) and (vi) Statutory offense(s) and count(s); the name(s) of the State or territory in (vii) Name of primary prosecuting which the license is held; agency (or the plaintiff in civil ac- (vi) Other numbers assigned by Fed- tions); eral or State agencies, to include, but (viii) Date of sentence or judgment; not limited to Drug Enforcement Ad- (ix) Length of incarceration, deten- ministration (DEA) registration num- tion, probation, community service or ber(s), Clinical Laboratory Improve- suspended sentence; ment Act (CLIA) number(s), Food and (x) Amounts of any monetary judg- Drug Administration (FDA) number(s), ment, penalty, fine, assessment or res- and Medicaid and Medicare provider titution; number(s); (xi) Other sentence, judgment or or- (vii) Names and titles of principal of- ders; ficers and owners; (xii) If the action is on appeal; (viii) Name(s) and address(es) of any (xiii) Name and address of the report- health care entity with which the sub- ing entity; and ject is affiliated or associated; and (xiv) The name, title and telephone (ix) Nature of the subject’s relation- number of the responsible official sub- ship to each associated or affiliated mitting the report on behalf of the re- health care entity. porting entity. (4) For all subjects:

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(i) Prosecuting agency’s case number; judgments as required to be reported (ii) Investigative agencies involved; under this section. (iii) Investigative agencies case of file number(s); and § 61.10 Reporting exclusions from par- (iv) The date of appeal, if any. ticipation in Federal or State health (d) Sanctions for failure to report. The care programs. Secretary will provide for publication (a) Who must report. Federal and of a public report that identifies those State Government agencies must re- Government agencies that have failed port health care providers, suppliers, or to report information on criminal con- practitioners excluded from partici- victions as required to be reported pating in Federal or State health care under this section. programs, including exclusions that were made in a matter in which there [64 FR 57758, Oct. 26, 1999, as amended at 69 was also a settlement that is not re- FR 33868, June 17, 2004] ported because no findings or admis- § 61.9 Reporting civil judgments re- sions of liability have been made (related to the delivery of a health gardless of whether the exclusion is the care item or service. subject of a pending appeal) . (a) Who must report. Federal and (b) Entities described in paragraph State attorneys and health plans must (a) of this section must report the fol- report civil judgments against health lowing information: (1) If the subject is an individual, per- care providers, suppliers, or practi- sonal identifiers, including: tioners related to the delivery of a (i) Name; health care item or service (regardless (ii) Social Security Number (or of whether the civil judgment is the ITIN); subject of a pending appeal). If a Gov- (iii) Home address or address of ernment agency is party to a multi- record; claimant civil judgment, it must as- (iv) Sex; and sume the responsibility for reporting (v) Date of birth. the entire action, including all (2) If the subject is an individual, amounts awarded to all the claimants, that individual’s employment or pro- both public and private. If there is no fessional identifiers, including: Government agency as a party, but (i) Organization name and type; there are multiple health plans as (ii) Occupation and specialty, if ap- claimants, the health plan which re- plicable; and ceives the largest award must be re- (iii) National Provider Identifier sponsible for reporting the total action (NPI), when issued by theCenters for for all parties. Medicare & Medicaid Services (CMS). (b) Entities described in paragraph (3) If the subject is an organization, (a) of this section must report the in- identifiers, including: formation as required in § 61.8(b). (i) Name; (c) Entities described in paragraph (ii) Business address; (a) of this section should report, if (iii) Federal Employer Identification known the information as described in Number (FEIN), or Social Security § 61.8(c). Number (or ITIN) when used by the (d) Sanctions for failure to report. Any subject as a Taxpayer Identification health plan that fails to report infor- Number (TIN); mation on a civil judgment required to (iv) The NPI, when issued by CMS; be reported under this section will be and subject to a civil money penalty (CMP) (v) Type of organization. of not more than $25,000 for each such (4) For all subjects: adverse action not reported. Such pen- (i) A narrative description of the acts alty will be imposed and collected in or omissions and injuries upon which the same manner as CMPs under sub- the reported action was based; section (a) of section 1128A of the Act. (ii) Classification of the acts or omis- The Secretary will provide for publica- sions in accordance with a reporting tion of a public report that identifies code adopted by the Secretary; those Government agencies that have (iii) Classification of the action failed to report information on civil taken in accordance with a reporting

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code adopted by the Secretary, and the (vi) Other numbers assigned by Fed- amount of any monetary penalty re- eral or State agencies, to include, but sulting from the reported action; not limited to Drug Enforcement Ad- (iv) The date the action was taken, ministration (DEA) registration num- its effective date and duration; ber(s), Clinical Laboratory Improve- (v) If the action is on appeal; ment Act (CLIA) number(s), Food and (vi) Name of the agency taking the Drug Administration (FDA) number(s), action; and Medicaid and Medicare provider (vii) Name and address of the report- number(s); ing entity; and (vii) Names and titles of principal of- (viii) The name, title and telephone ficers and owners; number of the responsible official sub- (viii) Name(s) and address(es) of any mitting the report on behalf of the re- health care entity with which the sub- porting entity. ject is affiliated or associated; and (c) Entities described in paragraph (ix) Nature of the subject’s relation- (a) of this section should report, if ship to each associated or affiliated known, the following information: health care entity. (4) For all subjects: (1) If the subject is an individual, per- (i) If the subject will be automati- sonal identifiers, including: cally reinstated; and (i) Other name(s) used; (ii) The date of appeal, if any. (ii) Other address; (d) Sanctions for failure to report. The (iii) FEIN, when used by the indi- Secretary will provide for publication vidual as a TIN; of a public report that identifies those (iv) Name of each professional school Government agencies that have failed attended and year of graduation; and to report information on exclusions or (v) If deceased, date of death. debarments as required to be reported (2) If the subject is an individual, under this section. that individual’s employment or professional identifiers, including: [64 FR 57758, Oct. 26, 1999, as amended at 69 FR 33869, June 17, 2004] (i) State professional license (including professional registration and cer- § 61.11 Reporting other adjudicated tification) number(s), field(s) of licen- actions or decisions. sure, and the name(s) of the State or (a) Who must report. Federal and Territory in which the license is held; State governmental agencies and (ii) Other numbers assigned by Fed- health plans must report other adju- eral or State agencies, to include, but dicated actions or decisions as defined not limited to Drug Enforcement Ad- in § 61.3 related to the delivery, pay- ministration (DEA) registration num- ment or provision of a health care item ber(s), Unique Physician Identification or service against health care pro- Number(s) (UPIN), and Medicaid and viders, suppliers, and practitioners (re- Medicare provider number(s); gardless of whether the other adju- (iii) Name(s) and address(es) of any dicated action or decision is subject to health care entity with which the sub- a pending appeal). ject is affiliated or associated; and (b) Entities described in paragraph (iv) Nature of the subject’s relation- (a) of this section must report the in- ship to each associated or affiliated formation as required in § 61.10(b). health care entity. (c) Entities described in paragraph (3) If the subject is an organization, (a) of this section should report, if identifiers, including: known the information as described in (i) Other name(s) used; § 61.10(c). (ii) Other address(es) used; (d) Sanctions for failure to report. Any (iii) Other FEIN(s) or Social Security health plan that fails to report infor- Numbers(s) (or ITINs) used; mation on an other adjudicated action (iv) Other NPI(s) used; or decision required to be reported (v) State license (including registra- under this section will be subject to a tion and certification) number(s) and civil money penalty (CMP) of not more the name(s) of the State or territory in than $25,000 for each such action not re- which the license is held; ported. Such penalty will be imposed

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and collected in the same manner as (i) Any report(s) in the HIPDB spe- CMPs under subsection (a) of section cific to them; and 1128A of the Act. The Secretary will (ii) A disclosure history from the provide for publication of a public re- HIPDB of the name(s) of any entity (or port that identifies those Government entities) that have previously received agencies that have failed to report in- the report(s). formation on other adjudicated actions (2) The disclosure history will be re- as required to be reported under this stricted in accordance with the Privacy section. Act regulations set forth in 45 CFR part 5b. Subpart C—Disclosure of Informa- tion by the Healthcare Integ- § 61.13 Fees applicable to requests for rity and Protection Data information. Bank (a) Policy on fees. The fees described in this section apply to all requests for § 61.12 Requesting information from information from the HIPDB, except the Healthcare Integrity and Pro- requests from Federal agencies. How- tection Data Bank. ever, for purposes of verification and (a) Who may request information and dispute resolution at the time the re- what information may be available. Infor- port is accepted, the HIPDB will pro- mation in the HIPDB will be available, vide a copy—at the time a report has upon request, to the following persons been submitted automatically, without or entities, or their authorized a request and free of charge—of every agents— report to the health care provider, sup- (1) Federal and State Government plier or practitioner who is the subject agencies; of the report. For the same purpose, (2) Health plans; the Department will provide a copy of (3) A health care practitioner, pro- the report—at the time a report has vider, or supplier requesting informa- been submitted automatically, without tion concerning himself, herself or a request and free of charge—to the re- itself; and porter that submitted it. The fees are (4) A person or entity requesting sta- authorized by section 1128E(d)(2) of the tistical information, which does not Act, and they reflect the full costs of permit identification of any individual operating the database. The actual fees or entity. (For example, researchers will be announced by the Secretary in can use statistical information to iden- periodic notices in the FEDERAL REG- tify the total number of practitioners ISTER. excluded from the Medicare and Med- (b) Criteria for determining the fee. The icaid programs. Similarly, health plans amount of each fee will be determined can use statistical information to de- based on the following criteria — velop outcome measures in their ef- (1) Direct and indirect personnel forts to monitor and improve quality costs; care.) (b) Procedures for obtaining HIPDB in- (2) Physical overhead, consulting, formation. Eligible individuals and enti- and other indirect costs including rent ties may obtain information from the and depreciation on land, buildings and HIPDB by submitting a request in such equipment; form and manner as the Secretary may (3) Agency management and super- prescribe. These requests are subject to visory costs; fees set forth in § 61.13. The HIPDB will (4) Costs of enforcement, research comply with the Department’s prin- and establishment of regulations and ciples of fair information practice by guidance; providing each subject of a report with (5) Use of electronic data processing a copy when the report is entered into equipment to collect and maintain in- the HIPDB. formation—the actual cost of the serv- (c) Information provided in response to ice, including computer search time, self-queries. (1) At the time subjects re- runs and printouts; and quest information as part of a ‘‘self- (6) Any other direct or indirect costs query,’’ the subject will receive— related to the provision of services.

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(c) Assessing and collecting fees. The ty to resolve the dispute. If the report- Secretary will announce through peri- ing entity revises the information odic notice in the FEDERAL REGISTER originally submitted to the HIPDB, the the method of payment of fees. In de- HIPDB will notify the subject and all termining these methods, the Sec- entities to whom reports have been retary will consider efficiency, effec- sent that the original information has tiveness and convenience for users and been revised. If the reporting entity for the Department. Methods may in- does not revise the reported informa- clude credit card, electronic funds tion, or does not respond to the subject transfer and other methods of elec- within 60 days, the subject may request tronic payment. that the Secretary review the report for accuracy. The Secretary will decide § 61.14 Confidentiality of Healthcare whether to correct the report within 30 Integrity and Protection Data Bank days of the request. This time frame information. may be extended for good cause. The Information reported to the HIPDB is subject also may provide a statement considered confidential and will not be to the HIPDB, either directly or disclosed outside the Department, ex- through a designated representative, cept as specified in §§ 61.12 and 61.15. that will permanently append the re- Persons and entities receiving informa- port. tion from the HIPDB, either directly or (c) Procedures for requesting a Secre- from another party, must use it solely tarial review. The subject must request, with respect to the purpose for which it in writing, that the Secretary of the was provided. Nothing in this section Department review the report for accu- will prevent the disclosure of informa- racy. The subject must return this re- tion by a party from its own files used quest to the HIPDB along with appro- to create such reports where disclosure priate materials that support the sub- is otherwise authorized under applica- ject’s position. The Secretary will only ble State or Federal law. review the accuracy of the reported information, and will not consider the § 61.15 How to dispute the accuracy of merits or appropriateness of the action Healthcare Integrity and Protection or the due process that the subject re- Data Bank information. ceived. (a) Who may dispute the HIPDB infor- (2) After the review, if the Sec- mation. The HIPDB will routinely mail retary— or transmit electronically to the sub- (i) Concludes that the information is ject a copy of the report filed in the accurate and reportable to the HIPDB, HIPDB. In addition, as indicated in the Secretary will inform the subject § 61.12(a)(3), the subject may also re- and the HIPDB of the determination. quest a copy of such report. The sub- The Secretary will include a brief ject of the report or a designated rep- statement (Secretarial Statement) in resentative may dispute the accuracy the report that describes the basis for of a report concerning himself, herself the decision. The report will be re- or itself as set forth in paragraph (b) of moved from ‘‘disputed status.’’ The this section. HIPDB will distribute the corrected re- (b) Procedures for disputing a report port and statement(s) to previous with the reporting entity. If the subject queriers (where identifiable), the re- disagrees with the reported informa- porting entity and the subject of the tion, the subject must request in writ- report. ing that the HIPDB enter the report (ii) Concludes that the information into ‘‘disputed status.’’ contained in the report is inaccurate, (2) The HIPDB will send the report, the Secretary will inform the subject with a notation that the report has of the determination and direct the been placed in ‘‘disputed status,’’ to HIPDB or the reporting entity to re- queriers (where identifiable), the revise the report. The Secretary will in- porting entity and the subject of the clude a brief statement (Secretarial report. Statement) in the report describing the (3) The subject must attempt to enter findings. The HIPDB will distribute the into discussion with the reporting enti- corrected report and statement (s) to

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previous queriers (where identifiable), 63.17 Amount of award. the reporting entity and the subject of 63.18 Limitations on costs. the report. 63.19 Budget revisions and minor devi- (iii) Determines that the disputed ations. 63.20 Period during which grant funds may issues are outside the scope of the De- be obligated. partment’s review, the Secretary will 63.21 Obligation and liquidation by grantee. inform the subject and the HIPDB of 63.22 Cost sharing. the determination. The Secretary will 63.23 Telecommunications Demonstration include a brief statement (Secretarial Grants. Statement) in the report describing the findings. The report will be removed Subpart C—Special Provisions from ‘‘disputed status.’’ The HIPDB 63.30 Scope of subpart. will distribute the report and the state- 63.31 Protection of human subjects. ment(s) to previous queriers (where 63.32 Data collection instruments. identifiable), the reporting entity and 63.33 Treatment of animals. the subject of the report. 63.34 Principal investigators. (iv) Determines that the adverse ac- 63.35 Dual compensation. 63.36 Fees to Federal employees. tion was not reportable and therefore 63.37 Leasing facilities. should be removed from the HIPDB, 63.38 Publications. the Secretary will inform the subject 63.39 Religious worship or instruction. and direct the HIPDB to void the re- AUTHORITY: Sec. 602, Community Services port. The HIPDB will distribute a no- Act (42 U.S.C. 2942); sec. 1110, Social Security tice to previous queriers (where identi- Act (42 U.S.C. 1310). fiable), the reporting entity and the SOURCE: 40 FR 23295, May 29, 1975, unless subject of the report that the report otherwise noted. has been voided. [64 FR 57758, Oct. 26, 1999, as amended at 64 Subpart A—General FR 71041, Dec. 20, 1999] § 63.1 Purpose and scope. § 61.16 Immunity. (a) Applicability. Except to the extent Individuals, entities or their author- inconsistent with an applicable Federal ized agents and the HIPDB shall not be statute the regulations in this part held liable in any civil action filed by apply to all grant awards of Federal as- the subject of a report unless the indi- sistance made by the Assistant Sec- vidual, entity or authorized agent sub- retary for Planning and Evaluation or mitting the report has actual knowl- his designee, hereinafter referred to in edge of the falsity of the information this part as the Assistant Secretary. contained in the report. Such grants include those under section 232 of the Community Services Act PART 63—GRANT PROGRAMS AD- (42 U.S.C. 2835), section 1110 of the So- MINISTERED BY THE OFFICE OF cial Security Act (42 U.S.C. 1310), sec- THE ASSISTANT SECRETARY FOR tion 392A of the Communications Act PLANNING AND EVALUATION of 1934, and such other authority as may be delegated to the Assistant Sec- Subpart A—General retary for policy research activities. (b) Exceptions to applicability. The Sec. award and administration of contracts 63.1 Purpose and scope. and cooperative agreements by the As- 63.2 Eligibility for award. sistant Secretary shall not be covered 63.3 Program announcements and solicitations. by this subchapter. Contracts entered 63.4 Cooperative arrangements. into by the Assistant Secretary shall 63.5 Effective date of approved grant. be subject to the regulations in 41 CFR 63.6 Evaluation of applications. Chapters 1 and 3. Generally, the Assist- 63.7 Disposition of applications. ant Secretary will select between grant 63.8 Supplemental regulations and grant and contract procedures and instru- conditions. ments, both with regard to the solicitation process and with respect to unso- Subpart B—Financial Provisions licited proposals, on the basis of cri- 63.16 Scope of subpart. teria set forth in the proposed revision

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of 41 CFR 3–1.53 published at 39 FR may consist of two or more related 27469 at any subsequent revision there- problems or subjects for concurrent or of. consecutive investigation and may in- (c) Objectives—(1) Policy Research. The volve multiple disciplines, facilities, overall objective of policy research ac- and resources. tivities is to obtain information, as it (2) Telecommunications Demonstrations. relates to the mission of the Depart- Any projects which meet the special ment of Health and Human Services, criteria in § 63.6(c) shall be eligible for about the basic causes of and methods a telecommunications demonstration for preventing and eliminating poverty grant. and dependency and about improved methods for delivering human re- [40 FR 23295, May 29, 1975, as amended at 42 sources services. Such information is FR 36149, July 13, 1977] obtained through the conduct of basic and applied research, statistical anal- § 63.3 Program announcements and solicitations. yses, and demonstrations and evaluations which have demonstrated a high (a) In each fiscal year the Assistant probability of impacting on the formu- Secretary may from time to time so- lation or modification of major Depart- licit applications through one or more mental policies and programs. general or specialized program an- (2) Telecommunications Demonstrations. nouncements. Such announcements The overall objective of the Tele- will be published in the FEDERAL REG- communications Demonstration Pro- ISTER as notices and will include: gram is to promote the development of (1) A clear statement of the type(s) of nonbroadcast telecommunications fa- applications requested; cilities and services for the trans- (2) A specified plan, time(s) of appli- mission, distribution, and delivery of cation, and criteria for reviewing and health, education, and social service approving applications; information. (3) Any grant terms or conditions of [40 FR 23295, May 29, 1975, as amended at 42 general applicability (other than those FR 36149, July 13, 1977] set forth in this part) which are necessary (i) to meet the statutory re- § 63.2 Eligibility for award. quirements of applicable legislation, (a) Groups and organizations eligible. (ii) to assure or protect the advance- Except where otherwise prohibited by ment of the project, or (iii) to conserve law, any public or nonprofit private grant funds. agency, institution, or organization (b) Applications for grants: Any ap- which is found by the Assistant Sec- plicant eligible for grant assistance retary to be authorized and qualified may submit on or before such cutoff by educational, scientific, or other rel- date or dates as the Assistant Sec- evant competence to carry out a pro- retary may announce in program so- posed project in accordance with the licitations, an application containing regulations of this subchapter shall be such pertinent information and in ac- eligible to receive a grant under this cordance with the forms and instruc- part. tions as prescribed herein and addi- (b) Project eligible—(1) Policy Research. tional forms and instructions as may Any project found by the Assistant be specified by the Assistant Secretary. Secretary to be a research, pilot, eval- Such application shall be executed by uation, or demonstration project with- the applicant or an official or rep- in the meaning of this section and § 63.1 resentative of the applicant duly au- shall be eligible for an award. Eligible thorized to make such application. The projects may include planning, policy Assistant Secretary may require any modeling or research utilization stud- party eligible for assistance under this ies; experiments; demonstrations; field subchapter to submit a preliminary investigations; statistical data collec- proposal for review and approval prior tions or analyses; or other types of in- to the acceptance of an application vestigation or studies, or combinations submitted under these provisions. thereof, and may either be limited to (c) All applications and preliminary one aspect of a problem or subject, or proposals should be addressed to:

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Grants Officer, Office of the Assistant Sec- purpose as he/she determines are spe- retary for Planning and Evaluation, De- cially qualified in the areas of research partment of Health and Human Services, pursued by this office. The evaluation 330 Independence Avenue, SW, Room 5027, criteria below will be supplemented Washington, DC 20201. each fiscal year by a program an- § 63.4 Cooperative arrangements. nouncement outlining priorities and objectives for policy research, and by (a) Eligible parties may enter into other general or specialized solicita- cooperative arrangements with other tions. Such supplements may modify eligible parties, including those in an- the criteria in paragraphs (b) and (c) of other State, to apply for assistance. this section to provide greater speci- (b) A joint application made by two ficity or otherwise improve their appli- or more applicants for assistance under cability to a given announcement or this subchapter may have separate solicitation. budgets corresponding to the programs, (b) Criteria for evaluation of Policy Re- services and activities performed by search Projects. Review of applications each of the joint applicants or may under paragraph (a) of this section will have a combined budget. If joint appli- take into account such factors as: cations present separate budgets, the (1) Scientific merit and the signifi- Assistant Secretary may make sepa- cance of the project in relation to pol- rate awards, or may award a single icy objectives; grant authorizing separate amounts for (2) Feasibility of the project; each of the joint applicants. (3) Soundness of research design, sta- (c) In the case of each cooperative ar- tistical technique, and procedures and rangement authorized under paragraph methodology; (a) of this section and receiving assist- (4) Theoretical and technical sound- ance, except where the Assistant Sec- ness of the proposed plan of operation retary makes separate awards under including consideration of the extent paragraph (b) of this section all such to which: applicants (1) shall be deemed to be (i) The objectives of the proposed joint legal recipients of the grant project are sharply defined, clearly award and (2) shall be jointly and sev- stated, and capable of being attained erally responsible for administering by the proposed procedures; the project assisted under such grant. (ii) The objectives of the proposed project show evidence of contributing § 63.5 Effective date of approved grant. to the achievement of policy objec- Federal financial participation is tives; normally available only with respect to (iii) Provisions are made for adequate obligations incurred subsequent to the evaluation of the effectiveness of the effective date of an approved project. project and for determining the extent The effective date of the project will be to which the objectives are accom- set forth in the notification of grant plished; and award. Grantees may be reimbursed for (iv) Appropriate provisions are made costs resulting from obligations infor satisfactory inservice training con- curred before the effective date of the nected with project services. grant award if such costs are author- (5) Expected potential for utilizing ized by the Assistant Secretary in the the results of the proposed project in notification of grant award or subse- other projects or programs for similar quently in writing, and otherwise purposes; would be allowable as costs of the (6) Sufficiency of size, scope, and du- grant under the applicable regulations ration of the project so as to secure and grant terms and conditions. productive results; (7) Adequacy of qualifications and ex- § 63.6 Evaluation of applications. perience, including managerial, of per- (a) Review procedures. All applications sonnel; filed in accordance with § 63.3 shall be (8) Adequacy of facilities and other evaluated by the Assistant Secretary resources; and through officers, employees, and such (9) Reasonableness of estimated cost experts or consultants engaged for this in relation to anticipated results.

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(c) Criteria for evaluation of Tele- (9) That the provision has been made communications Demonstrations Projects. to submit a summary and factual eval- Review of applications for Tele- uation of the results of the demonstra- communications Demonstrations tion at least annually for each year in grants will take into account such fac- which funds are received, in the form of tors as are listed in paragraphs (c) (1) a report suitable for dissemination to through (10) of this section. Each appli- groups representative of national cant must include in the application, health, education, and social service prior to final evaluation by the Assist- telecommunications interests; and, ant Secretary, documentation indi- (10) That the project has potential for cating specifically and separately how stimulating cooperation and sharing and to what extent each of these cri- among institutions and agencies, both teria have been or will be met: (1) That the project for which appli- within and across disciplines. cation is made demonstrates innova- (d) Applicant’s performance on prior tive methods or techniques of utilizing award. Where the applicant has pre- nonbroadcast telecommunications viously received an award from the De- equipment or facilities to satisfy the partment of Health and Human Serv- purpose of this authority; ices, the applicant’s compliance or (2) That the project will have original noncompliance with requirements ap- research value which will demonstrate plicable to such prior award as re- to other potential users that such flected in past written evaluation re- methods or techniques are feasible and ports, memoranda on performance, and cost-effective; completeness of required submissions: (3) That the services to be provided Provided, That in any case where the are responsive to local needs as identi- Assistant Secretary proposes to deny fied and assessed by the applicant; assistance based upon the applicant’s (4) That the applicant has assessed noncompliance with requirements ap- existing telecommunications facilities plicable to a prior award, he shall do so (if any) in the proposed service area only after affording the applicant rea- and explored their use of interconnec- sonable notice and an opportunity to tion in conjunction with the project; rebut the proposed basis for denial of (5) That there is significant local assistance. commitment (e.g., evidence of support, participation, and contribution by [40 FR 23295, May 29, 1975, as amended at 42 local institutions and agencies) to the FR 36149, July 13, 1977] proposed project, indicating that it fulfills local needs, and gives some prom- § 63.7 Disposition of applications. ise that operational systems will result (a) Approval, disapproval, or deferral. from successful demonstrations and On the basis of the review of an appli- will be supported by service recipients cation pursuant to § 63.6 the Assistant or providers; Secretary will either (1) approve the (6) That demonstrations and related application in whole or in part, for activities assisted under this section such amount of funds and subject to will remain under the administration such conditions as he/she deems nec- and control of the applicant; essary or desirable for the completion (7) That the applicant has the managerial and technical capability to carry of the approved project, (2) disapprove out the project for which the applica- the application, or (3) defer action on tion is made; the application for such reasons as lack (8) That the facilities and equipment of funds or a need for further review. acquired or developed pursuant to the (b) Notification of disposition. The As- applications will be used substantially sistant Secretary will notify the appli- for the transmission, distribution, and cant in writing of the disposition of its delivery of health, education, or social application. A signed notification of service information, and that use of grant award will be issued to notify the such facilities and equipment may be applicant of an approved project appli- shared among these and additional cation. public or other services;

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§ 63.8 Supplemental regulations and shall be subject to the following addi- grant conditions. tional regulations except as otherwise (a) Grants under section 232 of the Com- provided in this part: munity Services Act. (1) Any grants (1) Part 74 of this title, establishing awarded with funds appropriated under uniform administrative requirements section 232 of the Community Services and cost principles for grants by the Act shall be subject to the following Department of Health and Human regulations issued by the Director of Services. the Community Services Administra- (2) Part 80 of this title, effectuating tion (formerly the Office of Economic the provisions of title VI of the Civil Opportunity): Rights Act of 1964; and 45 CFR 1060.2 ...... (Income Poverty Guidelines.) (3) Part 16 of this title, establishing a 45 CFR 1060.3 ...... (Limitation on Benefits to Those Vol- Departmental Grant Appeals Board for untarily Poor.) 45 CFR 1067.1 ...... (Suspension and Termination of As- the resolution of specified post-award sistance.) grant disputes. 45 CFR 1068.6...... (Grantee Compliance with IRS Re- quirements for Withheld Federal In- come and Social Security Taxes.) Subpart B—Financial Provisions 45 CFR 1069.1 ...... (Employee Participation in Direct Ac- tion.) 45 CFR 1069.2 ...... (Limitations with Respect to Unlawful § 63.16 Scope of subpart. Demonstrations, Rioting, and Civil This subpart sets forth supplemental Disturbances.) 45 CFR 1070.1...... (Public Access to Grantee Informa- financial provisions which apply to all tion.) grants awarded by the Assistant Sec- retary, except as specified in § 63.23 of No other portions of Chapter X of this this subpart. title are applicable to such grants. (2) Grants awarded with funds appro- [40 FR 23295, May 29, 1975, as amended at 42 priated under section 232 of the Com- FR 36149, July 13, 1977] munity Services Act shall also be subject to the applicable statutory re- § 63.17 Amount of award. quirements in sections 242, 243, and 244, Federal assistance shall be provided and title VI of the Community Services only to meet allowable costs incurred Act. The Assistant Secretary will ad- by the award recipient in carrying out vise grantees of the nature of these re- an approved project in accordance with quirements at or prior to the time of the authorizing legislation and the reg- award. ulations of this part. (3) In the event that any provision of this part is inconsistent with a provi- § 63.18 Limitations on costs. sion of law or a regulation referenced in paragraphs (a)(1) and (2) of this sec- The amount of the award shall be set tion with respect to any grant funded forth in the grant award document. under section 232 of the Community The total cost to the Government will Services Act, the provision of this part not exceed the amount set forth in the shall, to the extent of any such incon- grant award document or any modifica- sistency, not be effective. tion thereof approved by the Assistant (b) Grants under other statutory au- Secretary which meets the require- thority. Grants awarded by the Assist- ments of applicable statutes and regu- ant Secretary may be subject to regulations. The Government shall not be lations, other than those set forth in obligated to reimburse the grantee for this part, which have been issued under costs incurred in excess of such amount the authority of statutes authorizing unless and until the Assistant Sec- particular awards. In such a case, that retary has notified the grantee in writ- fact will be set forth in the program ing that such amount has been in- announcement soliciting applications creased and has specified such infor such grants published in the FED- creased amount in a revised grant ERAL REGISTER pursuant to § 63.3. award document. Such revised amount (c) Other regulations applicable to shall thereupon constitute the max- grants under this part. Federal financial imum cost to the Government for the assistance provided under this part performance of the grant.

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§ 63.19 Budget revisions and minor de- necessary to the demonstration. How- viations. ever, funds shall not be available for Pursuant to § 74.102(d) of this title, the construction, remodeling, or repair paragraphs (b)(3) and (b)(4) of that sec- of structures to house facilities or tion are waived. equipment acquired or developed with such funds, except that such funds may § 63.20 Period during which grant be used for minor remodeling which is funds may be obligated. necessary for and incident to the in- (a) The amount of the grant award stallation of such facilities or equip- shall remain available for obligation ment. by the grantee during the period speci- (b) Funds shall not be available for fied in the grant award or until other- the development of programming ma- wise terminated. Such period may be terials or content. extended by revision of the grant with (c) The funding of any demonstration or without additional funds pursuant under this authority shall continue for to paragraph (b) of this section where not more than three years from the otherwise permitted by law. date of the original grant or contract. (b) When it is determined that special (1) Applications for assistance under or unusual circumstances will delay the Act may project goals and activi- the completion of the project beyond ties over a period of up to three years. the period for obligation, the grantee Approval of a multi-year project is in- must in writing request the Assistant tended to offer the project a reasonable Secretary to extend such period and degree of stability over time and to must indicate the reasons therefor. facilitiate additional long range planning. § 63.21 Obligation and liquidation by (2) Applications proposing a multi- grantee. year project must be accompanied by Obligations will be considered to an explanation of the need for multi- have been incurred by a grantee on the year support, an overview of the objec- basis of documentary evidence of bind- tives and activities proposed, and budg- ing commitments for the acquisition of et estimates to attain these objectives goods or property or for the perform- in any proposed subsequent year. ance of work, except that funds for per- (3) Subject to the availability of sonal services, for services performed funds, an application for assistance to by public utilities, for travel, and for continue a project during the project the rental of facilities, shall be consid- period will be reviewed on a non-com- ered to have been obligated as of the petitive basis to determine— time such services were rendered, such (i) If the award recipient has com- travel was performed, and such rented plied with the award terms and condi- facilities were used, respectively. tions, the Act, and applicable regulations; § 63.22 Cost sharing. (ii) The effectiveness of the project to Policy Research funds shall not be date in terms of progress toward its used to pay any recipient of a grant for goals, or the constructive changes pro- the conduct of a research project an posed as a result of the ongoing evalua- amount equal to as much as the entire tion of the project; and, cost of the project. (iii) If continuation of the project would be in the best interests of the § 63.23 Telecommunications Dem- Government. onstration Grants. (d) The use of equipment in dem- The provisions of this section apply onstration projects shall be subject to only to grants awarded under authority the rules and regulations of the Fed- of 392A of the Communications Act of eral Communications Commission 1934. (FCC), and grant funds may not be ex- (a) Funds provided under the Tele- pended or obligated for purchase, lease, communications Demonstrations Pro- or use of such equipment prior to ap- gram shall be available to support the propriate and necessary coordination planning, development, and acquisition by the grantee with the Commission. or leasing of facilities and equipment In particular:

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(1) For any project requiring a new or 102(2)(C) of the National Environmental modification of an existing authoriza- Policy Act of 1969 (including the Na- tion(s) from the FCC, application(s) to tional Historical Preservation Act and the FCC for such authorization(s) must other environmental acts). (42 U.S.C. have been tendered for filing prior to 4332(2)(C)). the closing date established by any so- [42 FR 36149, July 13, 1977] licitation for grant applications offered under the Telecommunications Dem- onstration Program. Subpart C—Special Provisions (2) If the project is to be associated § 63.30 Scope of subpart. with an existing telecommunications activity requiring an FCC authoriza- This subpart sets forth supplemental tion, such operating authority for that special provisions which apply to all activity must be current and valid. grants awarded by the Assistant Sec- (3) For any project requiring a new or retary. modification of an existing authorization(s) from the FCC, the applicant § 63.31 Protection of human subjects. must file with the Secretary of Health All grants made pursuant to this part and Human Services a copy of each are subject to the specific provisions of FCC application and any amendments Part 46 of this subtitle relating to the thereto. protection of human subjects. (4) For any project requiring a new or modification of an existing authoriza- § 63.32 Data collection instruments. tion(s) from the FCC, the applicant (a) Definitions. For the purposes of must tender for filing with the FCC a this section ‘‘Child’’ means an indi- copy of the application to the Sec- vidual who has not attained the legal retary for a telecommunications dem- age of consent to participate in re- onstration grant. search as determined under the appli- (5) If the applicant fails to file re- cable law of the jurisdiction in which quired applications by the closing date such research is to be conducted. established by the solicitation for ‘‘Data-collection instruments’’ grant applications, or if the FCC re- means tests, questionnaires, inven- turns as substantially incomplete or tories, interview schedules or guides, deficient, dismisses, or denies an appli- rating scales, and survey plans or any cation required for the project, or any other forms which are used to collect part thereof, or for the operation of information on substantially identical any facility with which the project is items from 10 or more respondents. associated, the Secretary may return ‘‘Respondents’’ means individuals or the application for Federal assistance. organizations from whom information (e) For the purposes of this program, is collected. the term ‘‘non-broadcast telecommuni- (b) Applicability. This section does not cations facilities’’ includes but is not apply to instruments which deal solely limited to, cable television systems, with (1) functions of technical pro- communications satellite systems and ficiency, such as scholastic aptitude or related terminal equipment, and other school achievement, or (2) routine de- methods of transmitting, emitting, or mographic information. receiving images and sounds or intel- (c) Protection of privacy. (1) No project ligence by means of wire, radio, opti- supported under this part may involve cal, electromagnetic, and other means the use of data collection instruments (including non-broadcast utilization of which constitute invasion of personal telecommunications equipment nor- privacy through inquiries regarding mally associated with broadcasting such matters as religion, sex, race, or use). politics. (f) Each applicant shall provide such (2) A grantee which proposes to use a information as the Assistant Secretary data collection instrument shall set deems necessary to make a Federal as- forth in the grant application an expla- sessment of the impact of the project nation of the safeguards which will be on the quality of the human environ- used to restrict the use and disclosure ment in accordance with section of information so obtained to purposes

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directly connected with the project, in- order to fully carry out the purposes of cluding provisions for the destruction the grant. of such instruments where no longer needed for the purposes of the project. § 63.33 Treatment of animals. (d) Clearance of instruments. (1) Grant- If animals are utilized in any project ees will not be required to submit data- receiving assistance, the applicant for collection instruments to the Assistant such assistance shall provide assur- Secretary or obtain the Assistant Sec- ances satisfactory to the Assistant retary’s approval for the use of these Secretary that such animals will be instruments, except where the notifica- provided with proper care and humane tion of grant award specifically so pro- treatment; in accordance with the Ani- vides. mal Welfare Act (7 U.S.C. 2131 et seq.) (2) If a grantee is required under and regulations set forth in (9 CFR paragraph (d)(1) of this section to sub- Parts 1, 2, 3, 4). mit data-collection instruments for the approval of the Assistant Secretary or § 63.34 Principal investigators. if a grantee wishes the Assistant Sec- The principal investigator(s) des- retary to review a data-collection in- ignated in successful grant applica- strument, the grantee shall submit tions as responsible for the conduct of seven copies of the document to the As- the approved project, shall not be re- sistant Secretary along with seven cop- placed without the prior approval of ies of the Office of Management and the Assistant Secretary or his des- Budget’s standard form No. 83 and ignee. Failure to seek and acquire such seven copies of the Supporting State- approval may result in the grant award ment as required in the ‘‘Instructions being terminated in accordance with for Requesting OMB Approval under the procedures set forth in § 74.114 of the Federal Reports Act’’ (Standard this subtitle or such other regulations form No. 83A). as may be indicated in the grant terms (e) Responsibility for collection of infor- and conditions. mation. A grantee shall not in any way represent or imply (either in a letter of § 63.35 Dual compensation. transmittal, in the data-gathering instruments themselves, or in any other If a project staff member or consult- manner) that the information is being ant of one grantee is involved simulta- collected by or for the Federal Govern- neously in two or more projects sup- ment or any department, agency or in- ported by any funds either under this strumentality thereof. Basic responsi- part or otherwise, he/she may not be bility for the study and the data-gath- compensated for more than 100 percent ering instruments rests with the grant- of his/her time from any funds during ee. any part of the period of dual involvement. (f) Parental consent. In the case of any survey using data-collection instru- § 63.36 Fees to Federal employees. ments in which children are involved as respondents, the grantee, in addition The grantee shall not use funds from to observing the other requirements any sources to pay a fee to, or travel contained in this section, and in Part expenses of, employees of the Federal 46 of this subtitle as appropriate, shall Government for lectures, attending provide assurances satisfactory to the program functions, or any other activi- Assistant Secretary that informed con- ties in connection with the grant. sent will be obtained from the parents of each such respondent prior to the § 63.37 Leasing facilities. use of such instruments, except that a In the case of a project involving the waiver from the requirements of this leasing of a facility, the grantee shall paragraph for specific data-collection demonstrate that it will have the right activities may be granted upon the to occupy, to operate, and, if nec- written request by the grantee and a essary, to maintain and improve the determination by the Assistant Sec- leased facility during the proposed pe- retary that a waiver is necessary in riod of the project.

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§ 63.38 Publications. 73.735–503 Criminal provisions relating to gifts, entertainment, and favors. Any publication or presentation re- 73.735–504 Gifts to official superiors. sulting from or primarily related to 73.735–505 Acceptance of awards and prizes. Federal financial assistance under this 73.735–506 Gifts and decorations from for- part shall contain an acknowledgement eign governments. essentially as follows: 73.735–507 Acceptance of travel and subsist- The activity which is the subject of this re- ence. port was supported in whole or part by a 73.735–508 Other prohibitions. grant from the Office of the Assistant Sec- retary for Planning and Evaluation, Depart- Subpart F—Political Activity ment of Health and Human Services. How- ever, the opinions expressed herein do not 73.735–601 Applicability. necessarily reflect the position or policy of 73.735–602 Permissible activities. that Office and no official endorsement by 73.735–603 Prohibited activities. that Office should be inferred. Subpart G—Outside Activities § 63.39 Religious worship or instruction. 73.735–701 General provisions. 73.735–702 Criminal prohibitions on outside Federal funds shall not be used for activities. the making of any payment for reli- 73.735–703 Statutory prohibitions related to gious worship or instruction, or for the employment by a foreign government. construction, operation, or mainte- 73.735–704 Professional and consultative nance of so much of any facility as is services. used or to be used for sectarian in- 73.735–705 Writing and editing. struction or as a place for religious in- 73.735–706 Teaching, lecturing, and speech- struction. making. 73.735–707 Holding office in professional so- PART 73—STANDARDS OF cieties. CONDUCT 73.735–708 Administrative approval of certain outside activities. 73.735–709 Annual reporting of outside ac- Subpart A—General Provisions tivities. Sec. 73.735–710 Maintenance of records. 73.735–101 Purpose. 73.735–102 Definitions. Subpart H—Financial Interest 73.735–103 Applicability. 73.735–801 Participation in matters affecting Subpart B—Responsibilities a personal financial interest. 73.735–802 Executive order prohibitions. 73.735–201 Employees and supervisors. 73.735–803 Prohibition against involvement 73.735–202 Management officials. in financial transactions based on information obtained through Federal em- Subpart C—Conduct on the Job ployment. 73.735–301 Courtesy and consideration for 73.735–804 Waiver of the prohibitions in this others. subpart. 73.735–302 Support of department programs. 73.735–805 Advice and guidance on conflicts 73.735–303 Use of government funds. matters. 73.735–304 Use of government property. 73.735–806 Documentation and publication of 73.735–305 Conduct in Federal buildings. opinions. 73.735–306 Sexual harassment. 73.735–307 Use of official information. Subpart I—Reporting Financial Interests Subpart D—Financial Obligations 73.735–901 Reporting requirement of the Ethics in Government Act of 1978. 73.735–401 General provisions. 73.735–902 Reporting requirements for certain employees not covered by the Ethics Subpart E—Gifts, Entertainment, and Favors in Government Act of 1978. 73.735–501 Prohibited acceptance of gifts, en- 73.735–903 Action if conflicts of interest or tertainment, and favors. possible conflicts are noted. 73.735–502 Permissible acceptance of gifts, entertainment, and favors.

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73.735–904 Resolution of apparent or actual and must avoid conflicts of private in- conflicts of interest. terests with public duties and responsibilities. In accord with these prin- Subpart J—Provisions Relating to Experts, ciples, the regulations in this part are Consultants and Advisory Committee issued to inform HHS employees and Members special Government employees what 73.735–1001 Coverage. standards of conduct are expected of 73.735–1002 Ethical standards of conduct. them in performing their duties and 73.735–1003 Conflicts of interest statutes. what activities are permitted or pro- 73.735–1004 Requesting waivers or exemp- hibited both while they are employed tions. and after their employment with the 73.735–1005 Salary from two sources. 73.735–1006 Reporting financial interests. Department is ended. 73.735–1007 Political activity. § 73.735–102 Definitions. Subpart K—Special Government In this part: Employees Other Than Consultants (a) Employee means an officer or employee of HHS other than a special 73.735–1101 General provision. Government employee and includes Subpart L—Disciplinary Action Commissioned Officers of the Public Health Service who are on active duty, 73.735–1201 General provisions. and individuals on assignment or detail to HHS pursuant to the Intergovern- Subpart M—Reporting Violations mental Personnel Act (5 U.S.C. 3371– 73.735–1301 Responsibility for reporting pos- 3376). The term also includes HHS em- sible criminal violations. ployees who are detailed to non-Fed- 73.735–1302 Responsibility for reporting alle- eral or other Federal organizations. At gations of misconduct. times the term ‘‘regular employee’’ is 73.735–1303 Prohibition of reprisals. used in place of ‘‘employee’’ to make a 73.735–1304 Referral of matters arising under the standards of this part. clear distinction between special Gov- ernment employees and others em- Subpart N—Conduct and Responsibilities ployed by the Federal government. of Former Employees (b) Special Government employee means an individual who is retained, des- 73.735–1401 Prohibitions against post-em- ignated, appointed, or employed to per- ployment conflicts of interest. form temporary duties either on a full- APPENDIX A TO PART 73—LIST OF SOME OF- time or intermittent basis, with or FENSES FOR WHICH DISCIPLINARY ACTION without compensation, for not to ex- MAY BE TAKEN ceed 130 days during any period of 365 APPENDIX B TO PART 73—CODE OF ETHICS FOR GOVERNMENT SERVICE consecutive days. (c) Person means an individual, a cor- AUTHORITY: 5 U.S.C. 7301, 42 U.S.C. 216; E.O. poration, a company, an association, a 11222, 30 FR 6469; 5 CFR 735.101 et seq. firm, a partnership or any other orga- SOURCE: 46 FR 7369, Jan. 23, 1981, unless nization. otherwise noted. (d) Former employee means a former employee of HHS or former special Subpart A—General Provisions Government employee as defined in paragraph (b) of this section. § 73.735–101 Purpose. (e) Principal Operating Component has To assure that the business of the De- the meaning given to that term in the partment of Health and Human Serv- Department’s General Administration ices (HHS) is conducted effectively, ob- Manual. In addition, when used in jectively, and without improper influ- these regulations, it includes the Office ence or the appearance of improper in- of the Secretary. fluence, employees and special Govern- (f) Department means the Department ment employees must be persons of in- of Health and Human Services. tegrity and must observe high standards of honesty, impartiality, and be- § 73.735–103 Applicability. havior. They must not engage in any (a) The regulations in this part apply conduct prejudicial to the Government to all employees of the Department and

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to special Government employees to § 73.735–202 Management officials. the extent indicated in Subparts J and (a) The Department has an obligation K. They apply whether an employee is to enforce the requirements of this on leave, including leave without pay, part in all respects and to help employ- or on duty. ees, special Government employees, (b) These regulations may be supple- and supervisors carry out their respon- mented by regulations governing prin- sibilities to maintain high standards of cipal operating components, or sub- ethical conduct. This includes an obli- units of principal operating compo- gation for managers to provide infor- nents, provided the clearance and pub- mation and training concerning the lication requirements for standards of HHS conduct regulations, to provide conduct regulations are met and ap- advice and guidance with respect to proval is obtained from the Depart- them, and to review for possible con- ment Ethics Counselor and the Assist- flicts of interest certain outside activi- ant Secretary for Personnel Adminis- ties and financial interests of employ- tration. ees. The officials responsible for discharging the Department’s oligations Subpart B—Responsibilities in this regard are identified in paragraphs (b) through (f) of this section. § 73.735–201 Employees and super- (b) Department Ethics Counselor. visors. The Assistant General Counsel, Busi- ness and Administrative Law Division, (a) Employees and special Govern- shall be the Department Ethics Coun- ment employees shall be responsible selor and shall serve as the Designated for observing all generally accepted Agency Official for matters arising rules of conduct and the specific provi- under the Ethics in Government Act of sions of law and the regulations of this 1978, (Pub. L. 95–521). The responsibil- part that apply to them. They are re- ities of the Department Ethics Coun- quired to become familiar with these selor shall include: regulations and to exercise informed (1) Rendering authoritative advice judgments to avoid misconduct or con- and guidance on matters of general ap- flicts of interest. They shall secure applicability under the standards of this provals when required and file finan- part and all other laws and regulations cial disclosure reports or statements in governing employee conduct, with par- accordance with the provisions of this ticular reference to conflicts of inter- part. Failure to observe any of these est matters. regulations may be cause for discipli- (2) Coordinating the Department’s nary action. Some of the provisions are counselling and training services re- required by law and carry criminal garding conflicts of interest and assur- penalties which are in addition to any ing that employees of the Department disciplinary action which could be are kept informed of developments in taken. When employees have doubts conflict of interest laws and other re- about any provision, they should con- lated matters of ethics. sult their supervisor, personnel office, (3) Receiving information on con- or the Department Ethics Counselor or flicts of interest and appearances of a deputy counselor. conflicts of interest involving employ- (b) Supervisors, because of their day- ees of the Department and forwarding to-day relationships with employees, this information to the appropriate are responsible to a large degree for management official, or the Inspector making sure high standards of conduct General, as necessary, with his or her are maintained. They must become fa- legal evaluation of the matters ad- miliar with the Department’s stand- dressed. ards of conduct regulations and apply (4) Reviewing the financial disclosure the standards to the work they do and reports, requests for approval of out- supervise. Supervisors shall take suit- side activities, and similar reports filed able action, including disciplinary ac- by Executive level officers, non-career tion in accordance with Subpart L of executives, deputy ethics counselors, these regulations, when violations and Schedule C employees in the Office occur. of the Secretary for the purpose of

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identifying and resolving possible and ards of this part. Their responsibilities actual conflicts of interest. shall include: (5) Maintaining liaison with the Of- (1) Designating officials to review fice of Government Ethics. and approve outside activity requests (6) Advising management officials on in accordance with § 73.735–708 of this the resolution of conflicts of interest part or statements of employment or by any of the remedies set forth in financial interests under § 73.735–902. A § 73.735–904 of this part. list of the officials designated for these (7) Maintaining accurate and com- purposes shall be provided to the De- plete documentation of all formal guid- partment Ethics Counselor and to the ance and advice regarding conflict of Assistant Secretary for Personnel Ad- interest matters subject to the provi- ministration and shall be updated in sions of this part, except for routine or January and July of each year. repetitious cases where the guidance (2) Designating for the components of given is not precedential. his or her organization, other than (8) Maintaining and publishing from those for which a principal regional of- time to time a list of those cir- ficial provides personnel services, one cumstances or situations which have or more individuals to oversee and co- resulted or may result in noncompli- ordinate the administrative aspects of ance with conflict of interest laws or these regulations. Responsibilities of regulations. [Section 206(b)(7), Pub. L. such a person include making sure each 95–521]. employee or special government em- (9) Designating and training an ap- ployee is provided a copy of these regu- propriate number of reviewing officials lations, or an appropriate summary to assist him or her in carrying out the thereof; ensuring that training in the duties of the Designated Agency Offical requirements of the regulations is pro- under the Ethics in Government Act. vided to supervisors and to new em- (10) Maintaining effective lines of ployees; providing for the distribution, communication with deputy ethics receipt, review and retention of finan- counselors on all matters regarding cial interest reports and statements as employee conduct and ethics. directed by the Department Ethics (c) Deputy Ethics Counselors. Assist- Counselor and the Assistant Secretary ant General Counsels and Regional At- for Personnel Administration; sending torneys are designated deputy ethics annual reminders as required; pro- counselors to assist the Department’s viding for a file of outside work re- Counselor in carrying out his or her requests; giving information and assist- sponsibilities, particularly with re- ance to employees on a day-to-day spect to employees in the organization basis; and making available to employ- in which the deputy counselor serves. ees the names and addresses of the De- Regional Attorneys shall provide such partment’s Ethics Counselor and dep- assistance for all employees of the De- uty ethics counselors. partment in organizations for which (f) Principal Regional Officials the Principal Regional Official pro- (PROs) shall designate one or more re- vides personnel services. gional employees to perform, for com- (d) The Assistant Secretary for Per- ponents for which personnel services sonnel Administration shall be respon- are provided by the PROs, the responsible for developing and issuing proce- sibilities in paragraph (e)(2) of this sec- dures and requirements for the imple- tion. mentation of these regulations and for monitoring the application of such pro- Subpart C—Conduct on the Job cedures and requirements throughout the Department. § 73.735–301 Courtesy and consider- (e) Heads of Principal Operating ation for others. Components and the Assistant Sec- (a) An employee’s conduct on the job retary for Management and Budget for is, in all respects, of concern to the the Office of the Secretary shall be ul- Federal government. Courtesy, consid- timately responsible for assuring that eration, and promptness in dealing persons who work for their respective with the public must be shown in car- organizations comply with the stand- rying out official responsibilities, and

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actions which deny the dignity of indi- tigative officials in the performance of viduals or conduct which is disrespect- their duties or functions. This require- ful to others must be avoided. Employ- ment includes the giving of statements ees must recognize that inattention to or evidence to investigators of the In- matters of common courtesy can ad- spector General’s office or other HHS versely affect the quality of service the investigators authorized to conduct in- Department is responsible for pro- vestigations into potential violations. viding. Where appropriate, courtesy to the public should be included in the § 73.735–303 Use of government funds. standards for employee performance. (a) An employee shall not: (b) Of equal importance is the re- (1) Improperly use official travel; quirement that courtesy be shown in (2) Improperly use payroll and other day-by-day interaction with co-work- vouchers and documents on which Gov- ers. Employees shall be polite to and ernment payments are based; considerate of other employees, and (3) Take or fail to account for funds shall respect their needs and concerns with which the employee is entrusted in the work environment. in his or her official position; or (4) Take other Government funds for § 73.735–302 Support of department personal use. Violation of these prohi- programs. bitions carry criminal penalties. (a) When a Department program is (b) In addition, employees shall avoid based on law, Executive Order or regu- wasteful actions or behavior in the per- lation, every employee has a positive formance of their assigned duties. obligation to make it function as efficiently and economically as possible § 73.735–304 Use of government prop- and to support it as long as it is a part erty. of recognized public policy. An em- (a) An employee shall not directly or ployee may, therefore, properly make indirectly use, or allow the use of, Gov- an address explaining and interpreting ernment property of any kind, includ- such a program, citing its achieve- ing property leased to the Government, ments, defending it against uninformed for other than officially approved ac- or unjust criticism, or soliciting views tivities. An Employee has a positive for improving it. duty to protect and conserve Govern- (b) An employee shall not, either di- ment property, including equipment, rectly or indirectly, use appropriated supplies, and other property entrusted funds to influence, or attempt to influ- or issued to him or her. For example: ence, a Member of Congress to favor or (1) Only official documents and mate- oppose legislation. However, when au- rials may be processed on Government thorized by his or her supervisor, an reproduction facilities. Both super- employee is not prohibited from: visors and employees must assure that (1) Testifying, on request, as a rep- this rule is strictly followed. (Excep- resentative of the Department on pend- tion for employee welfare and recre- ing legislation or proposals before Con- ation associations is stated in Chapter gressional Committees; or 25–10, General Administration Manual. (2) Assisting Congressional Commit- Exception for labor organizations is tees in drafting bills or reports on re- stated in Personnel Instruction 711–1.) quest, when it is clear that the em- (2) Employees may drive or use Gov- ployee is serving solely as a technical ernment automobiles or aircraft only expert under the direction of com- on official business. Use of a Govern- mittee leadership. ment owned, leased, or rented vehicle (c) All employees shall be familiar or aircraft for non-official purposes with regulations and published instruc- may result in suspension for at least 30 tions that relate to their official duties days or removal from the Federal serv- and responsibilities and shall comply ice. 31 U.S.C. 638a. with those directives. This includes Example: Normally, use of a Government carrying out proper orders from offi- automobile by travel between home and cials authorized to give them. place of duty would not be considered official (d) Employees are required to assist business and could not be authorized. An ex- the Inspector General and other inves- ception to this rule might be appropriate in

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a situation where an employee is required to § 73.735–306 Sexual harassment. leave early in the morning to attend a meeting in a distant city, or to return late in the Sexual harassment is deliberate un- day from such a meeting. Allowing the em- solicited verbal comments, gestures, or ployee to drive a government car to his or physical contact of a sexual nature her home the night before in order to leave which are unwelcome. Sexual harass- from home, or to return to his or her home ment is unacceptable conduct and is in the evening upon completion of the trip is expressly prohibited. In addition, su- permissible, provided the employee does not pervisors and managers are prohibited use the car for any personal reason. from taking or promising personnel actions in exchange for sexual favors, or § 73.735–305 Conduct in Federal build- failing to take an action because an ings. employee or applicant for employment, (a) An employee shall not participate refuses to engage in sexual conduct. while on Government-owned or leased This same prohibition applies to rela- property or while on duty for the Gov- tionships between Department per- ernment, in any gambling activity in- sonnel who take or recommend action cluding the operation of a gambling de- on a grant or contract and the grantee or contractor. Those employees who vice, in conducting a lottery or pool, in wish to file a complaint of sexual har- a game for money or property, or in assment should contact the Office of selling or purchasing a numbers slip or Equal Employment Opportunity (EEO) ticket. within their respective agencies for (b) An employee shall not while in or guidance. (Time frames for pursuing a on Government-owned or leased prop- charge alleging sexual harassment are erty or while on duty for the Govern- the same as for any other complaint ment solicit alms and contributions, based on allegations of sex discrimina- engage in commercial soliciting and tion.) vending, display or distribute commercial advertisements, or collect private § 73.735–307 Use of official informa- debts. tion. (c) The prohibitions in paragraphs (a) (a) The public interest requires that and (b) of this section do not preclude: certain information in the possession (1) Activities necessitated by an em- of the Government be kept confidential, and released only with general or ployee’s law enforcement duties; specific authority under Department or (2) Participation in Federally spon- operating component regulations. Such sored fund-raising activities conducted information may involve the national pursuant to Executive Order 10927, or security or be private, personal, or similar HHS-approved activities; or business information which has been (3) Buying a lottery ticket at an au- furnished to the Government in con- thorized State lottery outlet for a lot- fidence. In addition, information in the tery authorized by State law and con- possession of the Government and not ducted by an agency of a State within generally available may not be used for that State. private gain. The following paragraphs (d) General Services Administration set forth the rules to be followed by regulations on ‘‘Conduct on Federal Department employees in handling in- Property’’ apply to all property under formation in official files or docu- the control of the General Services Ad- ments: ministration, and they are also appli- (1) Classified information. Employees cable to all buildings and space under who have access to information which the control of this Department. These is classified for security reasons in ac- regulations prohibit, among other cordance with Executive Order 12065 are responsible for its custody and safe- things, gambling, being intoxicated, keeping, and for assuring that it is not and possession, distribution, or use of disclosed to unauthorized persons. See narcotic or dangerous drugs on the the Department’s Security Manual, premises. The GSA regulations are Part 3 for details. found in Subpart 101–20.3 of the GSA (2) Security and investigative informa- Regulations, 41 CFR 101–20.3. tion. Security and investigative data

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received from Government agencies or ment determines does not, under the other sources for official use only with- circumstances, reflect adversely on the in the Department or developed under part of an employee in meeting his or a pledge of confidence is not to be di- her financial obligations, particularly vulged to unauthorized persons or those that relate to support of the em- agencies. ployee’s family, to payment of Federal, (3) Information obtained in confidence. State, or local taxes, or to payments to Certain Department units (e.g., Food tax-supported institutions such as a and Drug Administration, and the So- city or State hospital, or educational cial Security Administration) obtain in institution. If for some reason an em- the course of their program activities ployee is unable to pay these obliga- certain information from businesses or tions promptly, he or she is expected to individuals which they are forbidden by make satisfactory arrangements for law from disclosing. These statutory payment and abide by these arrange- prohibitions are found in 21 U.S.C. 331j, ments. and 18 U.S.C. 1905. Each employee is re- (b) Disciplinary action may be con- sponsible for observing these laws. sidered when an employee has handled (4) Use of information for private gain. his or her financial affairs in such a Government employees are sometimes way that: able to obtain information about some (1) Action on complaints received action the Government is about to from creditors requires the use of a take or some other matter which is not considerable amount of official time, generally known. Information of this or kind shall not be used by the employee (2) It appears that financial difficul- to further his or her or someone else’s ties are impairing the employee’s effi- private financial or other interests. ciency on the job, or Such a use of official information is (3) Because of the employee’s finan- clearly a violation of a public trust. cial irresponsibility, the attitude of the Employees shall not, directly or indi- general public toward the Department rectly, make use of, or permit others to may be adversely affected; and the em- make use of, for the purpose of fur- ployee after counseling does not make thering any private interest, official arrangements to meet his or her finan- information not made available to the cial obligations. general public. (b) The Privacy Act provides criminal penalties for an employee who will- Subpart E—Gifts, Entertainment, fully discloses individually identifiable and Favors information from records, disclosure of which is prohibited by that Act. 5 § 73.735–501 Prohibited acceptance of U.S.C. 552a(i). gifts, entertainment, and favors. (a) Except as provided in §§ 73.735–502 Subpart D—Financial Obligations and 73.735–506, an employee shall not directly or indirectly solicit or accept § 73.735–401 General provisions. anything of monetary value, including (a) The Department considers the in- gifts, gratuities, favors, entertainment debtedness of its employees to be a or loans from a person who the em- matter of their own concern. However, ployee knows, or should know because employees shall not by failure to meet of the nature of the employee’s work: their just financial obligations reflect (1) Has, or is seeking to obtain, con- adversely on the Government as their tractual or other business or financial employer. Employees are expected to relations with the employee’s principal pay each just financial obligation in a operating component, or sub-unit proper and timely manner. A ‘‘just fi- thereof; or with a component of the De- nancial obligation’’ is one acknowl- partment with respect to which the edged by the employee or reduced to employee has official duties; judgment by a court, or one imposed by (2) Conducts operations or activities law such as Federal, State, or local that are regulated by the employee’s taxes. ‘‘In a proper and timely man- principal operating component, or sub- ner’’ is a manner which the Depart- unit thereof or by a component of the

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Department with respect to which the corporation which conducts business with employee has official duties; or the Department and the employee has offi- (3) Has interests that may be sub- cial dealings with representatives of the cor- stantially affected by the performance poration. The employee may attend the or non-performance of the employee’s luncheon. official duties. (b) Employees may not designate a § 73.735–503 Criminal provisions relating to gifts, entertainment, and fa- person or an organization, including vors. charitable or non-profit organizations, to accept any gift which an employee is (a) The law provides criminal pen- prohibited from accepting directly. alties for whoever, directly or indirectly: § 73.735–502 Permissible acceptance of (1) Receives or accepts anything of gifts, entertainment, and favors. value for or because of any official act (a) An employee may accept a gift, the employee has performed or will gratuity, favor, entertainment, loan or perform; or similar favor of monetary value which (2) Gives, offers or promises anything stems from a family relationship such of value for the performance of an offi- as that between the employee and his cial act or to influence the perform- or her parents, spouse or children, if it ance of an official act. 18 USC 201. is clear that the relationship is the mo- (b) The law prohibits an employee tivating factor. from receiving any salary or any con- (b) Loans from banks or other finan- tribution to, or supplementation of, his cial institutions may be accepted on or her salary as compensation for serv- customary terms. (c) Unsolicited advertising or pro- ices as an officer or employee of the motional material such as pens, note Government from any source other pads, calendars and similar items of than the United States or any State, nominal intrinsic value may be accept- county or municipality. This law does ed. not prohibit an employee from con- (d) An employee may accept food or tinuing to participate in a bona fide refreshment of nominal value on infre- pension, retirement, group life, health quent occasions in the ordinary course or accident insurance, profit-sharing, of a luncheon or dinner meeting or on stock bonus or other employee welfare an inspection tour only if the employee or benefit plan maintained by a former is properly in attendance and there is employer. 18 U.S.C. 209. not a reasonable opportunity to pay. Example 1: A corporate executive is asked Example 1: Employee is on the premises of to accept a position in the Department. The Company participating in a meeting at a corporation offers to continue to pay the ex- normal mealtime. A representative of Com- ecutive the difference between his or her sal- pany provides a meal for all meeting partici- ary as a Government employee and that re- pants from a Company facility and there is ceived by an employee of the corporation. no established method for payment. Em- Such payment would be considered to be ployee may accept. ‘‘compensation for’’ the employee’s Govern- Example 2: Employee is on the premises of ment service and is prohibited. Company and he or she goes outside for Example 2: A corporate executive is asked lunch with a representative of the Company. to accept a position in the Department. The The representative offers to pay the bill. corporation proposes to pay him or her a spe- Since it is practical for the employee to pay cial severance payment in anticipation of for his or her own meal, the employee may this or her serving in the Government. This not accept. proposal would be prohibited because there is (e) An employee may also accept food no distinction between the proposed lump- or refreshment of nominal value on in- sum payment and the prohibited continu- frequent occasions if the food and/or re- ation of salary payments described in the ex- freshment is offered to all participants ample above. or attendees of a meeting or conven- Example 3: A corporate executive is asked tion. to accept a position in the Department. The corporation has an established policy which Example 1: During the course of a conven- provides for an amount of severance pay to tion of a professional organization a lunch- be paid any departing executive and proposes eon open to all attendees is sponsored by a to make payment based on that policy when

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the executive leaves. The executive may ac- gift or decorations from a foreign gov- cept the payment. Under these cir- ernment or official thereof. cumstances it is clear that the severance pay (b) An employee may accept from a is in payment for past services not in antici- foreign government: pation of the future services for the Govern- ment. (1) A gift which is in the nature of medical treatment or an educational § 73.735–504 Gifts to official superiors. scholarship; (2) A tangible gift of minimal value An employee shall not solicit a con- tendered or received as a mark of cour- tribution from another employee for a tesy; (‘‘Minimal value’’ means a retail gift to an official superior, make a do- value in the United States at the time nation as a gift to an official superior, of acceptance of not more than one or accept a gift from an employee re- hundred dollars, unless the Adminis- ceiving less pay than himself or her- trator of the General Services Adminis- self. 5 U.S.C. 7351. This section does not tration adjusts the value by regula- prohibit a voluntary gift of nominal tion.) or value or donation in nominal amount (3) A tangible gift of more than mini- made on a special occasion such as mal value when it appears that to marriage, illness or retirement. refuse the gift would be likely to cause offense or embarrassment or otherwise § 73.735–505 Acceptance of awards and prizes. adversely affect the foreign relations of the United States. However, the ac- (a) Employees may accept awards, in- ceptance of such a gift would be on be- cluding cash awards, given in recogni- half of the United States and the gift tion of a meritorious public contribu- would become the property of the tion or achievement. However, if there United States. See the Department’s is any indication that the award may General Administration Manual, Chap- improperly influence the employee in ter 20–25 for information regarding the the performance of his or her offical disposition of a gift accepted under duties, advice about the acceptance of these circumstances. it should be sought from a deputy eth- (c) An employee may also accept ics counselor. Also, an employee may from a foreign government gifts of not accept an award from an organiza- travel or expenses for travel (such as tion which the employee knows, or transportation, food and lodging) that should know, has a contractual or take place entirely outside the United other business arrangement with, or is States and are of more than minimal regulated by, the principal operating value, if such acceptance is consistent component, or a sub-unit, in which he with the interests of the United States or she is employed or with respect to and is approved by the travel approving which the employee has official duties, authority in accordance with the De- unless acceptance is approved by the partment’s Travel Manual. See General head of the employee’s principal oper- Administration Manual, Chapter 20–25 ating component. The head of the com- for a requirement to report such travel. ponent may not approve acceptance (d) An employee may accept, retain, unless he or she is satisfied that no ac- and wear a decoration tendered in rec- tual conflict of interest would result. ognition of active field service in time (b) Employees may generally accept of combat operations or awarded for trophies, entertainment, rewards, and other outstanding or unusually meri- prizes given to competitors in contests torious performance, subject to the ap- or events which are open to the public. proval of the Secretary or his or her (c) Employees may not accept gifts, designee. awards, decorations or other things of (e) Members of an employee’s family value from a foreign government ex- and household are also subject to the cept as provided in § 73.735–506. regulations in this section. A member of an employee’s family and household § 73.735–506 Gifts and decorations is a relative by blood, marriage or from foreign governments. adoption who is a resident of the (a) An employee may not request or household. However, if a member of an otherwise encourage the tender of a employee’s family and household is

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employed by another agency of the (c) Impeding Government efficiency Government, the offer or acceptance of or economy; a gift shall be treated under the regula- (d) Losing complete independence or tions of that agency. impartiality in the performance of (f) For purposes of this section ‘‘for- their Government duties; eign government’’ means: (e) Making a Government decision (1) Any unit of foreign government outside official channels; or authority including any foreign na- (f) Affecting adversely the confidence tional, state, local and municipal gov- of the public in the integrity of the ernment; Government. (2) Any international or multi- national organization whose member- Subpart F—Political Activity ship is composed of any unit of foreign government described in paragraph § 73.735–601 Applicability. (f)(1) of this section; or (a) All employees in the Executive (3) Any agent or representative of Branch of the Federal Government, in- any such unit or organization when cluding non-career employees, are sub- acting as such agent or representative. ject to basic political activity restric- (5 U.S.C. 7342) tions in subchapter III of chapter 73 of title 5, United States Code (the former § 73.735–507 Acceptance of travel and Hatch Act) and Civil Service Rule IV. subsistence. Employees are individually responsible (a) Except as provided in paragraph for refraining from prohibited political (b) of this section, employees may ac- activity. Ignorance of a prohibition cept accommodations, subsistence, and does not excuse a violation. This sub- travel in cash or in kind in connection part summarizes provisions of law and with official travel for attendance at regulation concerning political activ- meetings, conferences, training in non- ity of employees. The Federal Per- Governmental facilities or for personnel Manual and other publications forming advisory services, if approved of the Office of Personnel Management in accordance with the provisions of contain more detailed information on the HHS Travel Manual. (5 U.S.C. 4111; this subject. These may be reviewed in 42 U.S.C. 3506) Department personnel offices, or will be made available by the Ethics Coun- (b) Employees may not accept ac- selor, or the deputy counselor for the commodations, subsistence, or travel employee’s organizational component. in cash or in kind in connection with (b) The Secretary and Under Sec- official travel from a non-Govern- retary are exempt from the prohibi- mental source with which they have of- tions concerning active participation ficial dealings unless Government or in political management and political commercial travel and/or accommoda- campaigns. Also exempt are other offi- tions are not available. If travel and/or cials of the Department, except the In- subsistence is accepted for official spector General and Deputy Inspector travel under these circumstances, such General, who are appointed by the acceptance and the basis for it must be President by and with the advice and reported in writing to the Head of the consent of the Senate, and who deter- Principal Operating Component or As- mine policies to be pursued by the sistant Secretary for Management and United States in the nationwide admin- Budget for the Office of the Secretary. istration of Federal laws. (c) Intermittent employees are sub- § 73.735–508 Other prohibitions. ject to the restrictions when in active Employees shall avoid any action duty status only and for the entire 24 whether or not specifically prohibited hours of any day of actual employ- by this part, which might result in or ment. create the appearance of: (d) Employees on leave, on leave (a) Using public office for private without pay, or on furlough even gain; though an employee’s resignation has (b) Giving preferential treatment to been accepted, are subject to the re- any person; strictions. Separated employees who

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have received a lump-sum payment for cally designated by the Office of Per- annual leave are not subject to the re- sonnel Management. Information restriction during the period covered by garding the localities and the condi- the lump-sum payment or thereafter, tions under which the exceptions are provided they do not return to Federal granted may be obtained from per- employment during that period. Em- sonnel offices or the Department Coun- ployees are not permitted to take a selor or deputy counselors. leave of absence to work with a polit- (b) A covered employee is permitted ical candidate, committee, or organiza- to: tion or to become a candidate for office (1) Register and vote in any election; with the understanding that they will (2) Express his or her opinion as an resign their position if nominated or individual citizen privately and pub- elected. licly on political subjects and can- (e) Employees are accountable for po- didates; litical activity by another person act- (3) Display a political picture, stick- ing as their agent or under the employer, badge or button; ee’s direction or control, if they are (4) Participate in the nonpartisan ac- thus accomplishing indirectly what tivities of a civic, community, social, they may not lawfully do directly and labor, or professional organization, or openly. of a similar organization; (f) Though officers in the Public (5) Be a member of a political party Health Service Commissioned Corps or other political organization and par- are not subject to the restrictions in ticipate in its activities to the extent Subchapter III of Chapter 73 of Title 5, consistent with law; United States Code, the provisions of this subpart apply to them. (6) Attend a political convention, rally, fund raising function; or other § 73.735–602 Permissible activities. political gathering; (a) Section 7324 of Title 5, United (7) Sign a political petition as an in- States Code, provides that employees dividual citizen; have the right to vote as they please (8) Make a financial contribution to a and to express their opinions on polit- political party organization; ical subjects and candidates. Generally, (9) Take an active part, as an inde- however, employees are prohibited pendent candidate, or support of an from taking an active part in political independent candidate, in a partisan management or political campaigns or election in localities identified as per- using official authority or influence to missible for such activities by the Of- interfere with an election or affect its fice of Personnel Management; results. There are some exemptions (10) Take an active part, as a can- from the restrictions of the statute: didate or in support of a candidate, in (1) Employees may engage in polit- a nonpartisan election; ical activity in connection with any (11) Be politically active in connec- question not specifically identified tion with a question which is not spe- with a national or State political cifically identified with a political party. They also may engage in polit- party, such as a constitutional amend- ical activity in connection with an ment, referendum, approval of a mu- election, if none of the candidates rep- nicipal ordinance or any other question resents a party any of whose can- or issue of a similar character; didates for presidential elector re- (12) Serve as an election judge or ceived votes at the last preceding elec- clerk, or in a similar position to per- tion at which presidential electors form nonpartisan duties as prescribed were selected. by State or local law; and (2) An exception relates to political (13) Otherwise participate fully in campaigns within, or in communities public affairs, except as prohibited by adjacent to, the District of Columbia, law, in a manner which does not mate- or in communities the majority of rially compromise his or her efficiency whose voters are employees of the Fed- or integrity as an employee or the neu- eral government. Communities to trality, efficiency, or integrity of his or which the exception applies are specifi- her agency.

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(c) The head of a principal operating (12) Addressing a State or national component may prohibit or limit the convention or caucus, or a rally or participation of an employee or class of similar gathering of a political party, employees of his or her component in in support of or in opposition to a can- an activity permitted by paragraph (b) didate for public or political party of- of this section, if participation in the fice, or on a partisan political question; activity would interfere with the effi- and cient performance of official duties, or (13) Initiating or circulating a nomi- create a conflict or apparent conflict of nating petition for a candidate in a interest. partisan election. (b) In addition, certain political ac- § 73.735–603 Prohibited activities. tivities are prohibited by Federal (a) The following are prohibited ac- criminal law: tivities: (1) Officers and employees may not (1) Serving as an officer of a political directly or indirectly solicit or receive, party, a member of a national, State or or be in any way involved in soliciting local committee of a political party, an or receiving, any assessment, subscrip- officer or member of a committee of a tion or contribution for any political partisan political club, or being a can- purpose whatever from another officer didate for any of these positions; or employee. This prohibition extends (2) Organizing or reorganizing a polit- to one who acts as a mere agent or ical party organization or political messenger for the purpose of turning club; the contribution over to a political or- (3) Directly or indirectly soliciting, ganization. 18 U.S.C. 602. receiving, collecting, handling, dis- (2) All persons, whether employees or bursing, or accounting for assessments, not, are prohibited from soliciting in contributions, or other funds for a par- any manner, or receiving a contribu- tisan political purpose or in connection tion of, money or a thing of value, in with a partisan election; any room or building occupied in the (4) Organizing, selling tickets to, discharge of official duties by any offi- seeking support for, or actively partici- cer or employee of the United States. pating in a fund-raising activity of, a 18 U.S.C. 603. This prohibition extends political party or political club; to the sending of a letter soliciting po- (5) Taking an active part in man- litical contributions for delivery in a aging the political party campaign of a Government building. candidate for public office or political (3) No officer or employee may di- office; rectly or indirectly give to any other (6) Being a candidate for, or cam- officer, employee or person in the serv- paigning for, an elective public office, ice of the United States, any money or except as permitted in § 73.735–602(b)(9); other thing of value to be applied to (7) Taking an active part in an orga- the promotion of any political objec- nized solicitation of votes in support of tive. 18 U.S.C. 607. or in opposition to a candidate for pub- (4) Discrimination for giving or with- lic office or political party office; holding any contribution for any polit- (8) Acting as recorder, watcher, chal- ical purpose and discrimination based lenger, or similar officer at the polls on on political influence or recommenda- behalf of a political party or candidate tions is prohibited. in a partisan election; (c) Various other laws prohibit cer- (9) Driving voters to the polls on be- tain activities in connection with po- half of a political paty or a candidate litical campaigns and elections. They in a partisan election; include: (10) Endorsing or opposing a can- (1) Intimidating, threatening, or co- didate in a partisan election in a polit- ercing voters in Federal elections (18 ical advertisement, a broadcast, cam- U.S.C. 594). paign literature, or similar material; (2) Using official authority in inter- (11) Serving as a delegate, alternate, fering with a Federal election by a per- or proxy to a political party conven- son employed in any administrative po- tion; sition by the United States or by any

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department, independent establish- may result in, or create the appearance ment, or agency of the United States of, conflicts of interest; or by any State, agency, or political (2) Outside employment which tends subdivision thereof in connection with to impair the employee’s mental or any activity financed in whole or in physical capacity to perform Govern- part by Federal funds (18 U.S.C. 595). ment duties and responsibilities in an (3) Promising Federal employment, acceptable manner; compensation, or any benefit from Fed- (3) Work which identifies the Depart- eral funds, in return for political activ- ment or any employee in his or her of- ity or support (18 U.S.C. 600). ficial capacity with any organization (4) Depriving anyone of employment, commercializing products relating to compensation, or any benefit derived work conducted by the Department, or from Federal relief or work relief funds with any commercial advertising mat- on account of race, creed, color, or po- ter, or work performed under such cir- litical activity (18 U.S.C. 601). cumstances as to give the impression (5) Soliciting, assessing, or receiving that it is an official act of the Depart- subscriptions or contributions for po- ment or represents an official point of litical purpose from anyone on Federal relief or work relief (18 U.S.C. 604). view; (4) Outside work or activity that takes the employee’s time and atten- Subpart G—Outside Activities tion during his official work hours. § 73.735–701 General provisions. (c) An employee shall not receive any salary or anything of monetary value (a) Outside employment may be ap- from a private source as compensation propriate when it will not adversely af- for services to the Government. For ex- fect performance of an employee’s offi- ample, a Department employee may be cial duties and will not reflect dis- credit on the Government or the De- called upon, as a part of his or her offi- partment. Such work may include cial duties, to participate in a profes- civic, charitable, religious, and com- sional meeting sponsored by a non- munity undertakings. There are cer- Government organization, or to contain types of outside work, however, tribute a paper or other writing pre- which give rise to a real or apparent pared on official time for publication conflict of interest. Some of these are under non-Government auspices. The prohibited by law. Others are prohib- employee must not accept an hono- ited by regulation, as discussed in rarium or fee for such services, even paragraph (b) of this section, or by cri- though the organization accepting the teria developed by heads of operating service customarily makes such a pay- components for application within a ment to those who participate. Nor particular component. All of these pro- may the employee accept a contribu- visions are binding, but they do not tion to some charity, educational insti- necessarily include all possible con- tution, or the like, in appreciation of flicts of interest. In all instances, good the services furnished by the Depart- judgment must be used to avoid a con- ment employee who cannot accept the flict between an employee’s Federal re- usual payment. All offers to make such sponsibilities and outside activities. a contribution must be refused. Any (b) An employee shall not engage in employee with whom such a question is outside employment or other outside raised shall explain that the service inactivity not compatible with the full volved was provided as an official ac- and proper discharge of the duties and tion of the Department and is author- responsibilities of his or her Govern- ized by law. Under these cir- ment employment whether or not in cumstances, it is inappropriate for any violation of any specific provision of payment to be made, even indirectly law. Incompatible activities include, and to a third party, for services which but are not limited to: are furnished without charge by the (1) Acceptance of a fee, compensa- Government. tion, gift, payment of expense, or any (d) Other than as provided in para- other thing of monetary value in any graph (c) of this section, employees circumstances in which acceptance may receive compensation or other

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things of monetary value for any lec- (h) Application of these general pro- ture, discussion, writing or appearance visions to some specific activities is the subject matter of which is in part discussed below. devoted to the responsibility, programs or operations of the Department so § 73.735–702 Criminal prohibitions on long as the activity is undertaken in a outside activities. personal capacity, is not performed as (a) An employee may not, with or official duty, is not done while on offi- without compensation, represent an- cial time, and does not create a con- other before any Government agency, flict of interest or appearance of con- court or commission in connection flict of interest. However, such activi- with any proceeding, application, re- ties are considered outside employ- quest for a ruling, contract, claim or ment and may be undertaken only as other particular matter in which the provided in this subpart. United States is a party or has a direct (e) This section does not restrict the and substantial interest. (18 U.S.C. 203 acceptance of compensation or other and 205) things of monetary value for any lec- (b) An employee may not act as ture, discussion, writing or appearance, agent or attorney for anyone else in the subject matter of which is not de- prosecuting any claim against the voted to the responsibilities, programs, United States (18 U.S.C. 205). or operations of the Department and (c) As an exception to the above, if it which are undertaken in a private ca- is not inconsistent with the perform- pacity and in accordance with §§ 73.735– ance of his or her duties, an employee 704, 73.735–705, or 73.735–706. (f) Federal law limits the amount of may act without compensation as an honorarium that may be paid any em- agent or attorney for another employee for any one speech, writing or ployee, or a person under active consid- appearance to $2,000.00 (not to include eration for Federal employment, who is amounts for actual travel and subsist- the subject of disciplinary, loyalty, or ence expenses for the employee and his other personnel administration pro- or her spouse) and an aggregate of ceedings in connection with those pro- $25,000.00 in any calendar year. This ceedings at the administrative level. limitation applies to such activities For example, an employee may rep- whether or not the subject matter is resent another employee who is the related to the responsibilities, pro- subject of disciplinary action, or the grams or operations of the Depart- complainant in a discrimination pro- ment. (2 U.S.C. 441i) The term ‘‘hono- ceeding, at all stages within the De- rarium’’ means payment of money or partment and before the Merit Systems other thing of value whether made gra- Protection Board or Equal Employ- tuitously or as a fee for an appearance, ment Opportunity Commission but not speech or article but does not include in Federal Court. It would be incon- salary or compensation made for serv- sistent with the performance of official ices rendered on a continuing basis, duties for a supervisor to represent such as for teaching, or as proceeds subordinate employees. from the sale of a book or similar un- (d) The law and these regulations do dertaking. not prohibit an employee from acting, (g) An employee who is a Presidential with or without compensation, as appointee covered by section 401(a) of agent or attorney for his or her par- Executive Order 11222 shall not receive ents, spouse, child or any person for compensation or anything of monetary whom, or estate for which, he or she is value for any consultation, lecture, dis- acting as fiduciary provided that the cussion, writing or appearance, the head of the principal operating compo- subject matter of which is devoted sub- nent or his or her designee approve. stantially to the responsibilities, pro- Such approval, if granted, must be grams, or operations of his or her com- granted in accordance with the proce- ponent, or which draws substantially dures for approval of outside activity. on official data or ideas which have not However, the employee may not do so or will not on request become public if the particular matter is one in which information. he or she has participated personally

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and substantially or which is his or her (b) Advance administrative approval official responsibility. (18 U.S.C. 205). in accordance with § 73.735–708 of this subpart must be obtained. Such ap- § 73.735–703 Statutory prohibitions re- proval is required whether or not the lated to employment by a foreign services are for compensation, and government. whether or not related to the employ- Employees, including officers in the ee’s official duties. Public Health Service (PHS) Commis- (c) For the purpose of this section, sioned Corps and retired officers of the ‘‘professional and consultative work’’ Regular Commissioned Corps of the is performance of work requiring PHS, may not, without the consent of knowledge of an advanced type in a Congress, be employed by a foreign field of science or learning customarily government or agency of a foreign gov- acquired by a course of specialized in- ernment (Art. I, Sec. 9, U.S. Const.). struction and study in an institution of Congress has consented to such em- higher education, or hospital which re- ployment by Reserve Commissioned Of- quires the exercise of judgment and ficers of the PHS not on active duty discretion in its performance and is and by Retired Regular Commissioned primarily intellectual in nature as op- Officers (37 U.S.C. 801, note) if approved posed to manual, mechanical or phys- under regulations of the Department of ical work. State. 22 CFR part 3a. (d) Membership on a Board of Direc- tors, Board of Regents, Board of Trust- § 73.735–704 Professional and consult- ees, Planning Commission, Advisory ative services. Council or Committee, or on any similar body which provides advice, coun- (a) Employees may engage in outside sel, or consultation, shall be considered professional or consultative work only outside consultative services for which after meeting certain conditions. Ex- advance administrative approval is re- cept as provided in §§ 73.735–705 and quired. 73.735–706 for activities discussed in those sections, the conditions which § 73.735–705 Writing and editing. must be met are: (a) Employees are encouraged to en- (1) The work is not to be rendered, gage in outside writing and editing with or without compensation, to orga- whether or not done for compensation, nizations, institutions, or state or local when such activity is not otherwise governments with which the official prohibited. Such writing and editing, duties of the employee are directly re- though not a part of official duties, lated, or indirectly related if the indi- may be on a directly related subject or rect relationship is significant enough entirely unrelated. Certain conditions to cause the existence of conflict or ap- must be met in either case, however, parent conflict of interest; or and certain clearances or approvals are (2) The work is not to be rendered for prescribed according to the content of compensation to help a person, institu- the material as set forth in paragraphs tion, or government unit prepare or aid (b) through (e) of this section. in the preparation of grant applica- (b) Conditions applying to writing tions, contract proposals, program re- and editing done not as a part of offi- ports, and other material which are de- cial duties. signed to become the subject of deal- (1) The following conditions shall ings between the institutions or gov- apply to all writing and editing wheth- ernment units and the Federal Govern- er related or unrelated to the employment. All requests to perform consult- ee’s official duties: ative services, either compensated or (i) Government-financed time or sup- uncompensated, for institutions or gov- plies shall not be used by the author or ernment units which have recently ne- by other Government employees in gotiated or may in the near future seek connection with the activity; and a contract or grant from this Depart- (ii) Official support must not be ex- ment must be carefully appraised to pressed or implied in the material avoid any conflict or apparent conflict itself or advertising or promotional of interest. material, including book jackets and

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covers, relating to the employee and sion, Office of the General Counsel: his or her contribution to the publica- ‘‘This (article, book, etc.) was (written, tion. edited) by (employee’s name) in (his or (2) If the writing or editing activity her) private capacity. No official is unrelated to the employee’s official suport or endorsement by (name of op- duties or other responsibilities and pro- erating component or of Department) grams of the Federal government, the is intended or should be inferred.’’ employee must: (d) Advance approval. Advance ap- (i) Make no mention of his or her of- proval is required in accordance with ficial title or affiliation with the De- § 73.735–708 of this subpart when one or partment, or more of the following conditions apply: (ii) Use his or her official title or af- (1) Any Government information is filiation with the Department in a way used which is not available on request that will not suggest or convey official to persons outside the Government; endorsement of the work. (2) Material is written or edited (3) If the writing or editing activity which pertains to subject matter di- is related to the employee’s official du- rectly related to an employee’s official ties or other responsibilities and pro- duties; (This includes editing for sci- grams of the Federal government, the entific or professional journals which is employee must: related to his or her official duties.) (i) Make no mention of his or her of- (3) Material is written or edited ficial title or affiliation with the De- which pertains to any Government- partment, or (ii) Use his or her official title or af- sponsored research or other studies for filiation with the Department and a which clinical case records or other disclaimer as provided in paragraph (c) material of a confidential nature are of this section, or used or to which access is limited for (iii) Submit the material for clear- persons outside the Government. Such ance within the operating component, use will not be permitted unless made under procedures established by the under safeguards established by the op- component. When clearance is denied erating component to retain the con- at any lower level, the employee shall fidentiality of the material, and such have recourse for review up to the head use is determined to be in the public of the principal operating component. interest. This clearance will show there are no § 73.735–706 Teaching, lecturing, and official objections to the activity and speechmaking. the employee may then use his or her official title or affiliation with the De- (a) Employees are encouraged to en- partment usually without a disclaimer. gage in teaching and lecturing activi- (c) Disclaimers. (1) Except where the ties which are not part of their official requirement for disclaimer is waived as duties when certain conditions are a result of official clearance, dis- met. These conditions, which apply to claimers shall be used in all writing outside teaching and lecturing (includ- and editing related to the employee’s ing giving single addresses such as official duties or other responsibilities commencement and Memorial Day and programs of the Federal govern- speeches) whether or not done for comment: pensation, are: (i) In which the employee identifies (1) No Government-financed time, or himself or herself by official title or af- Government supplies not otherwise filiation with the Department, or available to the public, are used in con- (ii) When the prominence of the em- nection with such activity; ployee or the employee’s position (2) Government travel or per diem might lead the public to associate him funds are not used for the sole purpose or her with the Department, even with- of obtaining or performing such teach- out identification other than name. ing or lecturing; (2) Disclaimers shall read as follows (3) Such teaching or lecturing is not unless a different wording is approved dependent on specific information by the Assistant General Counsel, which would not otherwise be available Business and Administrative Law Divi- to the public;

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(4) Teaching, lecturing, or writing would be likely to embarrass the De- may not be for the purpose of the spe- partment; or cial preparation of a person or class of (3) Serve in capacities involving persons for an examination of the Of- them as representatives of non-Govern- fice of Personnel Management or Board ment organizations in dealing with the of Examiners for the Foreign Service, Government. that depends on information obtained (b) In undertaking any office or func- as a result of the employee’s Govern- tion beyond ordinary membership in a ment employment, except when that professional association, a Department information has been made available to employee must obtain advance ap- the general public or will be made proval in accordance with § 73.735–708 of available on request; this subpart in any situation in which (5) Such activities do not involve his or her responsibilities as an officer knowingly instructing persons on deal- would relate to his or her official du- ing with particular matters pending be- ties or would create a real or apparent fore Government organizations with conflict of interest with responsibil- which the employee is associated in an ities as a Department employee. For official capacity; example, advance administrative ap- (6) Advance approval is obtained proval must be obtained: when required by paragraph (b) of this (1) Before an employee who is respon- section. sible for review and approval of grants (b) Advance approval. Advance ap- or contracts, or is in a supervisory po- proval must be obtained in accordance sition over those who conduct review with § 73.735–708 of this subpart before and approval, may hold office, or be a an employee may: trustee or member of the governing (1) Teach or lecture for an institution board, or the chairman or member of a which has or is likely to have official committee, in any organization which dealings with the bureau or comparable has or is seeking a grant or contract organizational unit in which he or she with the bureau or comparable organi- is employed; zational unit in which he or she is em- (2) Use, for teaching or lecturing pur- ployed; poses, clinical case records or other (2) Before an employee may hold of- material of a confidential nature or to fice in an organization which custom- which access is limited for persons out- arily expresses publicly views on mat- side the Government. Such use will not ters of legislative or administrative be permitted unless made under safe- policy within the specific areas of con- guards established by the operating cern to the Department. component to retain the confidentiality of the material, and such use is § 73.735–708 Administrative approval determined to be in the public interest. of certain outside activities. (a) Scope. As specified in § 73.735–704 § 73.735–707 Holding office in profes- through 707, an employee is required to sional societies. obtain advance administrative ap- (a) Employees may be members of proval to engage in the following out- professional societies and be elected or side activities: appointed to office in such a society. (1) Certain writing or editing activi- Activity in professional associations is ties; generally desirable from the point of (2) Certain types of teaching and lec- view of both the Department and the turing; employee. Employees shall avoid, how- (3) All professional and consultative ever, any real or apparent conflict of services; interest in connection with such mem- (4) Any other outside activity for bership. For example, they must not: which the head of a principal operating (1) Directly or indirectly commit the component or the head of a sub-unit of Department or any portion of it on any a principal operating component im- matter unless such action is taken in poses internal requirements for admin- an official capacity; istrative approval; and (2) Permit their names to be attached (5) Certain office-holding activities in to documents the distribution of which professional societies.

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(b) Requests for Administrative Ap- counselors, and Schedule C employees proval. An employee seeking to engage in the Office of the Secretary. in any of the activities for which ad- (d) Granting Approval of Certain Ac- vance approval is required shall make tivities. The approving official shall re- a written request for administrative view each request submitted under approval a reasonable time before be- paragraph (b) of this section, and ap- ginning the activity. (See § 73.735– praise each request on the basis of the 202(e)(1)). This request should be di- standards of this part and all other ap- rected to the employee’s supervisor plicable laws, regulations or internal who will forward it to the official au- rules of the principal operating compo- thorized to approve outside work re- nent or sub-unit thereof. He or she quests for the employee’s component. should consult with a deputy ethics The request should include the following information: counselor or the Department Ethics (1) Employee’s name, position title, Counselor in all cases that raise a dif- grade or rank; ficult or novel question of law or fact. (2) Nature of the activity, fully de- The approving official shall approve or scribing the specific duties or services disapprove each request and commu- for which approval is requested; nicate his or her decision in writing to (3) Name and business of person or the employee. organization for which work will be done, or statement that work will be § 73.735–709 Annual reporting of out- self-employment. If self-employment, side activities. employee must state whether activity By September 10 of each year the ap- will be conducted alone or with part- proving official shall require a report ners; from each person for whom outside (4) Place where work will be per- work has been approved during the formed; past year. The report shall show: (5) Estimated total time to be de- (a) For the 12 months just past (end- voted to activity. If on a continuing ing August 31): basis, indicate estimated time per year (1) Whether the anticipated work was and the anticipated termination date; actually performed for the person or (6) Whether services can be per- organization named in the request for formed entirely outside of usual duty hours. If not, the estimated number of approval; hours absent from work should be indi- (2) Actual amount of time spent on cated; the activity. (7) Method or basis of compensation (b) For the forthcoming 12 months if any (e.g., fee, per diem, per annum, (ending August 31): or other). (1) Whether it is anticipated that the (8) Where an employee seeks approval outside work will continue; to provide consultative or professional (2) Whether any change is anticipated services to organizations including with respect to information supplied in governments which have been awarded accordance with the original request or may apply for a Federal grant or on which approval was based. contract, the request shall also include full details on any aspect of the profes- § 73.735–710 Maintenance of records. sional and consultative services which The official responsible for the ad- could relate in any way, either directly ministrative aspects of these regula- or indirectly, to grant applications, contract proposals, program reports, tions (§ 73.735–202) shall make provi- and other material which are designed sions for the retention and filing of re- to become the subject of dealings bequests for approval of outside work (or tween the grantee or contractor and copies of such requests), a copy of the the Government. (See § 73.735–704(a)(2)) notification of approval or disapproval, (c) The Department Ethics Counselor and the annual report. will review and approve outside work requests for Executive level officers, non-career executives, deputy ethics

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Subpart H—Financial Interest Example 2: An employee is on a leave of absence from a university. He or she would vio- § 73.735–801 Participation in matters late 18 U.S.C. 208 by participating in the affecting a personal financial inter- drafting of regulations which would have a est. ‘‘direct and predictable effect’’ upon universities in general and, therefore, upon the em- (a) An employee shall not participate ployee’s university. personally and substantially as a Gov- ernment employee in a matter in which (3) An employee must know that the any of the following individuals or or- financial interest exists in order to vio- ganizations has a financial interest: late 18 U.S.C. 208. (1) The employee; Example: An employee inherited a bene- (2) The employee’s spouse; ficial interest in a trust. He or she does not, (3) The employee’s minor child; however, have actual knowledge of the spe- (4) An organization in which the em- cific property held by the trustee. If the ployee serves as an officer, director, trust contains stock in a corporation which trustee, partner, or employee; or may be affected by the employee’s official (5) A person or organization with actions, he or she would not violate 18 U.S.C. which the employee is negotiating for 208 in taking official action affecting the prospective employment or has an ar- corporation. rangement for prospective employ- (4) Negotiation for prospective em- ment. Criminal penalties may be im- ployment includes both an indication posed under 18 U.S.C. 208 for violations of interest on the part of the employee of the prohibition. in working for an organization and an (b) Applying the provision of 18 affirmative action on the part of the U.S.C. 208: organization to show consideration of (1) A ‘‘financial interest’’ is any in- the employee. terest of monetary value which may be directly and predictably affected by Example 1: An employee of the Department the official action of an employee. sends resumes and cover letters to fifty pro- There is no minimum amount of value spective employers, all of whom regularly have dealings with HHS. Forty employers do or control that constitutes a financial not respond; however, ten respond with cor- interest. dial form letters stating that the employee’s Example 1: An employee owns a single resume will be retained for future reference. share of stock in a widely-held corporation. For purposes of the 18 U.S.C. 208 prohibition, If the corporation is likely to be affected by the employee is negotiating for prospective a matter in which the employee participates employment at the time he or she sends re- as a Government official, the employee may sumes. violate 18 U.S.C. 208. Example 2: At a site visit to a grantee insti- Example 2: An employee has a paid part- tution, an employee who is officially respon- time position with a non-federal organiza- sible for a grant to that institution informs tion. If the organization is likely to be af- an officer of the institution that he or she is fected by a matter in which the employee seeking a new position outside HHS. The participates as a Government official, the grantee subsequently makes a conditional employee would violate 18 U.S.C. 208. offer of employment to the employee who promptly responds by asking for an oppor- (2) The prohibition of 18 U.S.C. 208 tunity to discuss salary and related matters. applies to personal and substantial in- Under these circumstances, a negotiation for volvement by an employee in a matter, prospective employment is underway. exercised through decision, approval, (c) An employee may obtain approval disapproval, recommendation, inves- to participate in his or her official ca- tigation, giving advice, or other sig- pacity in a matter in which he or she nificant effort regarding the matter. has a direct or indirect financial inter- Example 1: An employee is a member of a est, if the interest is not so substantial panel that evaluates proposals for contracts as to affect the integrity of his or her and makes recommendations as to their official duties. An employee who be- award. If the employee’s spouse owns stock lieves that such participation is war- in a company which submits a proposal that ranted should follow the procedures in is reviewed by the panel, the employee would violate 18 U.S.C. 208 even though the panel § 73.735–804. recommendation may be rejected by the con- (d) An employee convicted of vio- tracting officer. lating 18 U.S.C. 208 may be fined up to

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$10,000, or imprisoned up to two years, pany or companies with which he or or both. she in the course of his or her official duties would be likely to have procure- § 73.735–802 Executive order prohibi- ment or contracting relationships. tions. (2) A procurement or contracting of- (a) Basic prohibition of Executive Order ficer may not hold shares in a mutual 11222. (1) An employee shall not have a fund or other regulated investment direct or indirect financial interest company that specializes in holdings in that conflicts substantially, or appears industries with which such officer to conflict substantially, with his or would be likely to have procurement or her duties as a Federal employee. contracting relationships. (2) An employee need not have a financial interest that actually conflicts Example: A contracting officer in the So- cial Security Administration owns shares in with his or her duties to violate the the XYZ Mutual Fund which specializes in prohibition of E.O. 11222. Any financial stock in firms manufacturing electronic data interest that could reasonably be processing equipment. Ownership of XYZ viewed as an interest which might Mutual Fund shares would be prohibited in compromise the employee’s integrity, this instance. On the other hand, a con- whether or not this is in fact true, is tracting officer for a Public Health Service subject to this prohibition. hospital, who is not likely to have responsi- (3) Except as provided in § 73.735–802 bility for major contracts relating to electronic data processing, could hold such (b) and (c), an employee who has an in- shares. direct financial interest in a business entity through the ownership of shares § 73.735–803 Prohibition against in- in a widely-held mutual fund or other volvement in financial transactions regulated investment company will not based on information obtained violate E.O. 11222. Stocks in business through Federal employment. entities held by an intermediary such An employee shall not engage in, di- as a mutual fund are generally too re- rectly or indirectly, a financial trans- mote or inconsequential to affect the action as a result of, or in primary reli- integrity of an employee’s services. ance upon, any information gained (b) Employees in regulatory activities. through his or her official duties. Infor- (1) An employee who is working in a mation gained through official duties regulatory activity shall not have a fi- are those facts and other data that re- nancial interest in any company whose late to the employee’s official duties or business activities are subject to the to the functions of the employing com- regulations of the particular activity ponent and would not be available to with which the employee is associated, the employee were he or she not an of- unless the regulated activities of the ficer of the Federal government. company are an insignificant part of its total business operations. Example 1: An employee working part-time for a consulting firm that does no business (2) An employee working in a regu- with the employee’s principal operating latory activity may not hold shares in component, in the area of health care plan- a mutual fund or other regulated in- ning advises it, based upon his or her knowl- vestment company which specializes in edge of a new health care planning program holdings in industries that are regu- about to be initiated by the Public Health lated by the particular activity in Service. The employee’s knowledge of the which he or she is employed. program was acquired solely through reading policy statements and other PHS literature Example: An employee working for the Bu- available to the public under the Freedom of reau of Laboratories, Centers for Disease Information Act. In such case, the employee Control, may not hold shares in a regulated would not violate this regulation if the out- investment company which specializes in side activity was otherwise approvable under holdings that include medical testing labora- Subpart G. tories. Example 2: A contracting officer with de- (c) Employees having procurement or tailed knowledge of a negotiated procurement contract invests in a corporation that contracting responsibilities. is likely to indirectly profit from the award (1) An employee who serves as a proof that contract. The officer’s decision to in- curement or contracting officer shall vest is based upon technical details of the not have a financial interest in a com- successful contract proposal that would not

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otherwise be available to a private citizen. conduct to be followed in a matter that The officer would violate this regulation in may involve an actual or apparent con- such a situation. flict of interest, he or she should immediately consult with his or her super- § 73.735–804 Waiver of the prohibitions in this subpart. visor or a deputy ethics counselor, or both. If a supervisor who is consulted (a) An employee may request ap- determines that the matter warrants proval to participate in his or her offi- further consideration, he or she may, cial capacity in a matter in which he in conjunction with the employee, sub- or she has a direct or indirect financial mit the details of the matter, in writ- interest if the employee believes the ing, to the appropriate deputy ethics interest is so remote and inconsequen- counselor. These details should include tial that it would not affect the integ- a description of: rity of his or her official duties. Also (1) The activity, relationship, or in- an employee who has a financial inter- terest giving rise to the question posed est that would otherwise be prohibited under these regulations may request an by the employee; exemption from the prohibition for the (2) The duties or official responsibil- reason stated in the preceding sen- ities of the employee(s) involved; tence. (3) The nature of the actual or appar- (b) The request shall be in writing ent conflict of interest; and and shall include the following infor- (4) Any other information that may mation: be helpful in reviewing the problem. (1) Employee’s name, occupational (b) Upon receiving the submission of title, grade or rank and Federal salary; an employee or a supervisor, the dep- (2) Full description of financial inter- uty ethics counselor will develop any est: including whether ownership, serv- additional information about the mat- ice as officer, partner, etc.; ter as necessary, and will confer with (3) Business or activity in which fi- the Department Ethics Counselor as nancial interest exists; appropriate. The Department Ethics (4) Description of official matter in Counselor and the head of the principal which employee is requesting approval operating component or his or her des- to participate; ignee will be informed of any serious (5) Basis for requesting determina- violation of the standards of this sub- tion that the interest is ‘‘not so subpart or any other conflict of interest stantial as to be deemed likely to af- law. Questions of first impression or fect the integrity of the services which other unusual matters shall be brought the Government may expect.’’ (If based to the attention of the Department on a small total value of investment, Ethics Counselor and the head of the supply appropriate information on principal operating component or his total value, such as total shares held or her designee. and latest quoted market price. If (c) On the basis of all information other basis, explain fully.) gathered including, where appropriate, The request should be sent through the advice of the Department Ethics usual administrative channels to the Counselor, the deputy ethics counselor official responsible for reviewing finan- will: cial disclosure reports or statements (1) Decide that there is no violation for the employee’s organization (Sub- or potential violation of the standards part I). That official, after conferring of this subpart or any other law and so with a deputy ethics counselor or with notify the employee and his or her su- the Department Ethics Counselor as pervisor in writing; or appropriate, will make a decision (2) Decide that a violation or poten- about the exemption or exception and tial violation of the standards of this inform the employee in writing. subpart or other law has occurred or may occur, and that the employee in- § 73.735–805 Advice and guidance on volved shall take one or more of the conflicts matters. steps set forth in § 731.735–904 to resolve (a) Whenever an employee has a ques- the problem and notify the employee tion about the appropriate course of and his or her supervisor in writing; or

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(3) Decide that, although no violation rate of pay (excluding ‘‘step’’ increases) of this subpart or other law has oc- under other pay schedules is equal to, curred, the nature of the matter is or greater than, the rate for GS–16 such that the employee should periodi- (step 1); cally report any additional information (2) Members of the uniformed serv- that would require reconsideration of ices whose pay grade is 0–7 or above; the initial submission. (3) Officers and employees in any other positions determined by the Di- § 73.735–806 Documentation and publi- rector of the Office of Government Eth- cation of opinions. ics to be of equal classification to GS– (a) The Department Ethics Coun- 16; selor, deputy ethics counselors, and (4) Administrative Law Judges; any other individuals required to be in- (5) Employees in the excepted service volved in the review and resolution of in positions which are of a confidential violations or potential violations of or policy-making character, unless this subpart shall maintain full and ac- their position has been excluded by the curate documentation of the formal ad- Director of the Office of Government vice and guidance given. Ethics; (b) From time to time, the Depart- (6) Department Ethics Counselor; and ment Ethics Counselor shall publish (7) Deputy Ethics Counselors. summaries of advisory opinions issued An employee who thinks that his or by his or her office, deleting, as nec- her position has been improperly in- essary, any personal identifiers or cluded under the reporting require- other information which may give rise ments of this part may obtain a review to an unwarranted invasion of personal of that determination by writing to the privacy. These summaries shall be dis- Department Ethics Counselor. tributed to all deputy ethics coun- (b) Filing Dates. Employees listed in selors, heads of principal operating § 73.735–901 (a) of this subpart shall file components, and principal regional of- a financial disclosure report: ficials. (1) Within 5 days after the trans- (c) From time to time, the Depart- mittal by the President to the Senate ment Ethics Counselor shall publish an of their nomination to a position re- index of all summaries issued in acquiring Senate confirmation, or cordance with paragraph (b) of this sec- (2) Within 30 days after assuming a tion, and shall distribute these indexes covered position not requiring Senate to all deputy ethics counselors and confirmation unless the employee has heads of principal operating compo- left another covered position listed in nents who shall in turn make them § 73.735–901 (a) of this subpart, or available for review by supervisors and (3) Within 30 days after terminating interested employees. Federal employment or assuming a position which is not listed in § 73.735–901 Subpart I—Reporting Financial (a) of this subpart; and Interests (4) By May 15 of each calendar year, unless the employee has in that cal- § 73.735–901 Reporting requirement of endar year already submitted a finan- the Ethics in Government Act of cial disclosure report covering the pre- 1978. ceding calendar year. (a) Applicability. The following em- (c) Submission of reports. (1) Executive ployees and special Government em- level officers, non-career executives, ployees shall submit public financial deputy ethics counselors and Schedule disclosure reports in accordance with C employees in the Office of the Sec- the provisions of Title II of the Ethics retary who are required to report in ac- in Government Act of 1978, Pub. L. 95– cordance with § 73.735–901 (a) of this 521, as amended: subpart shall submit their reports to (1) Officers and employees (including the Department Ethics Counselor. consultants who will work more than (2) All other employees required to 60 days in a calendar year) whose posi- report in accordance with § 73.735–901 tions are classified at GS–16 or above of (a) of this subpart shall submit their the General Schedule, or whose basic reports to the reviewing official for

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their organizational component under impact on the interest of any non-Fed- procedures described in the Depart- eral enterprise. ment’s Personnel Manual. Personnel (2) Incumbents of any other positions offices will keep a list of reviewing offi- designated by the head of the principal cials and will give each covered em- operating component, or by the Assist- ployee the name of the official to ant Secretary for Management and whom his or her report should be sent. Budget for the Office of the Secretary, (d) Review and certification of reports. to report employment and financial in- (1) Each report submitted in accord- terests in order to protect the integrity ance with this section shall be re- of the Government and to avoid pos- viewed by the appropriate reviewing of- sible conflicts of interest. The designa- ficial within 60 days of its receipt. tion of any such positions below the Upon reviewing a report and finding GS–13 grade must be approved by the that the information contained therein Office of Personnel Management. reveals no conflict of interest or other (3) All experts, consultants, or advi- violation of any provision of this part sory committee members who are not or applicable law, the reviewing officer required to submit a public financial shall certify the report with his or her disclosure report in accordance with signature. the Ethics in Government Act except: (2) The certification of a report filed (i) Doctors, dentists and allied med- in accordance with this section shall ical specialists performing services for, have the concurrence of the Office of or consulted as to the diagnosis or the General Counsel. treatment of, individual patients; or (3) Action to be taken by the review- (ii) Veterinarians performing services ing official if the individual is not in for or consulted as to care and service compliance with applicable laws and to animals. regulations is discussed in § 73.735–903 (b) Filing dates. (1) Experts, consult- and § 73.735–904. ants, and advisory committee members shall file a confidential Statement of § 73.735–902 Reporting requirements Employment and Financial Interest no for certain employees not covered later than the date employment com- by the Ethics in Government Act of mences and shall file supplemental 1978. statements as necessary to keep all in- (a) Applicability. The following em- formation submitted current and accu- ployees and special Government em- rate. ployees shall submit confidential state- (2) Other individuals covered by ments of employment and financial in- § 73.735–902 (a) of this subpart shall: terests in accordance with the provi- (i) File a confidential statement no sions of this subpart, provided they are later than 30 days after assuming a not required to submit financial disclo- covered position unless the employee, sure reports under § 73.735–901. A list of within 30 days before assuming the po- the positions in this Department whose sition, left another covered position in incumbents are required to file finan- HHS that is included in § 73.735–901(a) cial interest statements as prescribed or § 73.735–902(a) of this subpart; and by this subpart is available for review (ii) Report changes in or additions to in all of the Departments servicing per- the information in the statement as of sonnel offices. June 30 of each calendar year, or a dif- (1) Officers and employees in posi- ferent date set by employee’s compo- tions classified at GS–13 or above (or nent with authorization by the Office comparable pay level) who have deci- of Personnel Management. sion-making responsibility for the fol- (c) Submission and review of financial lowing matters: statements. (1) Heads of principal oper- (i) Contracting or procurement, ating components, the Assistant Sec- (ii) Administering or monitoring retary for Management and Budget, grants or subsidies, and principal regional officials for em- (iii) Regulating or auditing private or ployees under their appointing author- other non-Federal enterprises, or ity shall establish procedures to ensure (iv) Other activities where the deci- that financial statements from covered sion or action would have an economic employees are received and updated on

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a timely basis and are referred to the ever, should the date be later than 90 appropriate reviewing officials for re- days after the reporting individual is view and certification. (See § 73.735–202 notified of the reviewing official’s opin- (e)(1)). ion. (2) The reviewing official shall review (d) If steps for assuring compliance statements to determine whether con- with applicable laws and regulations flicts of interest or apparent conflicts are not taken by the date set in para- might arise from the activities re- graph (c) of this section, the matter ported thereon. If the review discloses shall be referred to the Department no conflict or apparent conflict, the re- Ethics Counselor. viewing official shall certify the statement with his or her signature. Action § 73.735–904 Resolution of apparent or to take if the individual is not in com- actual conflicts of interest. pliance with applicable laws and regu- (a) Disqualification from partici- lations is discussed in § 73.735–903 and pating in a particular matter or cat- § 73.735–904. egory of matters is an appropriate method for resolving apparent or ac- § 73.735–903 Action if conflicts of inter- tual conflicts of interest when the in- est or possible conflicts are noted. terest or activity giving rise to the (a) If after reviewing a financial dis- problem: closure report or a financial interest (1) Bears a direct or indirect relation- statement, a reviewing official believes ship to particular, identifiable duties that additional information is needed, of the employee involved; and he or she shall tell the individual sub- (2) Is not so substantial as to affect mitting such report what additional in- or give the appearance of affecting the formation is required and the time by integrity of the services which the which it must be submitted. Government may expect of the em- (b) If the reviewing official is of the ployee. Whenever disqualification is opinion that, on the basis of informa- employed to resolve an apparent or action submitted, the reporting indi- tual conflict of interest, the disquali- vidual is not in compliance with appli- fied employee shall sign a written cable laws and regulations, he or she statement reflecting the scope of the shall notify the individual, afford him disqualification and the precise nature or her a reasonable opportunity for a of the conflicting interest or activity. written or oral response, and after con- The reviewing official shall keep a file sideration of such response, determine of all such disqualification statements whether or not the individual is in and shall monitor compliance with compliance. these statements on a regular basis. (c) If the reviewing official deter- (b) Change of assignment is an appro- mines that an individual is not in com- priate method for resolving apparent or pliance with applicable laws and regu- actual conflicts of interest when the lations, he or she shall notify the indi- interest giving rise to the problem vidual of that determination in writing bears a direct or indirect relationship and, after an opportunity for personal to particular, identifiable duties of the consultation, determine and notify the employee involved, and those duties individual of the action, including constitute a significant portion of the those actions set forth in § 73.735–904, employee’s position. that would be appropriate to assure (c) Waiver under 18 U.S.C. 208(b) is an compliance with such laws and regula- appropriate method for resolving ap- tions, and the date by which such ac- parent or actual conflicts of interest tion should be taken. The action re- when: quired and the date for taking it shall (1) The employee seeking the waiver be determined by the nature of the fi- reported the financial interest that nancial interest or other relationship, bears some relationship to his or her the particular circumstances of the re- official duties, and the reviewing offi- porting individual (including his or her cial, in consultation with a deputy eth- ability to resolve the problem), and ics counselor or the Department Ethics other factors which the reviewing offi- Counselor, determines that the financial deems relevant. In no case, how- cial interest is not so substantial as to

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be deemed likely to affect the integrity are covered by the provisions of this of the services which the Government subpart irrespective of: may expect from such employee; or (1) The title by which designated; (2) By general rule or regulation pub- (2) The statutory authority under lished in the FEDERAL REGISTER, the which services are obtained; Department has exempted the financial (3) The duration of the period for interest from the requirements of 18 which services are obtained; U.S.C. 208 and this part as being too re- (4) Whether services are obtained by mote or too inconsequential to affect appointment or invitation and accept- the integrity of the Government offi- ance; cers’ service. (5) Whether services are compensated (d) A trust containing a financial in- or rendered without compensation; terest which may give rise to an appar- (6) Whether or not services are ob- ent or actual conflict of interest is an tained pursuant to a statute excepting appropriate method of resolving such employees or special Government em- conflicts when: ployees from conflict of interest stat- (1) The trust is qualified under sec- utes. tion 202(f) of the Ethics in Government (b) When the service is for less than Act of 1978 (Pub. L. 95–521), as amended, 130 days in a service year, experts, con- and subject to the regulations of the sultants, and advisory committee Office of Government Ethics; or members are included in the group of (2) In the opinion of the Depart- employees designated by law (18 U.S.C. ment’s Ethics Counselor, it is suffi- 202) as ‘‘Special Government employ- ciently independent of the employee ees.’’ involved so that the integrity of the employee’s services to the Government § 73.735–1002 Ethical standards of conduct. are not compromised. (e) Divestiture is an appropriate meth- (a) Like other Federal employees, an od for resolving actual conflicts of in- individual serving in a consultant ca- terest when the nature of the financial pacity must conduct himself or herself interest is such that the conflict of in- according to ethical behavior standards terest cannot be adequately resolved of the highest order. In particular, such by any of the methods set forth in an individual must: paragraphs (a), (b), (c), and (d) of this (1) Refrain from any use of office section. which is, or appears to be, motivated (f) Terminating an appointment as a by a private gain for himself or herself method for resolving an actual conflict or other persons, particularly those of interest should be used only when it with whom he or she has family, busi- is clear that no other remedy can be ness, or financial ties. The fact that de- found which would be acceptable to sired gain, if it materializes, will not both the Department and the em- take place at the expense of the Gov- ployee. Generally, this method will be ernment makes his or her actions no employed only in the most extreme less improper. cases. Such a termination would be (2) Conduct himself or herself in a subject to adverse action. manner devoid of any suggestion that he or she is exploiting Government employment for private advantage. A con- Subpart J—Provisions Relating to sultant must not, on the basis of any Experts, Consultants and Ad- inside information, enter into any visory Committee Members speculation or recommend speculation to members of his or her family or § 73.735–1001 Coverage. business associates, in commodities, (a) For purposes of this subpart the land, or the securities of any private title ‘‘consultant’’ will be used to in- company. This injunction applies even clude those who are appointed to serve though the consultant’s duties have no as experts, consultants or members of connection whatever with the Govern- advisory committees. All persons who ment programs or activities which may serve as an employee of the Govern- affect the value of such commodities, ment in the capacity of a consultant land, or securities. He or she should be

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careful in all personal financial activi- consultant who is a special Govern- ties to avoid any appearance of acting ment employee is not considered out- on the basis of information obtained in side work for purposes of Subpart G. the course of his or her Government Also, the limitation in § 73.735–701(f) re- work. garding the amount of an honorarium (3) Refrain from using information that may be received does not apply to not generally available to those out- special Government employees. side the Government for the special (c) A consultant who has questions benefit of a business or other entity by about conflicts of interest or the appli- which the consultant is employed or cation of the regulations in this part to retained or in which he or she has a fi- him or her or to his or her assigned nancial interest. Information not avail- work should make inquiry of the per- able to private industry should remain son for whom services are provided. confidential in the consultant’s hands That person may direct the consultant and not be divulged to his or her pri- to the Department Ethics Counselor or vate employer or clients. In cases of a deputy ethics counselor for interpre- doubt whether information is generally tative and advisory services as pro- available to the public, the consultant vided in § 73.735–202. should confer with the person for whom he or she provides services, with the of- § 73.735–1003 Conflicts of interest stat- fice having functional responsibility utes. for a specific type of information, or, (a) Each consultant should acquaint as appropriate, with the officials des- himself or herself with sections 203, 205, ignated in § 73.735–202 to give interpre- 207 and 208 of title 18, United States tive and advisory service. Code, all of which carry criminal pen- (4) Where requested by a private en- alties related to conflicts of interest. terprise to act for it in a consultant or The restraints imposed by the four advisory capacity and the request ap- criminal sections are summarized in pears motivated by the desire for inside paragraphs (b) and (c) of this section. information, make a choice between (b) 18 U.S.C. 203 and 205. acceptance of the tendered private em- (1) These two sections in general op- ployment and continuation of his or erate to preclude a person who works her Government consultancy. He or she for the Government, except in the dis- may not engage in both. charge of his or her official duties, (5) Not use his or her position in any from representing anyone else before a way to coerce, or give the appearance court or Government agency in a mat- of coercing, anyone to provide a finan- ter in which the United States is a cial benefit to him or her or another party or has a direct and substantial person, particularly one with whom the interest. The prohibition applies consultant has family, business, or fi- whether or not compensation is re- nancial ties. ceived for the representation. However, (6) Not receive or solicit anything of if the individual is a special Govern- value as a gift, gratuity, loan, enter- ment employee, this restriction applies tainment, or favor for himself or her- only if: self or another person, particularly one (i) The representation involves a with whom he or she has family, busi- matter in which the individual has at ness, or financial ties if the acceptance any time participated personally and would result in loss of complete inde- substantially in the course of his or her pendence or impartiality in serving the Government employment; or Government. All consultants are sub- (ii) The individual has served the De- ject to the restrictions in § 73.735–506 of partment for more than 60 days in the this part concerning gifts and decora- immediately preceding period of 365 tions from foreign governments. days, and the matter is one which is (b) Consultants may engage in other pending before the Department. This employment so long as there is no real second restraint applies whether or not or apparent conflict between the con- the matter is one in which the indi- sultant’s private employment and his vidual participated personally and sub- or her official duties. See § 73.735 Sub- stantially in his or her Government part G. The regular employment of a employment. These two provisions

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apply to a special Government em- had served more than 60 days in the ployee on days when he or she does not past year. This provision gives the serve the Government as well as on the head of a department the authority, days when services are rendered, and notwithstanding any prohibition in ei- they apply to both paid and unpaid rep- ther section 203 or 205, to allow a spe- resentation. cial Government employee to represent (2) To a considerable extent the pro- before such department or agency ei- hibitions of sections 203 and 205 are ther his or her regular employer or an- aimed at the sale of influence to gain other person or organization in the per- special favors for private businesses formance of work under a grant or con- and other organizations and at the mis- tract. As a basis for this action, the use of governmental position or infor- Secretary must first make a certifi- mation. In accordance with these aims, cation in writing, published in the FED- a consultant, even when not compelled ERAL REGISTER, that it is required by to do so by sections 203 and 205, should the national interest. make every effort in his or her private (4) Section 205 contains two other ex- work to avoid any personal contact emptive provisions, which apply to with respect to negotiations for con- both special and regular Government tracts or grants with the component of employees. See § 73.735–702. the department in which he or she is (c) 18 U.S.C. 207 applies to individuals serving, if the subject matter is related who have left Government service. See to the subject matter of his or her Subpart N of these regulations. consultancy or other service. This will not always be possible to achieve (d) 18 U.S.C. 208 bears on the activi- where, for example, a consultant has ties of Government personnel, includ- an executive position with his or her ing special Government employees, in regular employer which requires him the course of their official duties. In or her to participate personally in con- general, it prevents a Government em- tract negotiations with the department ployee from participating as such in a or agency he or she is advising. When- particular matter in which, to his or ever this is the case, the consultant her knowledge, he or she, his or her should participate in the negotiations spouse, minor child, partner, or a profit for his or her employer only after ad- or non-profit enterprise with which he vising the responsible Government offi- or she is connected has a financial in- cial of his or her involvement in other terest. However, the section permits an matters in the Department. In other employee’s agency to grant him or her instances an occasional consultant an ad hoc exemption if the interest is may have technical knowledge which is not so substantial as to affect the in- indispensable to his or her regular em- tegrity of his or her services. Insignifi- ployer in his efforts to formulate a re- cant interests may also be waived by a search and development contract or a general rule or regulation. The matters research grant, and for the same rea- in which special Government employ- son, it is in the interest of the Govern- ees are disqualified by section 208 are ment that the consultant should take not limited to those involving a spe- part in negotiations for his or her pri- cific party or parties in which the vate employer. Again, the individual United States is a party or has an in- should participate only after advising terest, as in the case of sections 203, 205 the responsible Government official of and 207. Section 208 therefore extends the relevant facts. to matters in addition to contracts, (3) Section 205 permits both the Gov- grants, judicial and quasi-judicial pro- ernment and the private employer of a ceedings, and other matters of an ad- special Government employee to ben- versary nature. Accordingly, a special efit, in certain cases, from his or her Government employee, like all govern- performance of work under a grant or ment employees, should in general be contract for which he or she would oth- disqualified from participating as such erwise be disqualified because of hav- in a matter of any type the outcome of ing participated in the matter for the which will have a direct and predict- Government or because it is pending in able effect upon the financial interests a component in which the consultant covered by the section.

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However, the power of exemption may The Indiana University system consisting be exercised in this situation if the spe- of eight universities on nine campuses, with cial Government employee renders ad- the exception of the system-wide schools: the vice of a general nature from which no School of Business; the School of Dentistry; the School of Medicine; the School of Nurs- preference or advantage over others ing; and the School of Public and Environ- might be gained by any particular per- mental Affairs. son or organization. The power of ex- The University of Nebraska system con- emption may also be exercised where sisting of the University of Nebraska—Lin- the financial interests involved are coln, the University of Nebraska at Omaha, minimal in value. and the University of Nebraska Medical Cen- ter. § 73.735–1004 Requesting waivers or The campuses of the State University of exemptions. New York. The Oregon system of higher education (a) A consultant may present in writ- consisting of the University of Oregon, Or- ing to the official for whom he or she egon State University, Oregon Health provides services requests for the waiv- Sciences University, Portland State Univer- ers or exemptions specified in § 73.735– sity, Western Oregon State College, South- 1003. That official will take, or refer ern Oregon State College, Eastern Oregon the request for, action as appropriate, State College, and the Oregon Institute of and will see that the employee receives Technology. The campuses of the University of Ten- advice or decision on his or her re- nessee. quest. The separate universities comprising the (b) A file of all waivers or exemptions University of Texas System. granted shall be maintained in such The separate universities comprising the manner that information can be given University of Wisconsin System. promptly on individual cases or statis- (2) Institutions that are not subject to 18 tics provided upon request. Generally, U.S.C. 208(a) and the subpart, because these records, together with written they are not part of the same organization advice given in connection with less within the State. The following State informal requests concerning questions stitutions and systems of higher edu- of ethical standards, are kept with the cation have been determined to be sep- employee’s statement of employment arate from each other to such a degree and financial interests or financial dis- that no waiver is necessary in order to closure report (§ 73.735–1006). permit a faculty member (including (c)(1) Waiver for reviewers from certain Department Chairman) employed by multi-campus institutions. Applicability one of the State institutions of higher of the prohibitions of 18 U.S.C. 208(a) education to review a funding applica- and this subpart are hereby waived tion or contract proposal from another pursuant to a determination that the of the named institutions within that interest involved is too remote or too State: inconsequential to affect the integrity of a special Government employee’s re- The University of Alabama System and view of a funding application or con- other Alabama State owned institutions of higher education. tract proposal from one campus of one The California Community Colleges, the of the following multi-campus institu- California State Universities and Colleges, tions, where the interest consists sole- and the University of California. ly of employment as a faculty member The University of Colorado, Colorado State (including Department Chairman) at a University, and other Colorado State owned separate campus of the same multi- institutions of higher education. campus institution: The University of Connecticut, Con- necticut State University, the Connecticut The University of Alabama system con- Technical Colleges, and the Connecticut sisting of the University of Alabama, the Community Colleges. University of Alabama in Birmingham, and The University of Illinois, Illinois State the University of Alabama in Huntsville. University, Western Illinois University, The campuses of the University of Cali- Southern Illinois University, and the Illinois fornia. Community Colleges. The system consisting of Colorado State The Indiana University and the other Indi- University, the University of Southern Colo- ana State owned institutions of higher edu- rado, and Fort Lewis College. cation.

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The University of Iowa, and Iowa State ment). Erroneous payments in con- University. travention of this provision will be sub- The University of Kansas, Kansas State ject to collection, and any consultant University, Wichita State University, Fort Hays State University, Pittsburg State Uni- who willfully collects double payments versity, and the Kansas Technological Insti- may be barred from further employ- tute. ment. Louisiana State University, and other Lou- isiana State owned institutions of higher § 73.735–1006 Reporting financial in- education. terests. The University of Massachusetts, and other Massachusetts State owned institu- (a) Consultants who will work more tions of higher education. than 60 days in a calendar year are sub- The University of Michigan, Michigan ject to the provisions of title II of the State University, and Wayne State Univer- Ethics in Government Act of 1978 when sity. The University of Minnesota, the Min- their rate of pay is equal to or greater nesota State University System, and the than the basic rate for GS–16, Step 1. Minnesota Community College System. Such consultants are covered by the re- The University of Missouri, and other Mis- porting requirements of § 73.735–901 of souri State owned institutions of higher edu- these regulations. cation. The University of Nebraska, and other Ne- (b) Consultants not subject to the braska State owned institutions of higher Ethics in Government Act shall file education. statements of financial interests as The State University of New York System, provided by § 73.735–902 of these regula- and the City University of New York Sys- tions. tem. The University of North Carolina, North Carolina State, and other North Carolina § 73.735–1007 Political activity. State owned institutions of higher edu- Consultants who serve intermit- cation. tently are subject to the political ac- Pennsylvania State University, the Uni- versity of Pittsburgh, Temple University, tivity restrictions of Subchapter III of Lincoln University, and the other State Chapter 73 of Title 5 U.S.C. and Civil owned colleges and universities in Pennsyl- Service Rule IV only on days on which vania. service is rendered and then for the en- The University of Texas System, the Texas tire 24 hours of such service day. Other A&M System, the Texas State University System, the University System of South consultants are subject to these re- Texas, the Lamar University System, the strictions at all times. University of Houston System, East Texas State University, Stephen F. Austin State Subpart K—Special Government University, West Texas State University, Midwestern University, North Texas State Employees Other Than Con- University, Texas Southern University, sultants Texas Woman’s University, Texas Tech Uni- versity and Pan American University. § 73.735–1101 General provision. The University of Utah and Utah State University. Individuals who are designated as special Government employees because [46 FR 7369, Jan. 23, 1981, as amended at 51 FR 15627, Apr. 25, 1986] of the nature of their services but who are not serving as a consultant, expert, § 73.735–1005 Salary from two sources. or advisory committee member are Special Government employees are subject to the provisions of Subparts B not subject to 18 U.S.C. 209 which pro- through I of these regulations. How- hibits other employees from receiving ever, the provisions of 18 U.S.C. 205, 206, any salary, or supplementation of Gov- 207, and 208 apply to them only as de- ernment salary, from a private source scribed in Subpart J. Also, the limita- as a compensation for services to the tion in § 73.735–701(f) on the amount of Government. This Department will not an honorarium that may be received knowingly pay per diem to a consult- does not apply. ant who also receives per diem pay for the same day from another Govern- ment agency (in or outside the Depart-

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Subpart L—Disciplinary Action use of funds, equipment, or facilities, and other conduct by a government of- § 73.735–1201 General provisions. ficer or employee, grantee, contractor (a) Violations of the regulations con- or other person which is prohibited by tained in the Part may be cause for dis- title 18 of the United States Code. Em- ciplinary action which could be in ad- ployees and supervisors should refer to dition to any penalty prescribed by chapter 5–10 of the Department’s Gen- law. (For a list of some offenses for eral Administration Manual for proce- which disciplinary action may be taken dures regarding the reporting and han- and ‘‘The Code of Ethics for Govern- dling of such information. ment Service,’’ the violation of which may also result in disciplinary action, § 73.735–1302 Responsibility for report- see Appendixes A and B of this Part). ing allegations of misconduct. (b) The type of disciplinary action to An employee who has information be taken must be determined in rela- which he or she reasonably believes in- tion to the specific violation. Those re- dicates the existence of an activity sponsible for recommending and for constituting (a) a possible violation of taking disciplinary action must apply a rule or regulation of the Department; judgment to each case, taking into ac- or (b) mismanagement, a gross waste of count the general objectives of meeting funds, or abuse of authority; or (c) a any requirements of law, deterring similar offenses by the employee and substantial and specific danger to the other employees, and maintaining high public health and safety, shall imme- standards of employee conduct and diately report such information to his public confidence. Some types of dis- or her supervisor, any management of- ciplinary action which may be consid- ficial of the Department, or directly to ered are: the Office of the Inspector General. (1) Admonishment Employees and supervisors should refer (2) Written reprimand to chapter 5–10 of the Department’s (3) Reassignment General Administration Manual for (4) Suspension procedures regarding the reporting and (5) Demotion handling of such information. This sub- (6) Removal section does not cover employee griev- (c) Suspension, demotion, and re- ances, equal employment opportunity moval are adverse actions; and when complaints, classification appeals, or such actions are taken, applicable other matters for which a formal gov- laws, regulations, and policies must be ernment-wide review system has been followed. established by the Federal government. [46 FR 7369, Jan. 23, 1981, as amended at 53 FR 4409, Feb. 16, 1988] § 73.735–1303 Prohibition of reprisals. (a) Any employee who has authority Subpart M—Reporting Violations to take, direct others to take, recommend, or approve any personnel ac- § 73.735–1301 Responsibility for report- tion, shall not, with respect to such au- ing possible criminal violations. thority, take or threaten to take any An employee who has information action against any employee as a re- which he or she reasonably believes in- prisal for making a complaint or pro- dicates a possible offense against the viding any information pursuant to United States by an employee of the §§ 73.735–1301 and 73.735–1302. If the com- Department, or any other individual plaint was made or the information working on behalf of the Department, was disclosed with the knowledge that shall immediately report such informa- it was false, or with willful disregard of tion to his or her supervisor, any man- its truth or falsity, any personnel ac- agement official, or directly to the Of- tion taken against the employee based fice of the Inspector General. Offenses on those reasons would not constitute covered by the preceding sentence include, but are not limited to, bribery, a reprisal action. fraud, perjury, conflict of interest, mis-

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(b) An employee who believes that he organization regardless of his or her or she has been threatened with a per- dealings with that organization while sonnel action, any other action, or har- employed by the Government. It ap- assment or has been harmed by any ac- plies solely to activities, not the mere tion as a reprisal for having made a existence of an employment arrange- complaint or providing information ment. pursuant to § 73.735–1301 or § 73.735–1302 (b) The Office of Government Ethics, may request the Office of the Inspector Office of Personnel Management, has General to review his or her allega- issued Government-wide regulations tions. Whenever the Inspector General covering post-employment conflict of has reason to believe that the allega- interest (5 CFR Part 737). Those regulations may be true, he or she will refer tions are incorporated herein by ref- the matter to the Assistant Secretary erence, and they are available for re- for Personnel Administration for ap- view in personnel offices throughout propriate action. The Assistant Sec- the Department. retary for Personnel Administration may order a stay of any personnel ac- APPENDIX A TO PART 73—LIST OF SOME tion if he or she determines that there OFFENSES FOR WHICH DISCIPLINARY are reasonable grounds to believe that ACTION MAY BE TAKEN the personnel action is being taken as Following is a list of some offenses for a reprisal for making a complaint or which disciplinary action may be taken providing information pursuant to under this Part. When a statute applies spe- § 73.735–1301 or § 73.735–1302. cifically to a particular offense, either wholly or in part, the statute is cited. Neither the § 73.735–1304 Referral of matters aris- list of offenses nor the statutory citations ing under the standards of this are all-inclusive. The ‘‘Code of Ethics for part. Government Service’’ is not cited because of its general applicability but is published in (a) The Department Ethics Counselor its entirety in Appendix B. may refer to the Inspector General for A. Concerning Efficiency of Operations in investigation and/or further action any General. 1. Engaging in wasteful actions or matter arising under the standards of behavior in the performance of assigned du- this part. ties; conducting non-Government business (b) The Department Ethics Counselor during official work hours; or participating may refer to the Office of Government in a strike (18 U.S.C. 1918), work stoppage, slowdown, sickout, or other similar action. Ethics, or the Inspector General may 2. Absence without leave, failure to adhere refer to the Department of Justice, sus- to the rules and regulations for requesting pected violations of the criminal laws and obtaining leave, or improper use of sick regarding employee standards of con- leave. duct and conflicts of interest. 3. Deliberate insubordination or refusal to carry out lawful orders or assignments given. Subpart N—Conduct and Respon- 4. Disruptive behavior, such as: sibilities of Former Employees a. Inflicting or threatening or attempting to inflict bodily injury on another (except § 73.735–1401 Prohibitions against for necessary defense of self or others) while post-employment conflicts of inter- on the job or on Federal premises. est. b. Discourtesy, disreputable conduct, or (a) The purpose of criminal prohibi- use of insulting, abusive or obscene language to or about other individuals while on the tion in 18 U.S.C. 207 is to prevent the job. unfair use of inside knowledge or influ- 5. Sexual harassment of employees or ence that results from Federal service. members of the public. 18 U.S.C. 207 generally prohibits a 6. Failure to observe precautions for safe- former employee from acting as anty, such as failure to use safety equipment other person’s representative to the when it is provided or ignoring signs, posted Government in particular matters in- rules or regulations, or written or verbal volving a specific party or parties in safety instructions. 7. Unauthorized use, possession, or dis- which the employee had been involved tribution of alcoholic beverages (5 U.S.C. while in Federal service. This prohibi- 7352) or controlled substances (e.g., tion does not require a former em- hallucinogens, such as LSD; stimulants, such ployee to decline employment with any as cocaine and amphetamines; sedatives,

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such as barbiturates; narcotics and other 9. Unauthorized use of documents pre- drugs or substances, such as hashish and sented or used to procure the payment of other cannabis substances). money from or by the Government. (18 8. Unauthorized gambling; or canvassing, U.S.C. 285.) soliciting, or peddling on Government prem- 10. Unauthorized use of a Government vehi- ises. cle; serious or repeated violations of traffic 9. Failure to carry or show proper identi- regulations while driving a Government ve- fication or credentials as required by com- hicle or a vehicle rented or leased for official petent authority; misuse of identification Government purposes; reckless driving or cards or investigative or identification cre- improper operation of any Government dentials or badges. owned, rented, or leased motor vehicle. (31 10. Failure to disclose (i.e., report) infor- U.S.C. 1349[b].) mation, when such disclosure is not specifi- 11. Violations of the Privacy Act, includ- cally prohibited by law or Executive Order, ing: that involves (a) violation of law, rule, or a. Willful prohibited disclosure of individ- regulation, (b) mismanagement or gross ually identifiable information in violation of waste of funds or abuse of authority, or (c) 5 U.S.C. 552a. posing a substantial and specific danger to b. Willfully maintaining a system of public health or safety; failure to cooperate records without meeting the notice require- in an official Department inquiry. ments of the Privacy Act as required by 5 11. Failure to pay just debts, including U.S.C. 552a. taxes to and loans from governmental 12. Violation of regulations concerning the sources. release of classified information, confiden- 12. Deceit or interference in a Civil Service tial, or security and investigative informa- examination (18 U.S.C. 1917) or in connection tion. (18 U.S.C. 798 and 1905; 21 U.S.C. 331j; with a Government personnel action. and 50 U.S.C. 783.) 13. Fraud or false statements in a Govern- C. Concerning Conflicts of Interest and Re- ment matter. (18 U.S.C. 1001 through 1003.) lated Unethical Conduct: 1. Violations of 18 14. Supervisory failure to initiate discipli- U.S.C. Chapter 11: Bribery, Graft, and Con- nary or corrective action when the facts are flicts of Interest, including: known and disciplinary or corrective action a. Having a direct or indirect financial in- is warranted. terest (includes employee ownership of 15. Employment of a member of an organi- stocks, bonds, or partnership interests in an zation that advocates the overthrow of our entity or employment of the employee, his constitutional form of government. (5 U.S.C. or her spouse, or dependent child) that con- 7311; 50 U.S.C. 784.) flicts with one’s Government duties because B. Concerning Government Funds, Property, such entity is either regulated by, has or Documents, and Records. 1. Actual or at- seeks to do business with the agency, or has tempted embezzlement or theft of Govern- any other particular matter with or pending ment or personal money or property either before the agency that may give rise to ei- directly or through use of Government docu- ther an actual conflict or the appearance ments, automated equipment, or other thereof. (18 U.S.C. 208.) means; actual or attempted embezzlement or b. Bribery of a public official; soliciting or theft of the money or property of another accepting directly or indirectly anything of person in the possession of an employee by monetary value, including gifts, gratuities, reason of his or her employment. (18 U.S.C. favors, entertainment, or loans either as 641 and 654.) compensation for governmental services or 2. Failure to account for public money. (18 from individuals who are seeking contrac- U.S.C. 643.) tual or other business or financial relations 3. Deliberate falsifying of official time and with the Department, are conducting oper- attendance records; improper use of official ations or activities that are regulated by the travel or forging, counterfeiting, or other- Department, or have interests that may be wise falsifying official Government travel substantially affected by the performance or records or documents. (18 U.S.C. 508.) nonperformance of the employee’s official 4. False record entries or false reports of duties; receiving salary or any contribution money or securities. (18 U.S.C. 2073.) to or supplementation of salary from a pri- 5. Loss or misuse of or damage to Govern- vate source as compensation for services for ment property or endangering persons or the Government. (18 U.S.C. 201 and 209.) Government property through carelessness c. Acting as the agent of a foreign prin- or by willful malicious conduct. cipal registered under the Foreign Agents 6. Mutilating, destroying, or concealing Registration Act. (18 U.S.C. 219.) public records. (18 U.S.C. 2071.) 2. Engaging, directly or indirectly, in a fi- 7. Misuse of penalty (postal) privilege. (18 nancial transaction as a result of or pri- U.S.C. 1719.) marily relying on information that is ob- 8. Failure to safeguard administratively tained through one’s official duties and confidential, financial, and trade secrets in- would not be available were the employee formation. not an employee of the Federal Government.

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3. Soliciting a contribution from another E. Concerning Prohibited Personnel Practices. employee for a gift to an official superior, 1. Commission of a prohibited personnel making a donation as a gift to an official su- practice (as defined in 5 U.S.C. 2302[b] [1–11]); perior, or accepting a gift from an employee that is, any employee who has authority to receiving less pay than oneself. (5 U.S.C. take, direct others to take, recommend, or 7351.) approve any personnel action, shall not, with 4. Engaging, without required permission, respect to such authority, commit any of the in outside activities that result in or create following practices: the appearance of a conflict of interest. a. Discriminate for or against any em- 5. Teaching, lecturing, or writing that de- ployee or applicant for employment on the pends on specific information obtained as a basis of race, color, religion, sex, national or- result of one’s Government employment igin, age, handicapping condition, marital when that information is not otherwise status, or political affiliation. available to the public. b. Solicit or consider any recommendation 6. Failure to obtain required clearance of an official speech or article. or statement, oral or written, with respect 7. Lobbying with appropriated funds. (18 to any individual who requests or is under U.S.C. 1913.) consideration for any personnel action un- 8. Representation before a Federal agency less such recommendation or statement is (other than in the proper discharge of one’s based on the personal knowledge or records official duties) as an agent or attorney in a of the person furnishing it and consists of (1) claim against the United States (or receiving an evaluation of the work performance abil- any gratuity or share in any such claim in ity, aptitude, or general qualifications of considertion for assistance given) or as an such individual or (2) an evaluation of the agent or attorney for anyone before any de- character, loyalty, or suitability of such in- partment, agency, court, or otherwise in dividual. connection with any proceeding, application, c. Coerce the political activity of any per- request for a ruling, or claim on any other son (including the providing of any political particular matter in which the United States contribution or service) or take any action is a party or has a direct and substantial in- against any employee or applicant for em- terest. (18 U.S.C. 205.) (Note: This section ployment as a reprisal for the refusal of any notwithstanding, an employee may, if not in- person to engage in such political activity. consistent with the performance of his or her d. Deceive or willfully obstruct any person official duties, act without compensation as with respect to such person’s right to com- an agent or attorney for another person who pete for employment. is the subject of any disciplinary or other ad- e. Influence any person to withdraw from ministrative proceeding or as an agent or at- competition for any position for the purpose torney for one’s parent, spouse, child, or any of improving or injuring the prospects of any person or estate for whom or which he or she other person for employment. serves as personal fiduciary except in those f. Grant any preference or advantage not matters in which the employee has partici- authorized by law, rule, or regulation to any pated personally and substantially.) employee or applicant for employment (in- D. Concerning Prohibited Political and Elec- cluding defining the scope or manner of com- tion Activities. 1. Activities prohibited by 5 petition or the requirements for any posi- U.S.C. Chapter 73, Subchapter III, including: tion) for the purpose of improving or injur- a. Section 7323, ‘‘Political contributions; ing the prospects of any particular person for prohibition.’’ employment. b. Section 7324, ‘‘Influencing elections; tak- g. Appoint, employ, promote, advance, or ing part in political campaigns; prohibitions; advocate for appointment, employment, pro- exceptions.’’ motion, or advancement, in or to a civilian 2. Activities prohibited by 18 U.S.C. Chap- position any individual who is a relative (as ter 29, including: defined in 5 U.S.C. 3110) when the civilian po- a. Section 594, ‘‘Intimidation of voters.’’ sition is in the Department or under his or b. Section 597, ‘‘Expenditures to influence her jurisdiction or control. voting.’’ c. Section 598, ‘‘Coercion by means of relief h. Take or fail to take a personnel action appropriations.’’ with respect to any employee or applicant d. Section 600, ‘‘Promise of employment or for employment as a reprisal for the lawful other benefit for political activity.’’ disclosure of information. e. Section 601, ‘‘Deprivation of employment i. Take or fail to take any personnel action or other benefit for political contribution.’’ against an employee or applicant for em- f. Section 602, ‘‘Solicitation of political ployment as a reprisal for the exercise of any contributions.’’ appeal right granted by any law, rule, or reg- g. Section 604, ‘‘Solicitation from persons ulation (including HHS Instructions and on relief.’’ issuances). h. Section 606, ‘‘Intimidation to secure po- j. Discriminate for or against any em- litical contributions.’’ ployee or applicant for employment on the

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basis of conduct that does not adversely af- Subpart B—Miscellaneous Provisions fect the performance of the employee or applicant or the performance of others (except 73a.735–201 Control activity employees for- criminal conviction in determining suit- merly associated with organizations sub- ability or fitness). ject to FDA regulation. k. Take or fail to take any personnel action when the taking of or failure to take Subpart C [Reserved] such action violates any law, rule, or regulation implementing, or directly concerning Subpart D—Outside Employment the merit system principles (as set forth in 5 73a.735–401 General provisions. U.S.C. 2301). [53 FR 4410, Feb. 16, 1988] Subpart E—Financial Interests

APPENDIX B TO PART 73—CODE OF 73a.735–501 General provisions. ETHICS FOR GOVERNMENT SERVICE 73a.735–502 Employees in regulatory activities. Any person in Government service should: 73a.735–504 Exceptions. I. Put loyalty to the highest moral principles and to country above loyalty to per- Subparts F–I [Reserved] sons, party, or Government department. II. Uphold the Constitution, laws, and reg- Subpart J—Statements of Employment and ulations of the United States and all govern- Financial Interests ments therein and never be a party to their evasion. 73a.735–1004 Submission and review of state- III. Give a full day’s labor for a full day’s ments. pay, giving earnest effort and best thought AUTHORITY: 45 CFR 73.735–105. to the performance of duties. IV. Seek to find and employ more efficient SOURCE: 43 FR 7619, Feb. 24, 1978, unless and economical ways of getting tasks accom- otherwise noted. plished. V. Never discriminate unfairly by the dis- Subpart A—General Provisions pensing of special favors or privileges to anyone, whether for remuneration or not; and § 73a.735–101 Principles and purpose. never accept, for himself or herself or family members, favors or benefits under cir- (a) To assure that the business of the cumstances which might be construed by Food and Drug Administration (FDA) reasonable persons as influencing the per- is conducted effectively, objectively, formance of governmental duties. and without improper influence or ap- VI. Make no private promises of any kind pearance thereof, all employees must binding upon the duties of office, since a be persons of integrity and observe the Government employee has no private word highest standards of conduct. Because which can be binding on public duty. VII. Engage in no business with the Gov- of FDA’s special regulatory respon- ernment, either directly or indirectly, which sibilities to the consumer and industry, is inconsistent with the conscientious per- its employees must be especially alert formance of governmental duties. to avoid any real or appearance of con- VIII. Never use any information gained flict of their private interests with confidentially in the performance of govern- their public duties. Their actions must mental duties as a means of making private be unquestionable and free from sus- profit. IX. Expose corruption wherever discovered. picion of partiality, favoritism, or any X. Uphold these principles, ever conscious hint of conflicting interests. This sup- that public office is a public trust. plement recognizes FDA’s public obligation to set reasonable and fair safe- [53 FR 4410, Feb. 16, 1988] guards for the prevention of employee conflicts of interest. It is necessary to PART 73a—STANDARDS OF CON- meet FDA’s regulatory responsibilities DUCT: FOOD AND DRUG ADMIN- and to otherwise assure full protection ISTRATION SUPPLEMENT of the public confidence in the integrity of its employees. Subpart A—General Provisions (b) Since FDA is a unique consumer Sec. protection and regulatory agency with- 73a.735–101 Principles and purpose. in the Department, the DHHS Stand- 73a.735–103 Responsibilities. ards of Conduct need further sup- 73a.735–104 Advice and guidance. plementation to reflect this role.

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Therefore, for purposes of imple- ized only under paragraph (e) of this menting the DHHS Standards of Con- section. duct regulations within the FDA, this (b) A control activity employee who supplement provides interpretive defi- was previously employed in a regulated nitions and additional requirements. organization shall not participate in As further guidance to its employees any regulatory action before FDA in and supervisory officials, FDA will which the employee had participated issue internal procedural instructions personally and substantially in behalf in accordance with this supplement. of the former employer organization, § 73a.735–103 Responsibilities. e.g., drug investigations/applications, food additive petitions, matters deal- (a) A ‘‘control activity’’ employee ing with compliance in areas of radi- shall be personally responsible for as- ation-producing products or medical suring that he does not hold an interest devices. Exceptions may be authorized in any organization whose FDA-regulated activities constitute more than only under paragraph (e) of this sec- an insignificant part of its business as tion. defined in § 73a.735–502(b)(2). The Asso- (c) Employment in a regulated orga- ciate Commissioner for Administration nization includes contractual relation- (or his designee) is available to assist ships, e.g., attorneys who may have such employees in obtaining corporate represented an FDA-regulated firm or data necessary to make such a deter- industry or an association of such mination. firms and individuals who may have (b) Other employees are similarly reserved a firm, industry or association sponsible for observing the financial in a consultant capacity. interest retention requirements in (d) Within 30 days after assignment §§ 73a.735–501(b) and 73a.735–502(a)(2). to a control activity position, an employee shall submit to his supervisor § 73a.735–104 Advice and guidance. detailed information concerning (a) The Associate Commissioner for former industry employers, and dates Administration (or his designee) shall and substance of involvement in such provide day-to-day guidance and assist- regulatory matters as may be subject ance to employees and supervisors on to the prohibition in paragraph (b) of matters covered by regulations in Part this action. 73 and this part of this chapter. (e) The Commissioner may grant in- (b) The FDA Conflict of Interest Re- dividual exceptions to paragraphs (a) view Board shall review and make rec- and (b) of this section whenever he de- ommendations to the Commissioner on termines that strict application would requests for exceptions to conflict of not be in the best interests of the interest policies and procedures in reg- United States. A memorandum of any ulations in this part and Part 73 of this exception granted shall be filed for chapter. public inspection in the Public Records and Documents Center, Food and Drug Subpart B—Miscellaneous Administration, Room 4–68, 5600 Fish- Provisions ers Lane, Rockville, Md. 20857, within 10 days after the Commissioner’s deci- § 73a.735–201 Control activity employees formerly associated with orga- sion. The memorandum shall include nizations subject to FDA regulation. the employee’s name, title, grade, summary of official duties, prior pertinent (a) For a period of 1 year after FDA industry involvement, a brief descrip- appointment, or appointment to the Food and Drug Division, Office of the tion of the specific regulatory action in General Counsel, a control activity em- which the employee has been permitted ployee who was employed in a regu- to participate, and a statement ex- lated organization within 1 year before plaining why such strict application of FDA employment shall not participate the subpart would not be in the best in- in any regulatory action before FDA terests of the United States. that involves the former employer organization. Exceptions may be author- Subpart C [Reserved] 213

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Subpart D—Outside Employment work, cook, waiter, waitress, hospital attendant, snack bar vendor, ware- § 73a.735–401 General provisions. houseman. (a) Employees of the Food and Drug (d) All employees will generally be Administration shall obtain advance granted approval to engage in paid or approval for all outside employment, unpaid outside employment which con- whether paid or unpaid. Employment, tributes to their technical or profes- as used in this section, does not in- sional development, e.g., clude: (1) Medical, dental, and veterinary (1) Memberships in charitable, reli- practices. gious, social, fraternal, recreational, (2) Pharmacy practice after meeting public service, civic, or similar non- the following conditions which will business organizations. serve to protect against possible con- (2) Memberships in professional orga- flicts or apparent conflicts of interest nizations. (Officeholding, however, re- and to avoid other problems resulting quires advance approval.) in embarrassment to the employee or (3) Performance of duties in the FDA: Armed Forces Reserve or National (i) The primary purpose of the part- Guard. time employment is to contribute to (b) Control activity employees (de- the overall professional development of fined in § 73a.735–502) will not generally the employee and generally enhance be granted approval to: his capability to better perform his (1) Manage or direct an organization current FDA duties. whose activities are subject to FDA (ii) The part-time duties will be con- regulation, or fined generally to dispensing Rx drugs (2) Be employed in an organization and related professional pharmacy du- whose business activities are subject to ties. FDA regulation unless: (iii) The employee will avoid unre- (i) The regulated activities of the or- lated nonprofessional duties such as su- ganization are an insignificant part of pervision or management of store oper- its total operations, i.e., the regulated ations, contractual or purchasing re- products of the organization constitute sponsibilities (except normal ‘‘out-of- no more than 10 percent of its annual stock’’ requisitioning) and repacking gross sales, and and relabeling of bulk items. (ii) The outside employment is in nonregulated activities of the organi- (iv) The employee will demonstrate a zation. high degree of discretion and judgment (c) All other employees will generally in his contacts with customers and rep- be granted approval to engage in out- resentatives of regulated industry and side employment which is compatible competitor firms so as to avoid giving with the full performance of their FDA the impression that: duties and responsibilities and which (a) His part-time actions, rec- will not give rise to a real or apparent ommendations, opinions, or remarks conflict of interest. Permissible em- are official points of view; ployment includes but is not limited (b) He is using his FDA position for to: private gain by oral misrepresentations (1) Employment where the sale of and false claims of the company’s prod- FDA-regulated products is incidential ucts; to the purpose of the establishment, (c) He is making a Government deci- e.g., hotels, theaters, bowling alleys, sion outside official channels, e.g., to and sports arenas. customers, prescribing physicians, buy- (2) Sales and clerical occupations re- ers, distributors; lating to regulated products, e.g., su- (d) He or other FDA representatives permarkets, drugstores, department will give preferential treatment to any stores, liquor stores. regulated organization or representa- (3) Trade, industrial, and service oc- tives of such organizations, or that cupations relating to regulated prod- FDA employees have not exercised ucts, e.g., gasoline service station at- complete independence or impartiality tendant, line production or assembly in carrying out their regulatory and

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consumer protection responsibilities; cial interest. Such exemptions will be or granted only in exceptional cir- (e) His part-time work is creating an cumstances. Any determination to au- adverse effect on the image of FDA or thorize such exceptions shall be made discrediting the integrity of official in accordance with 18 U.S.C. 208(b)(1) FDA regulatory decisions. and documented for public inspection in accordance with § 73a.735–504. Subpart E—Financial Interests § 73a.735–502 Employees in regulatory § 73a.735–501 General provisions. activities. (a) No restrictions are placed on own- (a) An employee in regulatory activi- ership of diversified mutual funds. ties (‘‘control activity’’ employee) may (b) An FDA employee, other than a hold financial interests in an FDA-reg- control activity employee (defined in ulated organization only if either of § 73a.735–502), may have financial inter- the following conditions are met: ests: (1) The regulated activities of the or- (1) In an organization whose FDA- ganization are an ‘‘insignificant’’ part regulated activities are an insignifi- of its total business operations, or cant part of its total operations, i.e., (2) Written approval for an individual no more than 10 percent of the organization’s annual gross sales are in prod- exception is granted by the Commis- ucts regulated by FDA; or sioner in accordance with § 73a.735–504; (2) In an organization whose FDA- however, such approval will not be con- regulated business activities are a sig- sidered unless all of the following con- nificant part of its total business oper- ditions are met: ations: Provided, That: (i) Retention of the financial interest (i) The holding is less than $5,000 does not give rise to an actual conflict (value or cost at time of initial report- of interest; ing), (ii) Acquisition of the financial inter- (ii) The holding represents less than 1 est occurred by marriage or inherit- percent of the total outstanding stock ance, or the interest was held prior to shares of that organization, and an FDA reorganization, change in regu- (iii) No more than 50 percent of the lations, or similar circumstances be- employee’s total investment value is yond the control of the employee that concentrated in organizations whose resulted in the interest becoming pro- FDA-regulated business activities are a hibited; significant part of their business oper- (iii) No direct relationship exists be- ations. tween the employee’s official duties (c) Notwithstanding the provisions of and the regulated activities of the or- this part permitting employees to hold ganization in which the financial inter- financial interests in organizations est is held; subject to FDA regulation, an em- (iv) The employee occupies a position ployee holding such an interest shall below that of Bureau/Deputy Bureau not participate in an official matter Director (or Assistant/Deputy General whose outcome would have a direct and Counsel, Food and Drug Division, Of- predictable effect on his financial in- fice of the General Counsel); and terest. However, this prohibition is not applicable to: (v) The employee agrees to refrain (1) Diversified mutual funds, which from engaging, either directly or indi- are exempted from 18 U.S.C. 208 by rectly, in transactions that are de- § 73.735–501(a) of this chapter. signed to increase the value of his ‘‘ex- (2) Financial interests for which the cepted’’ financial interest. Commissioner has in advance granted a (b) To administer provisions within written exception on the ground that this part, the following interpretations the public interest would be served if a apply: particular employee is allowed to par- (1) A ‘‘control activity’’ employee ticipate in an official matter whose (‘‘control activity’’ positions are iden- outcome may have a direct and pre- tified in Appendix C to Part 73 of this dictable effect on the employee’s finan- chapter), means one who:

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(i) Occupies an FDA position classi- (6) Date of Commissioner’s approval: fied at GS–11 or above, or PHS Com- lll. missioned Officer 0–3 or above, or (7) Basis for exception: Employee equivalent; owns financial interest in the ABC (ii) Occupies an FDA position below Foods Corporation, and permanent re- GS–11 with duties of a nature that the tention is normally prohibited under employee could in the discharge of his FDA/HHS conflict of interest regula- official duties and responsibilities tions for such an employee. The em- cause an economic advantage for or ployee, however, acquired this finan- impose a handicap on a non-Federal en- cial interest prior to his reassignment terprise (includes investigators, inspec- to FDA on lll, which was part of a tors, regulatory analysts); major Department reorganization (iii) Occupies a position at GS–11 or transferring certain functions from above in the Office of the Assistant NIH to the FDA (i.e., FDA’s Bureau of General Counsel, Food and Drug Divi- Biologics). At the time of acquisition sion. and immediately prior to the reorga- (2) ‘‘Insignificant’’ (part of an organi- nization, the employee’s financial in- zation’s total business operations) terest was allowable under Department means that the FDA-regulated prod- regulations. The employee’s official du- ucts constitute no more than 10 per- ties are fully confined to the matters cent of the organization’s annual gross under the jurisdiction of the Bureau of sales. Biologics, and his official duties do not involve any contact with the food in- § 73a.735–504 Exceptions. dustry. The Commissioner has deter- (a) A control activity employee who mined that an exception is warranted can satisfy all of the conditions speci- under the following criteria: fied in § 73a.735–502(a)(2) may submit a (i) Acquisition occurred prior to De- request to retain a prohibited financial partment reorganization; interest. Any such request must be sub- (ii) Financial interest retention will mitted no later than 30 days after the not give rise to an actual conflict of in- event that results in the employee terest situation; holding the prohibited financial inter- (iii) There is no direct relationship est. Such requests for exception should between the employee’s official duties be forwarded in writing through super- and the regulated activities of ABC visory channels to the Associate Com- Foods; missioner for Administration for re- (iv) The employee occupies a position view by the FDA Conflict of Interest below that of Bureau or Deputy Bureau Review Board and subsequent rec- Director (or equivalent position in the ommendation to the Commissioner. All Office of the Commissioner); and decisions on requests for exceptions (v) The employee agrees to refrain shall be in writing and a copy furnished from engaging in any direct or indirect to the employee involved. transactions that are designed to in- (b) A memorandum of each approved crease the value/shares of the ‘‘ex- exception shall be filed in the Public cepted’’ ABC Foods interests. Records and Documents Center for pub- This exception is considered equitable lic inspection. Such public disclosure to the employee involved, and reten- shall be made within 10 days after the tion of the ABC Foods interest will not Commissioner’s decision. The following in any way impair the interests of the is an example of the format of such Government or of the public. memorandum (in a hypothetical em- (c) In interpreting the requirement of ployee situation): § 73a.735–502(a)(2)(v), events not involv- (1) Employee: Joe Doe. ing employee discretion (e.g., accepting (2) Title: Research Chemist. dividends in the form of cash or addi- (3) Grade/Salary: GS–14. tional shares) do not constitute trans- (4) Organization: Bureau of Biologics, actions designed to increase the value/ Food and Drug Administration, Be- shares of an ‘‘excepted’’ financial inter- thesda, Md. est. A transaction involving discretion, (5) Date of employee’s request for ex- e.g., exercise of stock options, may be ception: lll. made only if proposed to the Associate

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Commissioner for Administration and PART 73b—DEBARMENT OR SUS- approved by the Conflict of Interest PENSION OF FORMER EMPLOY- Review Board as an amendment to the EES original exception. A memorandum recording such approval shall be made Sec. public in accordance with paragraph (b) 73b.1 Scope. of this section. 73b.2 Rules and regulations. (d) An employee may temporarily re- 73b.3 Reports of violations. tain a prohibited financial interest 73b.4 Proceedings. pending review of a written request for 73b.5 Hearings.

an exception submitted in accordance AUTHORITY: 18 U.S.C. 207(j). with this section. (e) Except as provided in § 73a.735– SOURCE: 47 FR 17505, Apr. 23, 1982, unless otherwised noted. 501(c), no employee may participate in an official matter whose outcome will § 73b.1 Scope. have a direct and predictable effect on a financial interest held by him. This This part contains rules governing debarment or disqualification action prohibition applies to official matters against a former officer or employee of handled before and after approval of an the Department, including former and exception under this section. retired officers of the commissioned corps of the Public Health Service, be- Subparts F–I [Reserved] cause of violation of the post-employment restrictions of the conflict of in- Subpart J—Statements of Employ- terest laws and regulations. ment and Financial Interests § 73b.2 Rules and regulations. § 73a.735–1004 Submission and review This part will be applied in conform- of statements. ance with the standards established by (a) Employees occupying control ac- the Office of Government Ethics in its tivity positions shall file Form HHS– regulations, 5 CFR Part 737, and inter- 473 ‘‘Confidential Statement of Em- pretations thereof. Former officers and ployment and Financial Interests’’ employees of the Department may request advice and assistance in compli- with the Associate Commissioner for ance with those regulations from the Administration within 30 days after en- Assistant General Counsel, Business trance in this category and annually and Administrative Law Division, De- thereafter as of June 30, or such other partment of Health and Human Serv- dates as the Secretary, with the con- ices. currence of the Civil Service Commis- sion, may approve. Prior to the due § 73b.3 Reports of violations. date, the Associate Commissioner for (a) If an officer or employee of the Administration shall advise ‘‘control Department has reason to believe that activity’’ employees of the annual fil- a former officer or employee of the De- ing requirement through normal ad- partment has violated any provision of ministrative channels. The annual re- 18 U.S.C. 207 (a), (b) or (c) or if any such porting requirement shall commence officer or employee receives informa- as of June 30, 1977. tion to that effect, he/she shall prompt- (b) The Associate Commissioner for ly make a written report thereof which Administration (or his designee) shall shall be forwarded to the Inspector serve as the principal reviewing official General. If any other person has infor- for Outside Activity Forms, HHS–520 mation of such violations, he/she may and 521, and shall make final deter- make a report thereof to the Inspector minations on matters arising from ac- General or to any officer or employee tivities reported on Form HHS–473. of the Department. (b) The Inspector General shall coordinate proceedings under this part with the Department of Justice in

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cases where it appears criminal pros- place thereof, giving due regard both to ecution is warranted. such person’s need for an adequate period to prepare a suitable defense and § 73b.4 Proceedings. an expeditious resolution of allegations (a) Upon a determination by the As- that may be damaging to his or her sistant General Counsel, Business and reputation. Administrative Law Division, or his/ (d) The presiding officer at the hear- her designee, after investigation by the ing and any related proceedings shall Inspector General, that there is reason- be a federal administrative law judge. able cause to believe that a former offi- He/she shall insure that the former de- cer or employee, including a former partmental employee has the following special Government employee, of the rights: Department of Health and Human (1) To self-representation or represen- Services (former departmental em- tation by counsel, ployee) has violated 18 US.C. 207 (a), (b) (2) To introduce and examine wit- or (c), the Assistant General Counsel, nesses and submit physical evidence, or his/her designee, shall cause a copy (3) To confront and cross-examine ad- of written charges of the violation(s) to verse witnesses, be served upon such individual, either (4) To present oral argument, and personally or by registered mail. The (5) To a transcript or recording of the charges shall be accompanied by a no- proceedings, upon request. tice to the former departmental em- (e) The Assistant General Counsel ployee to show cause within a specified shall designate one or more officers or time of not less than 30 days after re- employees of the Department to ceipt of the notice why he/she should present the evidence against the not be prohibited from engaging in rep- former departmental employee and resentational activities in relation to perform other functions incident to the matters pending in the Department, as proceedings. authorized by 18 U.S.C. 207(j), or sub- (f) A decision adverse to the former jected to other appropriate debarment departmental employee must be sus- or disqualification action under that tained by substantial evidence that he/ statute. The notice to show cause shall she violated 18 U.S.C. 207 (a), (b) or (c). include: If a judgment of conviction has been (1) A statement of allegations, and entered by a Federal district court their bases, sufficiently detailed to en- against the former departmental em- able the former departmental employee ployee for violation of 18 U.S.C. 207 (a), to prepare an adequate defense; (b) or (c), regardless of whether the (2) Notification of the right to a hear- judgment is based upon a verdict or a ing, and that failure to answer shall plea of guilty, such judgment of convic- constitute a waiver of defense; and tion shall be conclusive evidence of a (3) An explanation of the method by violation of 18 U.S.C. 207 (a), (b) or (c), which a hearing may be requested. unless and until the judgment is va- (b) If a former departmental em- cated or reversed on appeal. ployee who submits an answer to the (g) The administrative law judge notice to show cause does not request a shall issue an initial decision based ex- hearing or if the Assistant General clusively on the transcript of testi- Counsel does not receive an answer mony and exhibits, together with all within the time prescribed by the no- papers and requests filed in the pro- tice, the Assistant General Counsel ceeding, and shall set forth in the deci- shall forward the record, including the sion findings and conclusions, sup- report(s) of investigation, to the As- ported by reasons, on the material sistant Secretary for Personnel Admin- issues of fact and law presented on the istration (Assistant Secretary). In the record. case of a failure to answer, such failure (h) Within 30 days after issuance of shall constitute a waiver of defense. the initial decision, either party may (c) Upon receipt of a former depart- appeal in writing to the Assistant Sec- mental employee’s request for a hear- retary who in that event shall issue the ing, the Assistant General Counsel final decision based on the record of shall notify him/her of the time and the proceedings or those portions

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thereof cited by the parties to limit the under oath or affirmation. Hearings issues. If the final decision modifies or will be closed unless an open hearing is reverses the initial decision, the As- requested by the respondent, except sistant Secretary shall specify the find- that if classified information or pro- ings of fact and conclusions of law that tected information of third parties is vary from those of the presiding offi- likely to be adduced at the hearing, it cer. will remain closed. If either party to (i) If a former departmental em- the proceeding fails to appear at the ployee fails to appeal from an adverse hearing, after due notice thereof has initial decision within the prescribed been sent to him/her, he/she shall be period of time, the administrative law deemed to have waived the right to a judge shall forward the record of the proceedings to the Assistant Secretary. hearing and the administrative law (j) In the case of a former depart- judge may make a decision on the basis mental employee who filed an answer of the record before him/her at that to the notice to show cause but did not time. request a hearing, the Assistant Sec- (b) The rules of evidence prevailing retary shall make the final decision on in courts of law and equity are not con- the record submitted to him by the As- trolling in hearings under this part. sistant General Counsel pursuant to However, the administrative law judge paragraph (b) of this section. shall exclude evidence which is irrele- (k) In a case where: vant, immaterial, or unduly repeti- (1) The defense has been waived, tious. (2) The former departmental em- (c) Depositions for use at a hearing ployee has failed to appeal from an ad- may, with the consent of the parties in verse initial decision, or writing or the written approval of the (3) The Assistant Secretary has administrative law judge be taken by issued a final decision that the former either the Assistant General Counsel or departmental employee violated 18 the respondent or their duly authorized U.S.C. 207 (a), (b) or (c), representatives. Depositions may be The Assistant Secretary may issue an taken upon oral or written interrog- order: atories. There shall be at least 10 days (i) Prohibiting the former depart- written notice to the other party. The mental employee from making, on be- requirement of a 10-day written notice half of any other person (except the United States), any informal or formal may be waived by the parties in writ- appearance before, or, with the intent ing. When a deposition is taken upon to influence, any oral or written com- written interrogatories, any cross-ex- munication to, the Department on a amination shall be upon written inter- pending matter of business for a period rogatories. Copies of such written in- not to exceed five years, or terrogatories shall be served upon the (ii) Prescribing other appropriate de- other party with the notice, and copies barment or disqualification action, of any written cross-interrogation such as limiting the action to a par- shall be mailed or delivered to the op- ticular organization or organizations posing party at least 5 days before the within the Department. date of taking the depositions, unless (l) An order issued under either para- the parties mutually agree otherwise. graph (k)(i) or (k)(ii) of this section Expenses in the reporting of deposi- shall be supplemented by a directive to tions shall be borne by the party at officers and employees of the Depart- whose instance the deposition is taken. ment not to engage in conduct in relation to the former departmental employee that would contravene such order.

§ 73b.5 Hearings. (a) Hearings shall be stenographi- cally recorded and transcribed and the testimony of witnesses shall be taken

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PART 74—UNIFORM ADMINISTRA- 74.44 Procurement procedures. 74.45 Cost and price analysis. TIVE REQUIREMENTS FOR 74.46 Procurement records. AWARDS AND SUBAWARDS TO 74.47 Contract administration. INSTITUTIONS OF HIGHER EDU- 74.48 Contract provisions. CATION, HOSPITALS, OTHER NONPROFIT ORGANIZATIONS, REPORTS AND RECORDS AND COMMERCIAL ORGANIZA- 74.50 Purpose of reports and records. 74.51 Monitoring and reporting program TIONS performance. 74.52 Financial reporting. Subpart A—General 74.53 Retention and access requirements for Sec. records. 74.1 Purpose and applicability. TERMINATION AND ENFORCEMENT 74.2 Definitions. 74.3 Effect on other issuances. 74.60 Purpose of termination and enforce- 74.4 Deviations. ment. 74.5 Subawards. 74.61 Termination. 74.62 Enforcement. Subpart B—Pre-Award Requirements Subpart D—After-the-Award Requirements 74.10 Purpose. 74.11 Pre-award policies. 74.70 Purpose. 74.12 Forms for applying for HHS financial 74.71 Closeout procedures. assistance. 74.72 Subsequent adjustments and con- 74.13 Debarment and suspension. tinuing responsibilities. 74.14 Special award conditions. 74.73 Collection of amounts due. 74.15 Metric system of measurement. 74.16 Resource Conservation and Recovery Act (RCRA, Section 6002 of Pub. L. No. Subpart E—Special Provisions for Awards to 94–580 (Codified at 42 U.S.C. 6962)). Commercial Organizations 74.17 Certifications and representations. 74.80 Scope of subpart. 74.18 Participation by faith-based organiza- 74.81 Prohibition against profit. tions. 74.82 Program income. Subpart C—Post-Award Requirements 74.83 Effect on intangible property.

FINANCIAL AND PROGRAM MANAGEMENT Subpart F—Disputes 74.20 Purpose of financial and program man- 74.90 Final decisions in disputes. agement. 74.91 Alternative dispute resolution. 74.21 Standards for financial management APPENDIX A TO PART 74—CONTRACT PROVI- systems. SIONS 74.22 Payment. 74.23 Cost sharing or matching. APPENDIXES B–D TO PART 74 [RESERVED] 74.24 Program income. APPENDIX E TO PART 74—PRINCIPLES FOR DE- 74.25 Revision of budget and program plans. TERMINING COSTS APPLICABLE TO RE- 74.26 Non-Federal audits. SEARCH AND DEVELOPMENT UNDER GRANTS 74.27 Allowable costs. AND CONTRACTS WITH HOSPITALS 74.28 Period of availability of funds. APPENDIXES F–H TO PART 74 [RESERVED] AUTHORITY: 5 U.S.C. 301. PROPERTY STANDARDS 74.30 Purpose of property standards. 74.31 Insurance coverage. Subpart A—General 74.32 Real property. 74.33 Federally-owned and exempt property. SOURCE: 59 FR 43760, Aug. 25, 1994, unless 74.34 Equipment. otherwise noted. 74.35 Supplies. 74.36 Intangible property. § 74.1 Purpose and applicability. 74.37 Property trust relationship. (a) Unless inconsistent with statu- PROCUREMENT STANDARDS tory requirements, this part estab- 74.40 Purpose of procurement standards. lishes uniform administrative require- 74.41 Recipient responsibilities. ments governing: 74.42 Codes of conduct. (1) Department of Health and Human 74.43 Competition. Services’ (HHS) grants and agreements

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awarded to institutions of higher edu- surance, shall be included or excluded cation, hospitals, other nonprofit orga- from the unit acquisition cost in ac- nizations and only to commercial orga- cordance with the recipient’s regular nizations in instances other than those accounting practices. involving procedures to make data Advance means a payment made by available under the Freedom of Infor- Treasury check or other appropriate mation Act provision set forth in payment mechanism to a recipient § 74.36(d)(1). upon its request either before (2) Subgrants or other subawards outlaysare made by the recipient or awarded by recipients of HHS grants through the use of predetermined pay- and agreements to institutions of high- ment schedules. er education, hospitals, other nonprofit Award means financial assistance organizations and commercial organi- that provides support or stimulation to zations, including subgrants or other accomplish a public purpose. Awards subawards awarded under HHS grants include grants and other agreements in and agreements administered by State, the form of money or property in lieu local and Indian Tribal governments; of money, by the Federal Government and to an eligible recipient. The term does (b) Nonprofit organizations that im- not include: technical assistance, plement HHS programs for the States are also subject to state requirements. which provides services instead of (c) HHS shall not impose additional money; other assistance in the form of or inconsistent requirements except as loans, loan guarantees, interest sub- provided in §§ 74.4 and 74.14, or unless sidies, or insurance; direct payments of specifically required by Federal statute any kind to individuals; and, contracts or executive order. which are required to be entered into and administered under Federal pro- [59 FR 43760, Aug. 25, 1994, as amended at 61 curement laws and regulations. FR 11746, 11747, Mar. 22, 1996; 65 FR 14418, Cash contributions mean the recipi- Mar. 16, 2000; 68 FR 52844, Sept. 8, 2003] ent’s cash outlay, including the outlay § 74.2 Definitions. of money contributed to the recipient by third parties. Accrued expenditures mean the Closeout means the process by which charges incurred by the recipient dur- the HHS awarding agency determines ing a given period requiring the provi- that all applicable administrative ac- sion of funds for: (1) Goods and other tions and all required work of the tangible property received; (2) services award have been completed by the re- performed by employees, contractors, cipient and HHS. subrecipients, and other payees; and, (3) other amounts becoming owed Contract means a procurement con- under programs for which no current tract under an award or subaward, and services or performance is required. a procurement subcontract under a re- Accrued income means the sum of: (1) cipient’s or subrecipient’s contract. Earnings during a given period from (i) Cost sharing or matching means that services performed by the recipient, portion of project or program costs not and (ii) goods and other tangible prop- borne by the Federal Government. erty delivered to purchasers; and (2) Current accounting period means, with amounts becoming owed to the recipi- respect to § 74.27(b), the period of time ent for which no current services or the recipient chooses for purposes of fi- performance is required by the recipi- nancial statements and audits. ent. Date of completion means the date on Acquisition cost of equipment means which all work under an award is com- the net invoice price of the equipment, pleted or the date on the award docu- including the cost of modifications, at- ment, or any supplement or amend- tachments, accessories, or auxiliary ment thereto, on which HHS awarding apparatus necessary to make the prop- agency sponsorship ends. erty usable for the purpose for which it Departmental Appeals Board means was acquired. Other charges, such as the independent office established in the cost of installation, transportation, the Office of the Secretary with dele- taxes, duty or protective in-transit in- gated authority from the Secretary to

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review and decide certain disputes be- structions or authorized by the terms tween recipients of HHS funds and HHS and conditions of the award. awarding agencies under 45 CFR part 16 Federal share of real property, equip- and to perform other review, adjudica- ment, or supplies means that percent- tion and mediation services as as- age of the property’s or supplies’ acqui- signed. sition costs and any improvement ex- Disallowed costs mean those charges penditures paid with Federal funds. to an award that the HHS awarding This will be the same percentage as the agency determines to be unallowable, Federal share of the total costs under in accordance with the applicable Fed- the award for the funding period in eral cost principles or other terms and which the property was acquired (ex- conditions contained in the award. cluding the value of third party in-kind Discretionary award means an award contributions). made by an HHS awarding agency in Federally recognized Indian Tribal gov- keeping with specific statutory author- ernment means the governing body of ity which enables the agency to exer- any Indian tribe, band, nation, or other cise judgment (‘‘discretion’’) in select- organized group or community (including the applicant/recipient organiza- ing any Native village as defined in tion through a competitive award proc- section 3 of the Alaska Native Claims ess. Settlement Act certified by the Sec- Equipment means tangible nonexpend- retary of the Interior as eligible for the able personal property, including ex- special programs and services provided empt property, charged directly to the by him through the Bureau of Indian award having a useful life of more than Affairs. one year and an acquisition cost of Funding period means the period of $5000 or more per unit. However, con- time when Federal funding is available sistent with recipient policy, lower for obligation by the recipient. limits may be established. Government means a State or local Excess property means property under government or a federally recognized the control of any HHS awarding agen- Indian tribal government. cy that, as determined by the head of HHS means the U.S. Department of the awarding agency or his/her dele- Health and Human Services. gate, is no longer required for the agen- HHS awarding agency means any or- cy’s needs or the discharge of its re- ganization component of HHS that is sponsibilities. authorized to make and administer Exempt property means tangible per- awards. sonal property acquired in whole or in Intangible property and debt instru- part with Federal funds, where the ments mean, but are not limited to, HHS awarding agency has statutory trademarks, copyrights, patents and authority to vest title in the recipient patent applications and such property without further obligation to the Fed- as loans, notes and other debt instru- eral Government. An example of ex- ments, lease agreements, stock and empt property authority is contained other instruments of property owner- in the Federal Grant and Cooperative ship, whether considered tangible or in- Agreement Act, 31 U.S.C. 6306, for prop- tangible. erty acquired under an award to con- Local government means a local unit duct basic or applied research by a non- of government, including specifically a profit institution of higher education county, municipality, city, town, town- or nonprofit organization whose prin- ship, local public authority, school dis- cipal purpose is conducting scientific trict, special district, intra-state dis- research. trict, council of governments (whether Federal funds authorized mean the or not incorporated as a nonprofit cor- total amount of Federal funds obli- poration under State law), any other gated by the HHS awarding agency for regional or interstate entity, or any use by the recipient. This amount may agency or instrumentality of local gov- include any authorized carryover of un- ernment. obligated funds from prior funding pe- Obligations mean the amounts of or- riods when permitted by the HHS ders placed, contracts and grants awarding agency’s implementing in- awarded, services received and similar

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transactions during a given period that earned on advances of Federal funds is require payment by the recipient dur- not program income. Except as other- ing the same or a future period. wise provided in the terms and condi- OGAM means the Office of Grants tions of the award, program income and Acquisition Management, which is does not include the receipt of prin- an organizational component within cipal on loans, rebates, credits, dis- the Office of the Secretary, HHS, and counts, etc., or interest earned on any reports to the Assistant Secretary for of them. Furthermore, program income Management and Budget. does not include taxes, special assess- OMB means the U.S. Office of Man- ments, levies, and fines raised by gov- agement and Budget. ernmental recipients. Outlays or expenditures mean charges Project costs means all allowable made to the project or program. They costs, as set forth in the applicable may be reported on a cash or accrual Federal cost principles (see § 74.27), in- basis. For reports prepared on a cash curred by a recipient and the value of basis, outlays are the sum of cash dis- the contributions made by third par- bursements for direct charges for goods ties in accomplishing the objectives of and services, the amount of indirect ex- the award during the project period. pense charged, the value of third party Project period means the period estab- in-kind contributions applied and the lished in the award document during amount of cash advances and payments which HHS awarding agency sponsor- made to subrecipients. For reports pre- ship begins and ends. pared on an accrual basis, outlays are Property means, unless otherwise the sum of cash disbursements for di- stated, real property, equipment, in- rect charges for goods and services, the tangible property and debt instru- amount of indirect expense incurred, ments. the value of in-kind contributions ap- Real property means land, including plied, and the net increase (or de- land improvements, structures and ap- crease) in the amounts owed by the re- purtenances thereto, but excludes mov- cipient for goods and other property re- able machinery and equipment. ceived, for services performed by em- Recipient means an organization re- ployees, contractors, subrecipients and ceiving financial assistance directly other payees and other amounts be- from an HHS awarding agency to carry coming owed under programs for which out a project or program. The term inno current services or performance are cludes public and private institutions required. of higher education, public and private Personal property means property of hospitals, commercial organizations, any kind except real property. It may and other quasi-public and private non- be tangible, having physical existence, profit organizations such as, but not or intangible, having no physical exist- limited to, community action agencies, ence, such as copyrights, patents, or research institutes, educational asso- securities. ciations, and health centers. The term Prior approval means written ap- may include foreign or international proval by an authorized HHS official organizations (such as agencies of the evidencing prior consent. United Nations) which are recipients, Program income means gross income subrecipients, or contractors or sub- earned by the recipient that is directly contractors of recipients or subrecipi- generated by a supported activity or ents at the discretion of the HHS earned as a result of the award (see ex- awarding agency. The term does not in- clusions in § 74.24 (e) and (h)). Program clude government-owned contractor- income includes, but is not limited to, operated facilities or research centers income from fees for services per- providing continued support for mis- formed, the use or rental of real or per- sion-oriented, large-scale programs sonal property acquired under feder- that are government-owned or con- ally-funded projects, the sale of com- trolled, or are designated as federally- modities or items fabricated under an funded research and development cen- award, license fees and royalties on ters. For entitlement programs listed patents and copyrights, and interest on at 45 CFR 92.4(a)(3), (a)(7), and (a)(8) loans made with award funds. Interest ‘‘recipient’’ means the government to

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which an HHS awarding agency awards include foreign or international organi- funds and which is accountable for the zations (such as agencies of the United use of the funds provided. The recipient Nations) at the discretion of the HHS in this case is the entire legal entity awarding agency. even if only a particular component of Supplies means all personal property the entity is designated in the award excluding equipment, intangible prop- document. erty, and debt instruments as defined Research and development means all in this section, and inventions of a con- research activities, both basic and ap- tractor conceived or first actually re- plied, and all development activities duced to practice in the performance of that are supported at universities, col- work under a funding agreement leges, hospitals, other nonprofit insti- (‘‘subject inventions’’), as defined in 37 tutions, and commercial organizations. CFR part 401, ‘‘Rights to Inventions ‘‘Research’’ is defined as a systematic Made by Nonprofit Organizations and study directed toward fuller scientific Business Firms Under Government knowledge or understanding of the sub- Grants, Contracts, and Cooperative ject studied. ‘‘Development’’ is the sys- Agreements.’’ tematic use of knowledge and under- Suspension means an action by the standing gained from research directed HHS awarding agency that temporarily toward the production of useful mate- withdraws the agency’s financial as- rials, devices, systems, or methods, in- sistance sponsorship under an award, cluding design and development of pro- pending corrective action by the recipi- totypes and processes. The term re- ent or pending a decision to terminate search also includes activities involv- the award. ing the training of individuals in re- Suspension of an award is a separate search techniques where such activities action from suspension under HHS reg- utilize the same facilities as other re- ulations (45 CFR part 76) implementing search and development activities and E.O.s 12549 and 12689, ‘‘Debarment and where such activities are not included Suspension.’’ in the instruction function. Termination means the cancellation Small awards means a grant or coop- of HHS awarding agency sponsorship, erative agreement not exceeding the in whole or in part, under an agree- simplified acquisition threshold fixed ment at any time prior to the date of at 41 U.S.C. 403(11) (currently $100,000). completion. For the entitlement pro- State means any of the several States grams listed at 45 CFR 92.4 (a)(3), (a)(7), of the United States, the District of and (a)(8), ‘‘termination’’ shall have Columbia, the Commonwealth of Puer- that meaning assigned at 45 CFR 92.3. to Rico, any territory or possession of Third party in-kind contributions the United States, or any agency or in- means the value of non-cash contribu- strumentality of a State exclusive of tions provided by non-Federal third local governments. parties. Third party in-kind contribu- Subaward means an award of finan- tions may be in the form of real prop- cial assistance in the form of money, or erty, equipment, supplies and other ex- property in lieu of money, made under pendable property, and the value of an award by a recipient to an eligible goods and services directly benefiting subrecipient or by a subrecipient to a and specifically identifiable to the lower tier subrecipient. The term in- project or program. cludes financial assistance when pro- Unliquidated obligations, for financial vided by any legal agreement, even if reports prepared on a cash basis, mean the agreement is called a contract, but the amount of obligations incurred by does not include procurement of goods the recipient that has not been paid. and services nor does it include any For reports prepared on an accrued ex- form of assistance which is excluded penditure basis, they represent the from the definition of ‘‘award’’ in this amount of obligations incurred by the section. recipient for which an outlay has not Subrecipient means the legal entity to been recorded. which a subaward is made and which is Unobligated balance means the por- accountable to the recipient for the use tion of the funds authorized by the of the funds provided. The term may HHS awarding agency that has not

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been obligated by the recipient and is part that have been approved for class- determined by deducting the cumu- es of awards or recipients. lative obligations from the cumulative (b) As a matter of Departmental pol- funds authorized. icy, requests for individual case devi- Unrecovered indirect cost means the ations will be considered favorably by difference between the amount awarded HHS and its awarding agencies when- and the amount which could have been ever the deviation will facilitate com- awarded under the recipient’s approved prehensive or integrated service deliv- negotiated indirect cost rate. ery, or multiple-source consolidated Working capital advance means a pro- awards, unless the deviation would im- cedure whereby funds are advanced to pair the integrity of the program. the recipient to cover its estimated disbursement needs for a given initial [59 FR 43760, Aug. 25, 1994, as amended at 61 period. FR 11746, Mar. 22, 1996] [59 FR 43760, Aug. 25, 1994, as amended at 61 § 74.5 Subawards. FR 11746, Mar. 22, 1996; 62 FR 41878, Aug. 4, 1997] (a) Unless inconsistent with statutory requirements, this part (except for § 74.3 Effect on other issuances. § 74.12 and the forms prescribed in § 74.22) shall apply to— This part supersedes all administra- (1) Except for subawards under block tive requirements of codified program regulations, program manuals, hand- grants (45 CFR part 96), all subawards books and other nonregulatory mate- received by institutions of higher edu- rials which are inconsistent with the cation, hospitals, other nonprofit orga- requirements of this part, except to the nizations, and commercial organiza- extent they are required by Federal tions from any recipient of an HHS statute, or authorized in accordance award, including any subawards re- with the deviations provision in § 74.4. ceived from States, local governments, and Indian tribal governments covered [59 FR 43760, Aug. 25, 1994, as amended at 61 by 45 CFR part 92; and FR 11746, Mar. 22, 1996] (2) All subawards received from § 74.4 Deviations. States by any entity, including a government entity, under the entitlement (a) After consultation with OMB, the programs identified at 45 CFR part 92, HHS OGAM may grant exceptions to § 92.4 (a), (a)(7), and (a)(8), except that HHS awarding agencies for classes of §§ 74.12 and 74.25 of this part shall not awards or recipients subject to the re- apply. quirements of this part when excep- (b) Except as provided in paragraph tions are not prohibited by statute. (a)(2) of this section, when State, local, However, in the interest of maximum uniformity, exceptions from the re- and Indian Tribal government recipi- quirements of this part shall be per- ents of HHS awards make subawards to mitted only in unusual circumstances. a government entity, they shall apply HHS awarding agencies may apply the regulations at 45 CFR part 92, more restrictive requirements to a ‘‘Uniform Administrative Require- class of awards or recipients when ap- ments for Grants and Cooperative proved by the OGAM, after consulta- Agreements to State and Local Gov- tion with the OMB. HHS awarding ernments,’’ or State rules, whichever agencies may apply less restrictive re- apply, to such awards. quirements without approval by the [59 FR 43760, Aug. 25, 1994, as amended at 61 OGAM when making small awards ex- FR 11746, Mar. 22, 1996] cept for those requirements which are statutory. Exceptions on a case-by-case basis may also be made by HHS award- Subpart B—Pre-Award ing agencies without seeking prior ap- Requirements proval from the OGAM. OGAM will maintain a record of all requests for SOURCE: 59 FR 43760, Aug. 25, 1994, unless exceptions from the provisions of this otherwise noted.

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§ 74.10 Purpose. SF–424 (Application for Federal Assist- Sections 74.11 through 74.17 prescribe ance) indicating whether the applica- forms and instructions and other pre- tion was subject to review by the State award matters to be used in applying Single Point of Contact (SPOC). The for HHS awards. name and address of the SPOC for a particular State can be obtained from § 74.11 Pre-award policies. the HHS awarding agency or the Cata- log of Federal Domestic Assistance. (a) Use of Grants and Cooperative The SPOC shall advise the applicant Agreements, and Contracts. The Fed- eral Grant and Cooperative Agreement whether the program for which applica- Act, 31 U.S.C. 6301–08, governs the use tion is made has been selected by that of grants, cooperative agreements and State for review. (See also 45 CFR part contracts. A grant or cooperative 100.) agreement shall be used only when the (d) HHS awarding agencies that do principal purpose of a transaction is to not use the SF–424 form will indicate accomplish a public purpose of support on the application form they prescribe or stimulation authorized by Federal whether the application is subject to statute. The statutory criterion for review by the State under E.O. 12372. choosing between grants and coopera- (e) This section does not apply to ap- tive agreements is that for the latter, plications for subawards. ‘‘substantial involvement is expected [59 FR 43760, Aug. 25, 1994, as amended at 61 between the executive agency and the FR 11746, Mar. 22, 1996] State, local government, or other recipient when carrying out the activity § 74.13 Debarment and suspension. contemplated in the agreement.’’ Con- Recipients are subject to the non- tracts shall be used when the principal procurement debarment and suspension purpose is acquisition of property or common rule implementing E.O.s 12549 services for the direct benefit or use of and 12689, ‘‘Debarment and Suspen- the HHS awarding agency. sion,’’2 CFR part 376. This common (b) HHS awarding agencies shall no- rule restricts subawards and contracts tify the public of funding priorities for with certain parties that are debarred, discretionary grant programs, unless suspended or otherwise excluded from funding priorities are established by or ineligible for participation in Fed- Federal statute. eral assistance programs or activities. § 74.12 Forms for applying for HHS fi- [59 FR 43760, Aug. 25, 1994, as amended at 72 nancial assistance. FR 9235, Mar. 1, 2007] (a) HHS awarding agencies shall comply with the applicable report clear- § 74.14 Special award conditions. ance requirements of 5 CFR part 1320, (a) The HHS awarding agency may ‘‘Controlling Paperwork Burdens on impose additional requirements as the Public,’’ with regard to all forms needed, without regard to § 74.4, above, used in place of or as a supplement to if an applicant or recipient: the Standard Form 424 (SF–424) series. (1) Has a history of poor performance; However, HHS awarding agencies (2) Is not financially stable; should use the SF–424 series and its (3) Has a management system that program narrative whenever possible. does not meet the standards prescribed (b) Applicants shall use the SF–424 in this part; series or those forms and instructions (4) Has not conformed to the terms prescribed by the HHS awarding agen- and conditions of a previous award; or cy. Applicants shall submit the origi- (5) Is not otherwise responsible. nal and two copies of any applications (b) When it imposes any additional unless additional copies are required requirements, the HHS awarding agen- pursuant to 5 CFR part 1320. cy must notify the recipient in writing (c) For Federal programs covered by as to the following: E.O. 12372, as amended by E.O. 12416, (1) The nature of the additional re- ‘‘Intergovernmental Review of Federal quirements; Programs,’’ the applicant shall com- (2) The reason why the additional re- plete the appropriate sections of the quirements are being imposed;

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(3) The nature of the corrective ac- § 74.17 Certifications and representations needed; tions. (4) The time allowed for completing Unless prohibited by statute or codi- the corrective actions; and fied regulation, each HHS awarding (5) The method for requesting recon- agency is authorized and encouraged to sideration of the additional require- allow recipients to submit certifi- ments imposed. cations and representations required (c) The HHS awarding agency will by statute, executive order, or regula- promptly remove any additional re- tion on an annual basis, if the recipi- quirements once the conditions that ents have ongoing and continuing rela- prompted them have been corrected. tionships with the HHS awarding agen- § 74.15 Metric system of measurement. cy. Annual certifications and representations shall be signed by the respon- The Metric Conversion Act, as sible official(s) with the authority to amended by the Omnibus Trade and ensure recipients’ compliance with the Competitiveness Act, 15 U.S.C. 205, de- pertinent requirements. clares that the metric system is the (a) The funds provided under this preferred measurement system for U.S. part shall be administered in compli- trade and commerce. The Act requires ance with the standards set forth in each Federal agency to establish a date or dates in consultation with the Sec- part 87 (Equal Treatment for Faith- retary of Commerce, when the metric based Organizations) of this chapter. system of measurement will be used in (b) [Reserved] the agency’s procurements, grants, and [59 FR 43760, Aug. 25, 1994, as amended at 61 other business-related activities. Met- FR 11746, Mar. 22, 1996; 69 FR 42592, July 16, ric implementation may take longer 2004] where the use of the system is initially impractical or likely to cause signifi- § 74.18 Participation by faith-based or- cant inefficiencies in the accomplish- ganizations. ment of federally-funded activities. The funds provided under this part HHS awarding agencies will follow the shall be administered in compliance provisions of E.O. 12770, ‘‘Metric Usage with the standards set forth in part 87 in Federal Government Programs.’’ (Equal Treatment for Faith-based Or- ganizations) of this chapter. § 74.16 Resource Conservation and Re- covery Act (RCRA, Section 6002 of [69 FR 42592, July 16, 2004] Pub. L. No. 94–580 (Codified at 42 U.S.C. 6962)). Subpart C—Post-Award Under the Act, any State agency or Requirements agency of a political subdivision of a State which is using appropriated Fed- eral funds must comply with section SOURCE: 59 FR 43760, Aug. 25, 1994, unless 6002 of the RCRA. This section requires otherwise noted. that preference be given in procure- FINANCIAL AND PROGRAM MANAGEMENT ment programs to the purchase of specific products containing recycled ma- § 74.20 Purpose of financial and pro- terials identified in guidelines devel- gram management. oped by the Environmental Protection Agency (EPA) (40 CFR parts 247–254). Sections 74.21 through 74.28 prescribe Accordingly, State and local institu- standards for financial management tions of higher education, hospitals, systems, methods for making pay- and other nonprofit organizations that ments, and rules for satisfying cost receive direct HHS awards or other sharing and matching requirements, Federal funds shall give preference in accounting for program income, budget their procurement programs funded revision approvals, making audits, de- with Federal funds to the purchase of termining allowability of cost, and es- recycled products pursuant to the EPA tablishing fund availability. guidelines.

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§ 74.21 Standards for financial man- be consistent with CMIA Treasury- agement systems. State Agreements, or the CMIA default (a) Recipients shall relate financial procedures codified at 31 CFR 205.9(f). data to performance data and develop (6) Written procedures for deter- unit cost information whenever prac- mining the reasonableness, allocability tical. For awards that support re- and allowability of costs in accordance search, unit cost information is usually with the provisions of the applicable not appropriate. Federal cost principles and the terms (b) Recipients’ financial management and conditions of the award. systems shall provide for the following: (7) Accounting records, including (1) Accurate, current and complete cost accounting records, that are sup- disclosure of the financial results of ported by source documentation. each HHS-sponsored project or pro- (c) Where the Federal Government gram in accordance with the reporting requirements set forth in § 74.52. If the guarantees or insures the repayment of HHS awarding agency requires report- money borrowed by the recipient, the ing on an accrual basis from a recipient HHS awarding agency, at its discre- that maintains its records on other tion, may require adequate bonding than an accrual basis, the recipient and insurance if the bonding and insur- shall not be required to establish an ac- ance requirements of the recipient are crual accounting system. These recipi- not deemed adequate to protect the in- ents may develop such accrual data for terest of the Federal Government. their reports on the basis of an anal- (d) The HHS awarding agency may ysis of the documentation on hand. require adequate fidelity bond coverage (2) Records that identify adequately where the recipient lacks sufficient the source and application of funds for coverage to protect the Federal Gov- HHS-sponsored activities. These ernment’s interest. records shall contain information per- (e) Where bonds are required in the taining to Federal awards, authoriza- situations described in § 74.21 (c) and tions, obligations, unobligated bal- (d), the bonds shall be obtained from ances, assets, outlays, income and in- companies holding certificates of au- terest. thority as acceptable sureties, as pre- (3) Effective control over and ac- scribed in 31 CFR part 223, ‘‘Surety countability for all funds, property and other assets. Recipients shall ade- Companies Doing Business with the quately safeguard all such assets and United States.’’ assure they are used solely for authorized purposes. § 74.22 Payment. (4) Comparison of outlays with budg- (a) Unless inconsistent with statu- et amounts for each award. Whenever tory program purposes, payment meth- appropriate, financial information ods shall minimize the time elapsing should be related to performance and between the transfer of funds from the unit cost data. (Unit cost data are usu- U.S. Treasury and the issuance or re- ally not appropriate for awards that demption of checks, warrants, or pay- support research.) ment by other means by the recipients. (5) Written procedures to minimize Payment methods of State agencies or the time elapsing between the transfer instrumentalities shall be consistent of funds to the recipient from the U.S. with Treasury-State CMIA agreements, Treasury and the issuance or redemp- or the CMIA default procedures codi- tion of checks, warrants or payments fied at 31 CFR 205.9, to the extent that by other means for program purposes either applies. by the recipient. To the extent that the provisions of the Cash Management Im- (b)(1) Recipients will be paid in ad- provement Act (CMIA) (Pub. L. 101–453) vance, provided they maintain or dem- and its implementing regulations, onstrate the willingness to maintain: ‘‘Rules and Procedures for Funds (i) Written procedures that minimize Transfers,’’ (31 CFR part 205) apply, the time elapsing between the transfer payment methods of State agencies, in- of funds and disbursement by the re- strumentalities, and fiscal agents shall cipient; and

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(ii) Financial management systems 30 days after receipt of the billing, un- that meet the standards for fund con- less the billing is improper. trol and accountability as established (2) Recipients may submit a request in § 74.21. for reimbursement at least monthly (2) Unless inconsistent with statu- when electronic funds transfers are not tory program purposes, cash advances used. to a recipient organization shall be (f) If a recipient cannot meet the cri- limited to the minimum amounts need- teria for advance payments and the ed and be timed to be in accordance HHS awarding agency has determined with the actual, immediate cash re- that reimbursement is not feasible be- quirements of the recipient organiza- cause the recipient lacks sufficient tion in carrying out the purpose of the working capital, HHS may provide cash approved program or project. The tim- on a working capital advance basis. ing and amount of cash advances shall Under this procedure, HHS advances be as close as is administratively feasible to the actual disbursements by cash to the recipient to cover its esti- the recipient organization for direct mated disbursement needs for an ini- program or project costs and the pro- tial period generally geared to the re- portionate share of any allowable indi- cipient’s disbursing cycle. Thereafter, rect costs. HHS reimburses the recipient for its (c) Whenever possible, advances will actual cash disbursements. The work- be consolidated to cover anticipated ing capital advance method of payment cash needs for all awards made by all will not be used for recipients unwill- HHS awarding agencies to the recipi- ing or unable to provide timely ad- ent. vances to their subrecipient to meet (1) Advance payment mechanisms in- the subrecipient’s actual cash disburse- clude electronic funds transfer, with ments. Treasury checks available on an excep- (g) Unless inconsistent with statu- tion basis. tory program purposes, to the extent (2) Advance payment mechanisms are available, recipients shall disburse subject to 31 CFR part 205. funds available from repayments to (3) Recipients may submit requests and interest earned on a revolving for advances and reimbursements at fund, program income, rebates, re- least monthly when electronic fund funds, contract settlements, audit re- transfers are not used. coveries and interest earned on such (d) Requests for Treasury check ad- funds before requesting additional cash vance payment shall be submitted on payments. PMS–270, ‘‘Request for Advance or Re- (h) Unless otherwise required by stat- imbursement,’’ or other forms as may ute, the HHS awarding agency will not be authorized by HHS. This form is not withhold payments for proper charges to be used when Treasury check ad- made by recipients at any time during vance payments are made to the recipi- the project period unless paragraph (h) ent automatically through the use of a (1) or (2) of this section applies: predetermined payment schedule or if precluded by special HHS-wide instruc- (1) A recipient has failed to comply tions for electronic funds transfer. with the project objectives, the terms (e) Reimbursement is the preferred and conditions of the award, or HHS method when the requirements in para- awarding agency reporting require- graph (b) of this section cannot be met. ments. The HHS awarding agency may also (2) The recipient or subrecipient is use this method on any construction delinquent in a debt to the United agreement, or if the major portion of States. Under such conditions, the HHS the construction project is accom- awarding agency may, upon reasonable plished through private market financ- notice, inform the recipient that paying or Federal loans, and the HHS as- ments shall not be made for obligations sistance constitutes a minor portion of incurred after a specified date until the the project. conditions are corrected or the indebt- (1) When the reimbursement method edness to the Federal Government is is used, HHS will make payment within liquidated. (See 45 CFR part 30).

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(i) Standards governing the use of tionary awards without prior written banks and other institutions as deposi- approval from the HHS awarding agen- tories of funds advanced under awards cy, it waives its right to recover the in- are as follows. terest under CMIA. (See § 74.25(d)). (1) Except for situations described in (m) PMS–270, Request for Advance or paragraph (i)(2) of this section, HHS Reimbursement. Recipients shall use the will not require separate depository ac- PMS–270 to request advances or reim- counts for funds provided to a recipient bursement for all programs when elec- or establish any eligibility require- tronic funds transfer or predetermined ments for depositories for funds pro- advance methods are not used. HHS vided to a recipient. However, recipi- shall not require recipients to submit ents must be able to account for the re- more than an original and two copies. ceipt, obligation and expenditure of (n) Recipients and subrecipients are funds. not required to use forms PMS–270 and (2) Advances of Federal funds shall be 272 in connection with subaward pay- deposited and maintained in insured ments. accounts whenever possible. [59 FR 43760, Aug. 25, 1994, as amended at 61 (j) Consistent with the national goal FR 11746, Mar. 22, 1996] of expanding the opportunities for women-owned and minority-owned § 74.23 Cost sharing or matching. business enterprises, recipients are en- (a) To be accepted, all cost sharing or couraged to use women-owned and mi- matching contributions, including cash nority-owned banks (a bank which is and third party in-kind, shall meet all owned at least 50 percent by women or of the following criteria: minority group members). (1) Are verifiable from the recipient’s (k) Recipients shall maintain ad- records; vances of Federal funds in interest (2) Are not included as contributions bearing accounts, unless one of the fol- for any other federally-assisted project lowing conditions apply: or program; (1) The recipient receives less than (3) Are necessary and reasonable for $120,000 in Federal awards per year. proper and efficient accomplishment of (2) The best reasonably available in- project or program objectives; terest bearing account would not be ex- (4) Are allowable under the applica- pected to earn interest in excess of $250 ble cost principles; per year on Federal cash balances. (5) Are not paid by the Federal Gov- (3) The depository would require an ernment under another award, except average or minimum balance so high where authorized by Federal statute to that it would not be feasible within the be used for cost sharing or matching; expected Federal and non-Federal cash (6) Are provided for in the approved resources. budget; and (l) For those entities where CMIA (7) Conform to other provisions of and its implementing regulations do this part, as applicable. not apply (see 31 CFR part 205), interest (b) Unrecovered indirect costs may be earned on Federal advances deposited included as part of cost sharing or in interest bearing accounts shall be matching. remitted annually to the Department (c) Values for recipient contributions of Health and Human Services, Pay- of services and property shall be estab- ment Management System, P.O. Box lished in accordance with the applica- 6021, Rockville, MD 20852. Recipients ble cost principles. If the HHS award- with Electronic Funds Transfer capa- ing agency authorizes recipients to do- bility should use an electronic medium nate buildings or land for construction/ such as the FEDWIRE Deposit System. facilities acquisition projects or long- Interest amounts up to $250 per year term use, the value of the donated may be retained by the recipient for property for cost sharing or matching administrative expense. State univer- shall be the lesser of: sities and hospitals shall comply with (1) The certified value of the remain- CMIA, as it pertains to interest. If an ing life of the property recorded in the entity subject to CMIA uses its own recipient’s accounting records at the funds to pay pre-award costs for discre- time of donation; or

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(2) The current fair market value. (2) If the purpose of the award is to However, when there is sufficient jus- support activities that require the use tification, the HHS awarding agency of equipment, buildings or land, nor- may approve the use of the current fair mally only depreciation or use charges market value of the donated property, for equipment and buildings may be even if it exceeds the certified value at made. However, the full value of equip- the time of donation to the project. ment or other capital assets and fair (d) Volunteer services furnished by rental charges for land may be allowed, professional and technical personnel, provided that the HHS awarding agen- consultants, and other skilled and un- cy has approved the charges. skilled labor may be counted as cost (h) The value of donated property sharing or matching if the service is an shall be determined in accordance with integral and necessary part of an ap- the usual accounting policies of the re- proved project or program. Rates for cipient, with the following qualifica- volunteer services shall be consistent tions. with those paid for similar work in the (1) The value of donated land and recipient’s organization. In those in- buildings shall not exceed its fair mar- stances in which the required skills are ket value at the time of donation to not found in the recipient’s organiza- the recipient as established by an inde- tion, rates shall be consistent with pendent appraiser (e.g., certified real those paid for similar work in the labor property appraiser or General Services market in which the recipient com- Administration representative) and petes for the kind of services involved. certified by a responsible official of the In either case, fringe benefits con- recipient. sistent with those paid that are reason- (2) The value of donated equipment able, allowable, and allocable may be shall not exceed the fair market value included in the valuation. of equipment of the same age and con- (e) When an employer other than the dition at the time of donation. recipient furnishes the services of an (3) The value of donated space shall employee, these services shall be val- not exceed the fair rental value of com- ued at the employee’s regular rate of parable space as established by an inde- pay (plus an amount of fringe benefits pendent appraisal of comparable space that are reasonable, allowable, and al- and facilities in a privately-owned locable, but exclusive of overhead building in the same locality. costs), provided these services are in (4) The value of loaned equipment the same skill for which the employee shall not exceed its fair rental value. is normally paid. (i) The following requirements per- (f) Donated supplies may include tain to the recipient’s supporting such items as expendable property, of- records for in-kind contributions from fice supplies, laboratory supplies or third parties. workshop and classroom supplies. (1) Volunteer services shall be docu- Value assessed to donated supplies in- mented and, to the extent feasible, sup- cluded in the cost sharing or matching ported by the same methods used by share shall be reasonable and shall not the recipient for its own employees, in- exceed the fair market value of the cluding time records. property at the time of the donation. (2) The basis for determining the (g) The method used for determining valuation for personal service, mate- cost sharing or matching for donated rial, equipment, buildings and land equipment, buildings and land for shall be documented. which title passes to the recipient may differ according to the purpose of the [59 FR 43760, Aug. 25, 1994, as amended at 61 award, if paragraph (g)(1) or (2) of this FR 11746, Mar. 22, 1996] section applies: (1) If the purpose of the award is to § 74.24 Program income. assist the recipient in the acquisition (a) The standards set forth in this of equipment, buildings or land, the section shall be used to account for total value of the donated property program income related to projects fi- may be claimed as cost sharing or nanced in whole or in part with Federal matching. funds.

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(b) Except as provided below in para- developmental, or research work. Un- graph (h) of this section, program in- less the terms and conditions for the come earned during the project period award provide otherwise, recipients shall be retained by the recipient and, shall have no obligation to HHS with in accordance with the terms and con- respect to program income earned from ditions of the award, shall be used in license fees and royalties for copy- one or more of the following ways: righted material, patents, patent appli- (1) Added to funds committed to the cations, trademarks, and inventions project or program, and used to further made under an award. However, no eligible project or program objectives; scholarship, fellowship, training grant, (2) Used to finance the non-Federal or other funding agreement made pri- share of the project or program; or marily to a recipient for educational (3) Deducted from the total project or purposes will contain any provision program allowable cost in determining giving the Federal agency rights to in- the net allowable costs on which the ventions made by the recipient. Federal share of costs is based. (c) When the HHS awarding agency § 74.25 Revision of budget and pro- authorizes the disposition of program gram plans. income as described in paragraph (b)(1) (a) The budget plan is the financial or (b)(2) of this section, program in- expression of the project or program as come in excess of any limits stipulated approved during the award process. It shall be used in accordance with para- may include either the sum of the Fed- graph (b)(3) of this section. eral and non-Federal shares, or only (d) In the event that the HHS award- the Federal share, depending upon HHS ing agency does not specify in the awarding agency requirements. It shall terms and conditions of the award how be related to performance for program program income is to be used, para- evaluation purposes whenever appro- graph (b)(3) of this section shall apply priate. automatically to all projects or pro- (b) Recipients are required to report grams except research. For awards that deviations from budget and program support performance of research work, plans, and request prior approvals for paragraph (b)(1) of this section shall budget and program plan revisions, in apply automatically unless: accordance with this section. Except as (1) The HHS awarding agency indi- provided at §§ 74.4, 74.14, and this sec- cates in the terms and conditions of tion, HHS awarding agencies may not the award another alternative; or impose other prior approval require- (2) The recipient is subject to special ments for specific items. award conditions under § 74.14; or (c) For nonconstruction awards, re- (3) The recipient is a commercial or- cipients shall obtain prior approvals ganization (see § 74.82). from the HHS awarding agency for one (e) Unless the terms and conditions or more of the following program or of the award provide otherwise, recipi- budget related reasons. ents shall have no obligation to the (1) Change in the scope or the objec- Federal Government regarding pro- tive of the project or program (even if gram income earned after the end of there is no associated budget revision the project period. requiring prior written approval). (f) Costs incident to the generation of (2) Change in the project director or program income may be deducted from principal investigator or other key per- gross income to determine program in- sons specified in the application or come, provided these costs have not award document. been charged to the award. (3) The absence for more than three (g) Proceeds from the sale of property months, or a 25 percent reduction in shall be handled in accordance with the time devoted to the project, by the ap- requirements of the Property Stand- proved project director or principal in- ards. (See §§ 74.30 through 74.37, below). vestigator. (h) The Patent and Trademark Laws (4) The need for additional Federal Amendments, 35 U.S.C. section 200–212, funding. apply to inventions made under an (5) The inclusion, unless waived by award for performance of experimental, the HHS awarding agency, of costs that

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require prior approval in accordance for the purpose of using unobligated with OMB Circular A–21, ‘‘Cost Prin- balances. Such extensions are not per- ciples for Educational Institutions;’’ mitted where: OMB Circular A–122, ‘‘Cost Principles (i) The terms and conditions of award for Nonprofit Organizations;’’ or appen- prohibit the extension; or dix E of this part, ‘‘Principles for De- (ii) The extension requires additional termining Costs Applicable to Research Federal funds; or and Development under Grants and (iii) The extension involves any Contracts with Hospitals,’’ or 48 CFR change in the approved objectives or part 31, ‘‘Contract Cost Principles and scope of the project. Procedures,’’ as applicable. (3) Carry forward unobligated bal- (6) The transfer of funds allotted for ances to subsequent funding periods. training allowances (direct payment to (4) For awards that support perform- trainees) to other categories of ex- ance of research work, unless the HHS pense. awarding agency provides otherwise in (7) Unless described in the applica- the award, or the award is subject to tion and funded in the approved award, § 74.14 or subpart E of this Part, the the subaward, transfer or contracting prior approval requirements described out of any work under an award. This in paragraphs (d) (1)–(3) of this section provision does not apply to the pur- are automatically waived (i.e., recipi- chase of supplies, material, equipment ents need not obtain such prior approv- or general support services. als). However, extension of award expi- (8) The inclusion of research patient ration dates must be approved by the care costs in research awards made for HHS awarding agency if one of the con- the performance of research work. ditions in paragraph (d)(2) of this sec- (d) Except for requirements listed in tion applies. paragraphs (c)(1) and (c)(4) of this sec- (e) The HHS awarding agencies may tion, the HHS awarding agency is au- not permit any budget changes in a re- thorized, at its option, to waive cost- cipient’s award that would cause any related and administrative prior writ- Federal appropriation to be used for ten approvals required by this part and purposes other then those consistent its appendixes. Additional waivers may with the original purpose of the au- be granted authorizing recipients to do thorization and appropriation under any one or more of the following: which the award was funded. (1) Incur pre-award costs up to 90 cal- (f) For construction awards, recipi- endar days prior to award, or more ents shall obtain prior written ap- than 90 calendar days with the prior proval promptly from the HHS award- approval of the HHS awarding agency. ing agency for budget revisions when- However, all pre-award costs are in- ever: curred at the recipient’s risk: the HHS (1) The revision results from changes awarding agency is under no obligation in the scope or the objective of the to reimburse such costs if for any rea- project or program; son the applicant does not receive an (2) The need arises for additional award or if the award to the recipient Federal funds to complete the project; is less than anticipated and inadequate or to cover such costs. (3) A revision is desired which in- (2) Initiate a one-time extension of volves specific costs for which prior the expiration date of the award of up written approval requirements apply in to 12 months unless one or more of the keeping with the applicable cost prin- conditions identified at paragraphs ciples listed in § 74.27. (d)(2)(i), (ii), and (iii) of this section (g) When an HHS awarding agency apply. For one-time extensions, the re- makes an award that provides support cipient must notify the HHS awarding for both construction and nonconstruc- agency in writing, with the supporting tion work, it may require the recipient reasons and revised expiration date, at to obtain prior approval before making least 10 days before the date specified any fund or budget transfers between in the award. This one-time extension the two types of work supported. may not be exercised either by recipi- (h) For both construction and non- ents or HHS awarding agencies merely construction awards, recipients shall

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notify the HHS awarding agency in (b) State and local governments shall writing promptly whenever the amount be subject to the audit requirements of Federal authorized funds is expected contained in the Single Audit Act to exceed the needs of the recipient for Amendments of 1996 (31 U.S.C. 7501– the project period by more than $5000 7507) and revised OMB Circular A–133, or five percent of the Federal award, ‘‘Audits of States, Local Governments, whichever is greater. This notification and Non-Profit Organizations.’’ shall not be required if an application (c) For-profit hospitals not covered for additional funding is submitted for by the audit provisions of revised OMB a continuation award. Circular A–133 shall be subject to the (i) Within 30 calendar days from the audit requirements of the Federal date of receipt of the request for budg- awarding agencies. et revisions, HHS awarding agencies (d)(1) Recipients and subrecipients shall notify the recipient whether its that are commercial organizations (in- requested budget revisions have been cluding for-profit hospitals) have two approved. If the requested revision is options regarding audits: still under consideration at the end of (i) A financial related audit (as de- 30 calendar days, the HHS awarding fined in the Government Auditing agency must inform the recipient in Standards, GPO Stock #020–000–00–265– writing of the date when the recipient 4) of a particular award in accordance may expect a decision. with Government Auditing Standards, (j) When requesting approval for in those cases where the recipient rebudget changes, recipients shall make ceives awards under only one HHS pro- their requests in writing. gram; or, if awards are received under (k) All approvals granted in keeping multiple HHS programs, a financial re- with the provisions of this section shall lated audit of all HHS awards in ac- not be valid unless they are in writing, cordance with Government Auditing and signed by at least one of the fol- Standards; or lowing HHS officials: (ii) An audit that meets the require- (1) The Head of the HHS Operating or ments contained in OMB Circular A– Staff Division that made the award or 133. subordinate official with proper dele- (2) Commercial organizations that regated authority from the Head, includ- ceive annual HHS awards totaling less ing the Head of the Regional Office of than OMB Circular A–133’s audit re- the HHS Operating or Staff Division quirement threshold are exempt from that made the award; or requirements for a non-Federal audit (2) The responsible Grants Officer of for that year, but records must be the HHS Operating or Staff Division available for review by appropriate of- that made the award or an individual ficials of Federal agencies. duly authorized by the Grants Officer. (l) No other prior approval require- [59 FR 43760, Aug. 25, 1994, as amended at 61 ments for specific items may be im- FR 11746, Mar. 22, 1996; 61 FR 15564, Apr. 8, 1996; 62 FR 41878, Aug. 4, 1997; 62 FR 45939, posed unless a class deviation has been 45945, Aug. 29, 1997] approved by OMB. [59 FR 43760, Aug. 25, 1994, as amended at 61 § 74.27 Allowable costs. FR 11746, Mar. 22, 1996] (a) For each kind of recipient, there is a particular set of Federal principles § 74.26 Non-Federal audits. that applies in determining allowable (a) Recipients and subrecipients that costs. Allowability of costs shall be de- are institutions of higher education or termined in accordance with the cost other non-profit organizations (includ- principles applicable to the entity in- ing hospitals) shall be subject to the curring the costs. Thus, allowability of audit requirements contained in the costs incurred by State, local or feder- Single Audit Act Amendments of 1996 ally-recognized Indian tribal govern- (31 U.S.C. 7501–7507) and revised OMB ments is determined in accordance Circular A–133, ‘‘Audits of States, with the provisions of OMB Circular A– Local Governments, and Non-Profit Or- 87, ‘‘Cost Principles for State and Local ganizations.’’ Governments.’’ The allowability of

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costs incurred by nonprofit organiza- development is research and develop- tions (except for those listed in Attach- ment which is conducted by an organi- ment C of Circular A–122) is determined zation, and which is not sponsored by in accordance with the provisions of Federal or non-Federal awards, con- OMB Circular A–122, ‘‘Cost Principles tracts, or other agreements. Inde- for Nonprofit Organizations’’ and para- pendent research and development graph (b) of this section. The allow- shall be allocated its proportionate ability of costs incurred by institutions share of indirect costs on the same of higher education is determined in basis as the allocation of indirect costs accordance with the provisions of OMB to sponsored research and develop- Circular A–21, ‘‘Cost Principles for ment. The cost of independent research Educational Institutions.’’ The allow- and development, including their pro- ability of costs incurred by hospitals is portionate share of indirect costs, are determined in accordance with the pro- unallowable. visions of appendix E of this part, ‘‘Principles for Determining Costs Ap- § 74.28 Period of availability of funds. plicable to Research and Development Under Grants and Contracts with Hos- Where a funding period is specified, a pitals.’’ The allowability of costs in- recipient may charge to the award only curred by commercial organizations allowable costs resulting from obliga- and those nonprofit organizations list- tions incurred during the funding pe- ed in Attachment C to Circular A–122 is riod and any pre-award costs author- determined in accordance with the pro- ized by the HHS awarding agency pur- visions of the Federal Acquisition Reg- suant to § 74.25(d)(1). ulation (FAR) at 48 CFR part 31, except that independent research and develop- PROPERTY STANDARDS ment costs are unallowable. § 74.30 Purpose of property standards. (b) OMB Circular A–122 does not cover the treatment of bid and proposal Sections 74.31 through 74.37 set forth costs or independent research and de- uniform standards governing manage- velopment costs. The following rules ment and disposition of property fur- apply to these costs for nonprofit orga- nished by HHS or whose cost was nizations subject to that Circular. charged directly to a project supported (1) Bid and proposal costs. Bid and pro- by an HHS award. The HHS awarding posal costs are the immediate costs of agency may not impose additional re- preparing bids, proposals, and applica- quirements, unless specifically re- tions for Federal and non-Federal quired to do so by Federal statute. The awards, contracts, and other agree- recipient may use its own property ments, including the development of management standards and procedures scientific, cost, and other data needed provided they meet the provisions of to support the bids, proposals, and ap- §§ 74.31 through 74.37. plications. Bid and proposal costs of the current accounting period are al- § 74.31 Insurance coverage. lowable as indirect costs. Bid and pro- Recipients shall, at a minimum, proposal costs of past accounting periods vide the equivalent insurance coverage are unallowable in the current period. for real property and equipment ac- However, if the recipient’s established quired with HHS funds as provided to practice is to treat these costs by some other property owned by the recipient. other method, they may be accepted if they are found to be reasonable and eq- § 74.32 Real property. uitable. Bid and proposal costs do not include independent research and de- (a) Title to real property shall vest in velopment costs covered by paragraph the recipient subject to the condition (b)(2) of this section, or pre-award costs that the recipient shall use the real covered by OMB Circular A–122, At- property for the authorized purpose of tachment B, paragraph 33 and the project as long as it is needed and § 74.25(d)(1). shall not encumber the property with- (2) Independent Research and Develop- out approval of the HHS awarding ment costs. Independent research and agency.

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(b) The recipient shall obtain written annually an inventory listing of feder- approval from the HHS awarding agen- ally-owned property in their custody to cy for the use of real property in other the HHS awarding agency. Upon com- federally-sponsored projects when the pletion of the award or when the prop- recipient determines that the property erty is no longer needed, the recipient is no longer needed for the purpose of shall report the property to the HHS the original project. Use in other awarding agency for further agency projects shall be limited to those under utilization. federally-sponsored projects (i.e., (2) If the HHS awarding agency has awards) or programs that have pur- no further need for the property, it poses consistent with those authorized shall be declared excess and reported to for support by the HHS awarding agen- the General Services Administration, cy. unless the HHS awarding agency has (c) When the real property is no statutory authority to dispose of the longer needed as provided in para- property by alternative methods (e.g., graphs (a) and (b) of this section, the the authority provided by the Federal recipient shall request disposition in- Technology Transfer Act, 15 U.S.C. structions from the HHS awarding 3710(I), to donate research equipment agency or its successor. The HHS to educational and nonprofit organiza- awarding agency must provide one or tions in accordance with E.O. 12821, more of the following disposition in- ‘‘Improving Mathematics and Science structions: Education in Support of the National (1) The recipient may be permitted to Education Goals’’). Appropriate in- retain title without further obligation structions shall be issued to the recipi- to the Federal Government after it ent by the HHS awarding agency. compensates the Federal Government (b) For research awards to certain for that percentage of the current fair types of recipients, 31 U.S.C. 6306 au- market value of the property attrib- thorizes HHS to vest title to property utable to the Federal share in the acquired with Federal funds in the re- project. cipient without further obligation to (2) The recipient may be directed to the Federal government and under con- sell the property under guidelines pro- ditions that HHS considers appro- vided by the HHS awarding agency and priate. Such property is ‘‘exempt prop- pay the Federal Government for that erty’’. Exempt property shall not be percentage of the current fair market subject to the requirements of § 74.34, value of the property attributable to except that it shall be subject to para- the Federal share in the project (after graphs (h)(1), (2), and (4) of that section deducting actual and reasonable selling concerning the HHS awarding agency’s and fix-up expenses, if any, from the right to require transfer. sales proceeds). When the recipient is [59 FR 43760, Aug. 25, 1994, as amended at 61 authorized or required to sell the prop- FR 11747, Mar. 22, 1996] erty, proper sales procedures shall be established that provide for competi- § 74.34 Equipment. tion to the extent practicable and re- (a) Title to equipment acquired by a sult in the highest possible return. recipient with HHS funds shall vest in (3) The recipient may be directed to the recipient, subject to the conditions transfer title to the property to the of this section. Federal Government or to an eligible (b)(1) The recipient shall not use third party provided that, in such equipment acquired with HHS funds to cases, the recipient shall be entitled to provide services to non-Federal organi- compensation for its attributable per- zations for a fee that is less than pri- centage of the current fair market vate companies charge for equivalent value of the property. services, unless specifically authorized by Federal statute, for so long as the § 74.33 Federally-owned and exempt Federal Government retains an inter- property. est in the equipment. (a)(1) Title of federally-owned prop- (2) If the equipment is owned by the erty remains vested in the Federal Federal Government, use on other ac- Government. Recipients shall submit tivities not sponsored by the Federal

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Government shall be permissible if au- (i) A description of the equipment; thorized by the HHS awarding agency. (ii) Manufacturer’s serial number, (3) User charges shall be treated as model number, Federal stock number, program income, in keeping with the national stock number, or other identi- provisions of § 74.24. fication number; (c) The recipient shall use the equip- (iii) Source of the equipment, includ- ment in the project or program for ing the award number; which it was acquired as long as need- (iv) Whether title vests in the recipi- ed, whether or not the project or pro- ent or the Federal Government; gram continues to be supported by Fed- (v) Acquisition date (or date re- eral funds and shall not encumber the ceived, if the equipment was furnished property without approval of the HHS by the Federal Government) and cost; awarding agency. When no longer need- (vi) Information from which one can ed for the original project or program, calculate the percentage of HHS’s the recipient shall use the equipment share in the cost of the equipment (not in connection with its other federally- applicable to equipment furnished by sponsored activities, if any, in the fol- the Federal Government); lowing order of priority: (vii) Location and condition of the (1) Programs, projects, or activities equipment and the date the informa- sponsored by the HHS awarding agen- tion was reported; cy; (viii) Unit acquisition cost; and (2) Programs, projects, or activities (ix) Ultimate disposition data, in- sponsored by other HHS awarding cluding date of disposal and sales price agencies; then or the method used to determine cur- (3) Programs, project, or activities rent fair market value where a recipi- sponsored by other Federal agencies. ent compensates the HHS awarding (d) During the time that equipment agency for its share. is used on the program, project, or ac- (2) Equipment owned by the Federal tivity for which it was acquired, the re- Government shall be identified to indi- cipient shall make it available for use cate Federal ownership. on other projects or programs if such (3) The recipient shall take a phys- other use will not interfere with the ical inventory of equipment and the re- work on the program, project, or activ- sults reconciled with the equipment ity for which the equipment was origi- records at least once every two years. nally acquired. First preference for Any differences between quantities de- such other use shall be given to other termined by the physical inspection programs, projects, or activities spon- and those shown in the accounting sored by the HHS awarding agency. records shall be investigated to deter- Second preference shall be given to mine the causes of the difference. The programs, projects, or activities spon- recipient shall, in connection with the sored by other HHS awarding agencies. inventory, verify the existence, current Third preference shall be given to pro- utilization, and continued need for the grams, projects, or activities sponsored equipment. by other Federal agencies. (4) recipient shall maintain a control (e) When acquiring replacement system to insure adequate safeguards equipment, the recipient may use the to prevent loss, damage, or theft of the equipment to be replaced as trade-in or equipment. Any loss, damage, or theft sell the equipment and use the proof equipment shall be investigated and ceeds to offset the costs of the replace- fully documented; if the equipment was ment equipment subject to the ap- owned by the Federal Government, the proval of the HHS awarding agency. recipient shall promptly notify the (f) The recipient’s property manage- HHS awarding agency. ment standards for equipment acquired (5) The recipient shall implement with Federal funds and federally-owned adequate maintenance procedures to equipment shall include all of the fol- keep the equipment in good condition. lowing: (6) Where the recipient is authorized (1) Equipment records shall be main- or required to sell the equipment, prop- tained accurately and shall include the er sales procedures shall be established following information: which provide for competition to the

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extent practicable and result in the used for allowable costs of that project highest possible return. or program. Otherwise the net amount (g) When the recipient no longer must be remitted to the HHS awarding needs the equipment, it may use the agency by check. equipment for other activities in ac- (h) The HHS awarding agency re- cordance with the following standards. serves the right to order the transfer of For equipment with a current per unit title to the Federal Government or to a fair market value of $5000 or more, the third party named by the awarding recipient may retain the equipment for agency when such third party is other- other uses provided that compensation wise eligible under existing statutes. is made to the original HHS awarding Such transfer shall be subject to the agency or its successor. The amount of following standards: compensation shall be computed by ap- (1) The equipment shall be appro- plying the percentage of HHS’s share in priately identified in the award or oth- the cost of the original project or pro- erwise made known to the recipient in gram to the current fair market value writing. of the equipment. If the recipient has (2) The HHS awarding agency may re- no need for the equipment, the recipi- quire submission of a final inventory ent shall request disposition instruc- that lists all equipment acquired with tions from the HHS awarding agency; HHS funds and federally-owned equip- such instructions must be issued to the ment. recipient no later than 120 calendar (3) If the HHS awarding agency fails days after the recipient’s request and to issue disposition instructions within the following procedures shall govern: 120 calendar days after receipt of the (1) If so instructed or if disposition inventory, the recipient shall apply the instructions are not issued within 120 standards of paragraph (g)(1) of this calendar days after the recipient’s re- section as appropriate. quest, the recipient shall sell the (4) When the HHS awarding agency equipment and reimburse the HHS exercises its right to order the transfer awarding agency an amount computed of title to the Federal Government, the by applying to the sales proceeds the equipment shall be subject to the rules percentage of HHS share in the cost of for federally-owned equipment. (See the original project or program. How- § 74.34(g)). ever, the recipient shall be permitted [59 FR 43760, Aug. 25, 1994, as amended at 61 to deduct and retain from the HHS FR 11747, Mar. 22, 1996] share $500 or ten percent of the proceeds, whichever is less, for the recipi- § 74.35 Supplies. ent’s selling and handling expenses. (a) Title to supplies shall vest in the (2) If the recipient is instructed to recipient upon acquisition. If there is a ship the equipment elsewhere, the re- residual inventory of unused supplies cipient shall be reimbursed by the HHS exceeding $5000 in total aggregate awarding agency by an amount which value upon termination or completion is computed by applying the percent- of the project or program and the sup- age of the recipient’s share in the cost plies are not needed for any other fed- of the original project or program to erally-sponsored project or program, the current fair market value of the the recipient shall retain the supplies equipment, plus any reasonable ship- for use on non-federally sponsored ac- ping or interim storage costs incurred. tivities or sell them, but shall, in ei- (3) If the recipient is instructed to ther case, compensate the Federal Gov- otherwise dispose of the equipment, the ernment for its share. The amount of recipient will be reimbursed by the compensation shall be computed in the HHS awarding agency for such costs in- same manner as for equipment. (See curred in its disposition. § 74.34(g)). (4) If the recipient’s project or pro- (b)(1) The recipient shall not use sup- gram for which or under which the plies acquired with Federal funds to equipment was acquired is still receiv- provide services to non-Federal organi- ing support from the same HHS pro- zations for a fee that is less than pri- gram, and if the HHS awarding agency vate companies charge for equivalent approves, the net amount due may be services, unless specifically authorized

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by Federal statute as long as the Fed- the full incremental cost of obtaining eral Government retains an interest in the research data. This fee should re- the supplies. flect costs incurred by the agency, the (2) If the supplies are owned by the recipient, and applicable subrecipients. Federal Government, use on other ac- This fee is in addition to any fees the tivities not sponsored by the Federal agency may assess under the FOIA (5 Government shall be permissible if au- U.S.C. 552(a)(4)(A)). thorized by the HHS awarding agency. (2) The following definitions apply (3) User charges shall be treated as for purposes of this paragraph (d): program income, in keeping with the (i) Research data is defined as the re- provisions of § 74.24. corded factual material commonly ac- [59 FR 43760, Aug. 25, 1994, as amended at 61 cepted in the scientific community as FR 11747, Mar. 22, 1996] necessary to validate research findings, but not any of the following: prelimi- § 74.36 Intangible property. nary analyses, drafts of scientific pa- (a) The recipient may copyright any pers, plans for future research, peer re- work that is subject to copyright and views, or communications with col- was developed, or for which ownership leagues. This ‘‘recorded’’ material ex- was purchased, under an award. The cludes physical objects (e.g., laboratory HHS awarding agency reserves a roy- samples). Research data also do not in- alty-free, nonexclusive and irrevocable clude: right to reproduce, publish, or other- (A) Trade secrets, commercial infor- wise use the work for Federal purposes, mation, materials necessary to be held and to authorize others to do so. confidential by a researcher until they (b) Recipients are subject to applica- are published, or similar information ble regulations governing patents and which is protected under law; and inventions, including government-wide (B) Personnel and medical informa- regulations issued by the Department tion and similar information the dis- of Commerce at 37 CFR part 401, closure of which would constitute a ‘‘Rights to Inventions Made by Non- clearly unwarranted invasion of per- profit Organizations and Small Busi- sonal privacy, such as information that ness Firms Under Government Grants, could be used to identify a particular Contracts and Cooperative Agree- person in a research study. ments.’’ (ii) Published is defined as either (c) The Federal Government has the when: right to: (1) Obtain, reproduce, publish or oth- (A) Research findings are published erwise use the data first produced in a peer-reviewed scientific or tech- under an award; and nical journal; or (2) Authorize others to receive, repro- (B) A Federal agency publicly and of- duce, publish, or otherwise use such ficially cites the research findings in data for Federal purposes. support of an agency action that has (d)(1) In addition, in response to a the force and effect of law. Freedom of Information Act (FOIA) re- (iii) Used by the Federal Government in quest for research data relating to pub- developing an agency action that has the lished research findings produced under force and effect of law is defined as when an award that were used by the Federal an agency publicly and officially cites Government in developing an agency the research findings in support of an action that has the force and effect of agency action that has the force and law, the HHS Awarding Agency shall effect of law. request, and the recipient shall pro- (3) The requirements set forth in vide, within a reasonable time, the re- paragraph (d)(1) of this section do not search data so that they can be made apply to commercial organizations. available to the public through the pro- (e) Title to intangible property and cedures established under the FOIA. If debt instruments purchased or other- the HHS Awarding Agency obtains the wise acquired under an award or research data solely in response to a subaward vests upon acquisition in the FOIA request, the agency may charge recipient. The recipient shall use that the requester a reasonable fee equaling property for the originally—authorized

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purpose, and the recipient shall not en- other agreement. This includes dis- cumber the property without approval putes, claims, protests of award, source of the HHS awarding agency. When no evaluation or other matters of a con- longer needed for the originally au- tractual nature. Matters concerning thorized purpose, disposition of the in- violation of statute are to be referred tangible property shall occur in accord- to such Federal, State or local author- ance with the provisions of § 74.34 (g) ity as may have proper jurisdiction. and (h). [59 FR 43760, Aug. 25, 1994, as amended at 65 § 74.42 Codes of conduct. FR 14407, 14418, Mar. 16, 2000] The recipient shall maintain written standards of conduct governing the § 74.37 Property trust relationship. performance of its employees engaged Real property, equipment, intangible in the award and administration of property and debt instruments that are contracts. No employee, officer, or acquired or improved with Federal agent shall participate in the selection, funds shall be held in trust by the re- award, or administration of a contract cipients as trustee for the beneficiaries supported by Federal funds if a real or of the project or program under which apparent conflict of interest would be the property was acquired or improved, and shall not be encumbered without involved. Such a conflict would arise the approval of the HHS awarding when the employee, officer, or agent, agency. Recipients shall record liens or or any member of his or her immediate other appropriate notices of record to family, his or her partner, or an orga- indicate that real property has been ac- nization which employs or is about to quired or constructed or, where appli- employ any of the parties indicated cable, improved with Federal funds, herein, has a financial or other interest and that use and disposition conditions in the firm selected for an award. The apply to the property. officers, employees, and agents of the recipient shall neither solicit nor ac- PROCUREMENT STANDARDS cept gratuities, favors, or anything of monetary value from contractors, or § 74.40 Purpose of procurement stand- parties to subagreements. However, re- ards. cipients may set standards for situa- Sections 74.41 through 74.48 set forth tions in which the financial interest is standards for use by recipients in es- not substantial or the gift is an unso- tablishing procedures for the procure- licited item of nominal value. The ment of supplies and other expendable standards of conduct shall provide for property, equipment, real property and disciplinary actions to be applied for other services with Federal funds. violations of such standards by offi- These standards are established to en- cers, employers, or agents of the recipi- sure that such materials and services ents. are obtained in an effective manner and in compliance with the provisions § 74.43 Competition. of applicable Federal statutes and executive orders. The standards apply All procurement transactions shall where the cost of the procurement is be conducted in a manner to provide, treated as a direct cost of an award. to the maximum extent practical, open and free competition. The recipient § 74.41 Recipient responsibilities. shall be alert to organizational con- The standards contained in this sec- flicts of interest as well as noncompeti- tion do not relieve the recipients of the tive practices among contractors that contractual responsibilities arising may restrict or eliminate competition under its contract(s). The recipient is or otherwise restrain trade. In order to the responsible authority, without re- ensure objective contractor perform- course to the HHS awarding agency, re- ance and eliminate unfair competitive garding the settlement and satisfaction advantage, contractors that develop or of all contractual and administrative draft grant applications, or contract issues arising out of procurements en- specifications, requirements, state- tered into in support of an award or ments of work, invitations for bids and/

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or requests for proposals shall be ex- natural resources and protect the envi- cluded from competing for such pro- ronment and are energy efficient. curements. Awards shall be made to (b) Positive efforts shall be made by the bidder or offeror whose bid or offer recipients to utilize small businesses, is responsive to the solicitation and is minority-owned firms, and women’s most advantageous to the recipient, business enterprises, whenever pos- price, quality and other factors consid- sible. Recipients of HHS awards shall ered. Solicitations shall clearly set take all of the following steps to fur- forth all requirements that the bidder ther this goal. or offeror shall fulfill in order for the (1) Ensure that small businesses, mi- bid or offer to be evaluated by the re- nority-owned firms, and women’s busi- cipient. Any and all bids or offers may ness enterprises are used to the fullest be rejected when it is in the recipient’s extent practicable. interest to do so. (2) Make information on forthcoming opportunities available and arrange § 74.44 Procurement procedures. time frames for purchases and con- (a) All recipients shall establish writ- tracts to encourage and facilitate par- ten procurement procedures. These ticipation by small businesses, minor- procedures shall provide for, at a min- ity-owned firms, and women’s business imum, that: enterprises. (1) Recipients avoid purchasing un- (3) Consider in the contract process necessary items; whether firms competing for larger contracts intend to subcontract with (2) Where appropriate, an analysis is small businesses, minority-owned made of lease and purchase alter- firms, and women’s business enter- natives to determine which would be prises. the most economical and practical pro- (4) Encourage contracting with con- curement for the recipient and the Fed- sortiums of small businesses, minority- eral Government; and owned firms and women’s business en- (3) Solicitations for goods and serv- terprises when a contract is too large ices provide for all of the following: for one of these firms to handle individ- (i) A clear and accurate description ually. of the technical requirements for the (5) Use the services and assistance, as material, product or service to be pro- appropriate, of such organizations as cured. In competitive procurements, the Small Business Administration and such a description shall not contain the Department of Commerce’s Minor- features which unduly restrict com- ity Business Development Agency in petition. the solicitation and utilization of (ii) Requirements which the bidder/ small businesses, minority-owned firms offeror must fulfill and all other fac- and women’s business enterprises. tors to be used in evaluating bids or (c) The type of procuring instruments proposals. used (e.g., fixed price contracts, cost (iii) A description, whenever prac- reimbursable contracts, purchase or- ticable, of technical requirements in ders, and incentive contracts) shall be terms of functions to be performed or determined by the recipient but shall performance required, including the be appropriate for the particular pro- range of acceptable characteristics or curement and for promoting the best minimum acceptable standards. interest of the program or project in- (iv) The specific features of ‘‘brand volved. The ‘‘cost-plus-a-percentage-of- name or equal’’ descriptions that bid- cost’’ or ‘‘percentage of construction ders are required to meet when such cost’’ methods of contracting shall not items are included in the solicitation. be used. (v) The acceptance, to the extent (d) Contracts shall be made only with practicable and economically feasible, responsible contractors who possess of products and services dimensioned in the potential ability to perform suc- the metric system of measurement. cessfully under the terms and condi- (vi) Preference, to the extent prac- tions of the proposed procurement. ticable and economically feasible, for Consideration shall be given to such products and services that conserve matters as contractor integrity, record

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of past performance, financial and § 74.46 Procurement records. technical resources or accessibility to Procurement records and files for other necessary resources. In certain purchases in excess of the simplified circumstances, contracts with certain acquisition threshold shall include the parties are restricted by agencies’ im- following at a minimum: (a) Basis for plementation of E.O.s 12549 and 12689, contractor selection, (b) justification ‘‘Debarment and Suspension.’’ (See 45 for lack of competition when competi- CFR part 76.) tive bids or offers are not obtained, and (e) Recipients shall, on request, make (c) basis for award cost or price. available for the HHS awarding agency, pre-award review, procurement docu- [59 FR 43760, Aug. 25, 1994, as amended at 62 FR 41878, Aug. 4, 1997] ments such as requests for proposals or invitations for bids, independent cost § 74.47 Contract administration. estimates, etc., when any of the fol- A system for contract administration lowing conditions apply: shall be maintained to ensure con- (1) A recipient’s procurement proce- tractor conformance with the terms, dures or operation fails to comply with conditions and specifications of the the procurement standards in this contract and to ensure adequate and Part. timely follow up of all purchases. Re- (2) The procurement is expected to cipients shall evaluate contractor per- exceed the simplified acquisition formance and document, as appro- threshold fixed at 41 U.S.C. 403(11) (cur- priate, whether contractors have met rently $100,000) and is to be awarded the terms, conditions and specifica- without competition or only one bid or tions of the contract. offer is received in response to a solicitation. § 74.48 Contract provisions. (3) The procurement, which is ex- The recipient shall include, in addi- pected to exceed the simplified acquisition to provisions to define a sound and tion threshold specifies a ‘‘brand complete agreement, the following pro- name’’ product. visions in all contracts. The following (4) The proposed award over the sim- provisions shall also be applied to sub- plified acquisition threshold is to be contracts: awarded to other than the apparent (a) Contracts in excess of the sim- low bidder under a sealed bid procure- plified acquisition threshold shall con- ment. tain contractual provisions or condi- (5) A proposed contract modification tions that allow for administrative, changes the scope of a contract or in- contractual, or legal remedies in increases the contract amount by more stances in which a contractor violates than the amount of the simplified ac- or breaches the contract terms, and quisition threshold. provide for such remedial actions as may be appropriate. [59 FR 43760, Aug. 25, 1994, as amended at 61 (b) All contracts in excess of the sim- FR 11747, Mar. 22, 1996; 62 FR 41878, Aug. 4, plified acquisition threshold (currently 1997; 62 FR 51377, Oct. 1, 1997] $100,000) shall contain suitable provisions for termination by the recipient, § 74.45 Cost and price analysis. including the manner by which termi- Some form of cost or price analysis nation shall be effected and the basis shall be made and documented in the for settlement. In addition, such con- procurement files in connection with tracts shall describe conditions under every procurement action. Price anal- which the contract may be terminated ysis may be accomplished in various for default as well as conditions where ways, including the comparison of the contract may be terminated be- price quotations submitted, market cause of circumstances beyond the con- prices and similar indicia, together trol of the contractor. with discounts. Cost analysis is the re- (c) Except as otherwise required by view and evaluation of each element of statute, an award that requires the cost to determine reasonableness, contracting (or subcontracting) for allocability and allowability. construction or facility improvements

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shall provide for the recipient to follow aminations, excerpts and tran- its own requirements relating to bid scriptions. guarantees, performance bonds, and (e) All contracts, including small payment bonds unless the construction purchases, awarded by recipients and contract or subcontract exceeds their contractors shall contain the pro- $100,000. For those contracts or sub- curement provisions of appendix A to contracts exceeding $100,000, the HHS this part, as applicable. awarding agency may accept the bond- [59 FR 43760, Aug. 25, 1994, as amended at 61 ing policy and requirements of the re- FR 11747, Mar. 22, 1996; 62 FR 41878, Aug. 4, cipient, provided the HHS awarding 1997] agency has made a determination that the Federal Government’s interest is REPORTS AND RECORDS adequately protected. If such a determination has not been made, the min- § 74.50 Purpose of reports and records. imum requirements shall be as follows: Sections 74.51 through 74.53 set forth (1) A bid guarantee from each bidder the procedures for monitoring and re- equivalent to five percent of the bid porting on the recipient’s financial and price. The ‘‘bid guarantee’’ shall con- program performance and the nec- sist of a firm commitment such as a essary standard reporting forms. They bid bond, certified check, or other ne- also set forth record retention require- gotiable instrument accompanying a ments. bid as assurance that the bidder shall, upon acceptance of his bid, execute § 74.51 Monitoring and reporting pro- such contractual documents as may be gram performance. required within the time specified. (a) Recipients are responsible for (2) A performance bond on the part of managing and monitoring each project, the contractor for 100 percent of the program, subaward, function or activ- contract price. A ‘‘performance bond’’ ity supported by the award. Recipients is one executed in connection with a shall monitor subawards to ensure that contract to secure fulfillment of all the subrecipients have met the audit re- contractor’s obligations under such quirements as set forth in § 74.26. contract. (b) The HHS awarding agency will (3) A payment bond on the part of the prescribe the frequency with which the contractor for 100 percent of the con- performance reports shall be subtract price. A ‘‘payment bond’’ is one mitted. Except as provided in para- executed in connection with a contract graph (f) of this section, performance to assure payment as required by stat- reports will not be required more fre- ute of all persons supplying labor and quently than quarterly or, less fre- material in the execution of the work quently than annually. Annual reports provided for in the contract. shall be due 90 calendar days after the (4) Where bonds are required in the award year; quarterly or semi-annual situations described herein, the bonds reports shall be due 30 days after the shall be obtained from companies hold- reporting period. The HHS awarding ing certificates of authority as accept- agency may require annual reports be- able sureties pursuant to 31 CFR part fore the anniversary dates of multiple 223, ‘‘Surety Companies Doing Business year awards in lieu of these require- with the United States.’’ ments. The final performance reports (d) All negotiated contracts (except are due 90 calendar days after the expi- those for less than the simplified ac- ration or termination of the award. quisition threshold) awarded by recipi- (c) If inappropriate, a final technical ents shall include a provision to the ef- or performance report will not be re- fect that the recipient, the HHS award- quired after completion of the project. ing agency, the U.S. Comptroller Gen- (d) Performance reports shall general, or any of their duly authorized erally contain, for each award, brief in- representatives, shall have access to formation on each of the following: any books, documents, papers and (1) A comparison of actual accom- records of the contractor which are di- plishments with the goals and objec- rectly pertinent to a specific program tives established for the period, the for the purpose of making audits, ex- findings of the investigator, or both.

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Whenever appropriate and the output (ii) If the HHS awarding agency re- of programs or projects can be readily quires accrual information and the re- quantified, such quantitative data cipient’s accounting records are not should be related to cost data for com- normally kept on the accrual basis, the putation of unit costs. recipient shall not be required to con- (2) Reasons why established goals vert its accounting system, but shall were not met, if appropriate. develop such accrual information (3) Other pertinent information in- through best estimates based on an cluding, when appropriate, analysis analysis of the documentation on hand. and explanation of cost overruns or (iii) The HHS awarding agency will high unit costs. determine the frequency of the Finan- (e) Recipients shall submit the origi- cial Status Report for each project or nal and two copies of performance re- program, considering the size and com- ports. plexity of the particular project or pro- (f) Recipients shall immediately no- gram. However, the report will not be tify the HHS awarding agency of devel- required more frequently than quar- opments that have a significant impact terly or less frequently than annually on the award-supported activities. except under § 74.14. A final report shall Also, notification shall be given in the be required at the completion of the case of problems, delays, or adverse agreement. conditions which materially impair the (iv) Recipients shall submit the SF– ability to meet the objectives of the 269 and SF–269A (an original and two award. This notification shall include a copies) no later than 30 days after the statement of the action taken or con- end of each specified reporting period templated, and any assistance needed for quarterly and semi-annual reports, to resolve the situation. and 90 calendar days for annual and (g) HHS may make site visits, as final reports. Extensions of reporting needed. due dates may be approved by the HHS awarding agency upon request of the (h) The HHS awarding agency com- recipient. plies with the applicable report clear- (2) PMS–272, Report of Federal Cash ance requirements of 5 CFR part 1320, Transactions. ‘‘Controlling Paperwork Burdens on (i) When funds are advanced to re- the Public,’’ when requesting perform- cipients, the HHS awarding agency re- ance data from recipients. quires each recipient to submit the PMS–272 and, when necessary, its con- § 74.52 Financial reporting. tinuation sheet, PMS–272A through G. (a) The following forms are used for The HHS awarding agency uses this re- obtaining financial information from port to monitor cash advanced to re- recipients: cipients and to obtain disbursement in- (1) SF–269 or SF–269A, Financial Sta- formation for each agreement with the tus Report. recipients. (i) The HHS awarding agency will re- (ii) The HHS awarding agency may quire recipients to use either the SF– require forecasts of Federal cash re- 269 (long form) or SF–269A to report quirements in the ‘‘Remarks’’ section the status of funds for all nonconstruc- of the report. tion projects or programs. The SF–269 (iii) Recipients shall submit the shall always be used if income has been original and two copies of the PMS–272 earned. The awarding agency may, 15 calendar days following the end of however, waive the SF–269 or SF–269A each quarter. The HHS awarding agen- requirement when the PMS–270, Re- cy may require a monthly report from quest for Advance or Reimbursement, those recipients receiving advances to- or PMS–272, Report of Federal Cash taling $1 million or more per year. Transactions, will provide adequate in- (iv) The HHS awarding agency may formation to meet its needs, except waive the requirement for submission that a final SF–269 or SF–269A shall be of the PMS–272 for any one of the fol- required at the completion of the lowing reasons: (A) When monthly ad- project when the PMS–270 is used only vances do not exceed $25,000 per recipi- for advances. ent, provided that such advances are

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monitored through other forms con- (1) If any litigation, claim, financial tained in this section; (B) If, in HHS’ management review, or audit is started opinion, the recipient’s accounting before the expiration of the 3-year pe- controls are adequate to minimize ex- riod, the records shall be retained until cessive Federal advances; or, (C) When all litigation, claims or audit findings the electronic payment mechanisms involving the records have been re- provide adequate data. solved and final action taken. (b) When the HHS awarding agency (2) Records for real property and needs additional information or more equipment acquired with Federal funds frequent reports, the following shall be shall be retained for 3 years after final observed. disposition. (1) When additional information is (3) When records are transferred to or needed to comply with legislative re- maintained by the HHS awarding agen- quirements, the HHS awarding agency cy, the 3-year retention requirement is will issue instructions to require re- not applicable to the recipient. cipients to submit that information (4) Indirect cost rate proposals, cost under the ‘‘Remarks’’ section of the re- allocations plans, etc., as specified in ports. § 74.53(g). (2) When HHS determines that a re- (c) Copies of original records may be cipient’s accounting system does not substituted for the original records if authorized by the HHS awarding agen- meet the standards in § 74.21, additional cy. pertinent information to further mon- (d) The HHS awarding agency will re- itor awards may be obtained, without quest transfer of certain records to its regard to § 74.4, upon written notice to custody from recipients when it deter- the recipient until such time as the mines that the records possess long system is brought up to standard. In term retention value. However, in obtaining this information, the HHS order to avoid duplicate recordkeeping, awarding agencies comply with report the HHS awarding agency may make clearance requirements of 5 CFR part arrangements for recipients to retain 1320, ‘‘Controlling Paperwork Burdens any records that are continuously on the Public.’’ needed for joint use. (3) The HHS awarding agency may (e) HHS awarding agencies, the HHS accept the identical information from Inspector General, the U.S. Comp- a recipient in machine readable format troller General, or any of their duly au- or computer printouts or electronic thorized representatives, have the outputs in lieu of prescribed formats. right of timely and unrestricted access (4) The HHS awarding agency may to any books, documents, papers, or provide computer or electronic outputs other records of recipients that are per- to recipients when such action expe- tinent to the awards, in order to make dites or contributes to the accuracy of audits, examinations, excerpts, tran- reporting. scripts and copies of such documents. This right also includes timely and rea- § 74.53 Retention and access require- sonable access to a recipient’s per- ments for records. sonnel for the purpose of interview and (a) This section sets forth require- discussion related to such documents. ments for record retention and access The rights of access in this paragraph to records for awards to recipients. are not limited to the required reten- (b) Financial records, supporting doc- tion period, but shall last as long as uments, statistical records, and all records are retained. other records pertinent to an award (f) Unless required by statute, the shall be retained for a period of three HHS awarding agency will not place re- years from the date of submission of strictions on recipients that limit pub- the final expenditure report or, for lic access to the records of recipients awards that are renewed quarterly or that are pertinent to an award, except annually, from the date of the submis- when the HHS awarding agency can sion of the quarterly or annual finan- demonstrate that such records shall be cial report. The only exceptions are the kept confidential and would have been following: exempted from disclosure pursuant to

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the Freedom of Information Act, 5 (3) By the recipient upon sending to U.S.C. 552, if the records had belonged the HHS awarding agency written noti- to the HHS awarding agency. fication setting forth the reasons for (g) Paragraphs (g)(1) and (g)(2) of this such termination, the effective date, section apply to the following types of and, in the case of partial termination, documents, and their supporting the portion to be terminated. However, records: Indirect cost rate computa- if the HHS awarding agency determines tions or proposals, cost allocation in the case of partial termination that plans, and any similar accounting com- the reduced or modified portion of the putations of the rate at which a par- award will not accomplish the purposes ticular group of costs is chargeable for which the award was made, it may (such as computer usage chargeback terminate the award in its entirety. rates or composite fringe benefit (b) If costs are allowed under an rates). award, the responsibilities of the re- (1) If the recipient submits to the cipient referred to in § 74.71(a), includ- Federal Government or the sub- ing those for property management as recipient submits to the recipient the applicable, shall be considered in the proposal, plan, or other computation to termination of the award, and provi- form the basis for negotiation of the sion shall be made for continuing re- rate, then the 3-year retention period sponsibilities of the recipient after ter- for its supporting records starts on the mination, as appropriate. date of such submission. § 74.62 Enforcement. (2) If the recipient is not required to submit to the Federal Government or (a) If a recipient materially fails to the subrecipient is not required to sub- comply with the terms and conditions mit to the recipient the proposal, plan, of an award, whether stated in a Fed- or other computation for negotiation eral statute or regulation, an assur- purposes, then the 3-year retention pe- ance, an application, or a notice of riod for the proposal, plan, or other award, the HHS awarding agency may, computation and its supporting records in addition to imposing any of the spe- starts at the end of the fiscal year (or cial conditions outlined in § 74.14, take other accounting period) covered by one or more of the following actions, as the proposal, plan, or other computa- appropriate in the circumstances: tion. (1) Temporarily withhold cash payments pending correction of the defi- TERMINATION AND ENFORCEMENT ciency by the recipient or more severe enforcement action by the HHS award- § 74.60 Purpose of termination and en- ing agency. forcement. (2) Disallow (that is, deny both use of funds and any applicable matching Sections 74.61 and 74.62 set forth uni- credit for) all or part of the cost of the form suspension, termination and en- activity or action not in compliance. forcement procedures. (3) Wholly or partly suspend or ter- § 74.61 Termination. minate the current award. (4) Withhold further awards for the (a) Awards may be terminated in project or program. whole or in part only if paragraph (a) (5) Take any other remedies that (1), (2), or (3) of this section applies. may be legally available. (1) By the HHS awarding agency, if a (b) In taking an enforcement action, recipient materially fails to comply the HHS awarding agency will provide with the terms and conditions of an the recipient or subrecipient an oppor- award. tunity for such hearing, appeal, or (2) By the HHS awarding agency with other administrative proceeding to the consent of the recipient, in which which the recipient or subrecipient is case the two parties shall agree upon entitled under any statute or regula- the termination conditions, including tion applicable to the action. (See also the effective date and, in the case of 45 CFR parts 16 and 95.) partial termination, the portion to be (c) Costs to a recipient resulting from terminated. obligations incurred by the recipient

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during a suspension or after termi- the terms and conditions of the award nation of an award are not allowable or in agency implementing instruc- unless the HHS awarding agency ex- tions. pressly authorizes them in the notice (c) HHS will make prompt payments of suspension or termination or subse- to a recipient for allowable reimburs- quently. Other recipient costs during able costs under the award being closed suspension or after termination which out. are necessary and not reasonably (d) The recipient shall promptly re- avoidable are allowable if: fund any balances of unobligated cash (1) The costs result from obligations that HHS has advanced or paid and which were properly incurred by the re- that is not authorized to be retained by cipient before the effective date of sus- the recipient for use in other projects. pension or termination, are not in an- 45 CFR part 30 governs unreturned ticipation of it, and in the case of a ter- amounts that become delinquent debts. mination, are noncancellable; and (e) When authorized by the terms and (2) The costs would be allowable if conditions of the award, HHS will the award were not suspended or ex- make a settlement for any upward or pired normally at the end of the fund- downward adjustments to the Federal ing period in which the termination share of costs after closeout reports are takes effect. received. (d) The enforcement remedies identi- (f) The recipient shall account for fied in this section, including suspen- any real and personal property ac- sion and termination, do not preclude a quired with HHS funds or received from recipient from being subject to debar- the Federal Government in accordance ment and suspension under E.O.s 12549 with §§ 74.31 through 74.37. and 12689 and the HHS implementing (g) In the event a final audit has not regulations at § 74.13 of this part and 45 been performed prior to the closeout of CFR part 76. an award, HHS retains the right to re- [59 FR 43760, Aug. 25, 1994, as amended at cover an appropriate amount after 62FR 38218, July 17, 1997] fully considering the recommendations on disallowed costs resulting from the Subpart D—After-the-Award final audit. Requirements § 74.72 Subsequent adjustments and continuing responsibilities. SOURCE: 59 FR 43760, Aug. 25, 1994, unless otherwise noted. (a) The closeout of an award does not affect any of the following: § 74.70 Purpose. (1) The right of the HHS awarding Sections 74.71 through 74.73 contain agency to disallow costs and recover closeout procedures and other proce- funds on the basis of a later audit or dures for subsequent disallowances and other review. adjustments. (2) The obligation of the recipient to return any funds due as a result of § 74.71 Closeout procedures. later refunds, corrections, or other (a) Recipients shall submit, within 90 transactions. calendar days after the date of comple- (3) Audit requirements in § 74.26. tion of the award, all financial, per- (4) Property management require- formance, and other reports as required ments in §§ 74.31 through 74.37. by the terms and conditions of the (5) Records retention requirements in award. The HHS awarding agency may § 74.53. approve extensions when requested by (b) After closeout of an award, a rela- the recipient. tionship created under an award may (b) Unless the HHS awarding agency be modified or ended in whole or in authorizes an extension, a recipient part with the consent of the HHS shall liquidate all obligations incurred awarding agency and the recipient, under the award not later than 90 cal- provided the responsibilities of the re- endar days after the funding period or cipient referred to in § 74.72(a), includ- the date of completion as specified in ing those for property management as

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applicable, are considered and provi- § 74.82 Program income. sions made for continuing responsibil- The additional costs alternative de- ities of the recipient, as appropriate. scribed in § 74.24(b)(1) may not be applied to program income earned by a § 74.73 Collection of amounts due. commercial organization except in the (a) Any funds paid to a recipient in SBIR and STTR programs. excess of the amount to which the recipient is finally determined to be enti- § 74.83 Effect on intangible property. tled under the terms and conditions of Data sharing (FOIA) requirements as the award constitute a debt to the Fed- set forth in § 74.36(d)(1) do not apply to eral Government. If not paid within a commercial organizations. reasonable period after the demand for payment, the HHS awarding agency [65 FR 14418, Mar. 16, 2000] may reduce the debt by paragraph (a) (1), (2), or (3) of this section: Subpart F—Disputes (1) Making an administrative offset against other requests for reimburse- SOURCE: 59 FR 43760, Aug. 25, 1994, unless ments. otherwise noted. (2) Withholding advance payments § 74.90 Final decisions in disputes. otherwise due the recipient. (3) Taking other action permitted by (a) HHS attempts to promptly issue statute. final decisions in disputes and in other (b) Except as otherwise provided by matters affecting the interests of re- law, HHS awarding agencies will cipients. However, final decisions ad- charge interest on an overdue debt in verse to the recipient are not issued accordance with 4 CFR ch. II, ‘‘Federal until it is clear that the matter cannot Claims Collection Standards.’’ (See 45 be resolved through further exchange CFR part 30.) of information and views. (b) Under various HHS statutes or regulations, recipients have the right Subpart E—Special Provisions for to appeal from, or to have a hearing on, Awards to Commercial Orga- certain final decisions by HHS award- nizations ing agencies. (See, for example, subpart D of 42 CFR part 50, and 45 CFR part SOURCE: 59 FR 43760, Aug. 25, 1994, unless 16). Paragraphs (c) and (d) of this sec- otherwise noted. tion set forth the standards HHS expects its member agencies to meet in § 74.80 Scope of subpart. issuing a final decision covered by any This subpart contains provisions that of the statutes or regulations. apply to awards to commercial organi- (c) The decision may be brief but zations. These provisions are in addi- must contain: tion to other applicable provisions of (1) A complete statement of the this part, or they make exceptions background and basis of the awarding from other provisions of this part for agency’s decision, including reference awards to commercial organizations. to the pertinent statutes, regulations, or other governing documents; and § 74.81 Prohibition against profit. (2) Enough information to enable the recipient to understand the issues and Except for awards under the Small the position of the HHS awarding agen- Business Innovation Research (SBIR) cy. and Small Business Technology Trans- (d) The following or similar language fer Research (STTR) programs (15 (consistent with the terminology of the U.S.C. 638), no HHS funds may be paid applicable statutes or regulations) as profit to any recipient even if the re- should appear at the end of the deci- cipient is a commercial organization. sion: ‘‘This is the final decision of the Profit is any amount in excess of al- (title of grants officer or other official lowable direct and indirect costs. responsible for the decision). It shall be [59 FR 43760, Aug. 25, 1994, as amended at 61 the final decision of the Department FR 11747, Mar. 22, 1996] unless, within 30 days after receiving

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this decision, you deliver or mail (you partment of Labor regulations, 29 CFR part should use registered or certified mail 3, ‘‘Contractors and Subcontractors on Pub- to establish the date) a written notice lic Building or Public Work Financed in of appeal to (name and address of ap- Whole or in Part by Loans or Grants from the United States.’’ The Act provides that propriate contact, e.g., the office re- each contractor or subrecipient shall be pro- sponsible for awarding agency prelimi- hibited from inducing, by any means, any nary appeal process or, where none, the person employed in the construction, com- Departmental Appeals Board, Depart- pletion, or repair of public work, to give up ment of Health and Human Services, any part of the compensation to which he is Washington, DC 20201). You shall at- otherwise entitled. The recipient shall report tach to the notice a copy of this deci- all suspected or reported violations to the sion, note that you intend an appeal, Federal awarding agency. 3. Davis-Bacon Act, as amended (40 U.S.C. state the amount in dispute, and brief- 276a to a–7)— When required by Federal pro- ly state why you think that this deci- gram legislation, all construction contracts sion is wrong. You will be notified of awarded by the recipients and subrecipients further procedures.’’ of more than $2000 shall include a provision for compliance with the Davis-Bacon Act, 40 [59 FR 43760, Aug. 25, 1994, as amended at 61 U.S.C. 276a to a–7, and as supplemented by FR 11747, Mar. 22, 1996; 62 FR 38218, July 17, Department of Labor regulations, 29 CFR 1997] part 5, ‘‘Labor Standards Provisions Applica- ble to Contracts Governing Federally Fi- § 74.91 Alternative dispute resolution. nanced and Assisted Construction.’’ Under HHS encourages its awarding agen- this Act, contractors shall be required to pay cies and recipients to try to resolve wages to laborers and mechanics at a rate disputes by using alternative dispute not less than the minimum wages specified in a wage determination made by the Sec- resolution (ADR) techniques. ADR retary of Labor. In addition, contractors often is effective in reducing the cost, shall be required to pay wages not less than delay and contentiousness involved in once a week. The recipient shall place a copy appeals and other traditional ways of of the current prevailing wage determination handling disputes. ADR techniques in- issued by the Department of Labor in each clude mediation, neutral evaluation solicitation and the award of a contract shall and other consensual methods. Infor- be conditioned upon the acceptance of the wage determination. The recipient shall re- mation about ADR is available from port all suspected or reported violations to the HHS Dispute Resolution Specialist the HHS awarding agency. at the Departmental Appeals Board, 4. Contract Work Hours and Safety Standards U.S. Department of Health and Human Act (40 U.S.C. 327–333)— Where applicable, all Services, Washington, DC 20201. contracts awarded by recipients in excess of $100,000 for construction contracts and for APPENDIX A TO PART 74—CONTRACT other contracts that involve the employment PROVISIONS of mechanics or laborers shall include a provision for compliance with sections 102 and All contracts awarded by a recipient, in- 107 of the Contract Work Hours and Safety cluding small purchases, shall contain the Standards Act, 40 U.S.C. 327–333, as supple- following provisions as applicable where the mented by Department of Labor regulations, cost of the contract is treated as a direct 29 CFR part 5. Under section 102 of the Act, cost of an award: each contractor shall be required to compute 1. Equal Employment Opportunity— All con- the wages of every mechanic and laborer on tracts shall contain a provision requiring the basis of a standard work week of 40 compliance with E.O. 11246, ‘‘Equal Employ- hours. Work in excess of the standard work ment Opportunity,’’ as amended by E.O. week is permissible provided that the worker 11375, ‘‘Amending Executive Order 11246 Re- is compensated at a rate of not less than 11⁄2 lating to Equal Employment Opportunity,’’ times the basic rate of pay for all hours and as supplemented by regulations at 41 worked in excess of 40 hours in the work CFR part 60, ‘‘Office of Federal Contract week. Section 107 of the Act is applicable to Compliance Programs, Equal Employment construction work and provides that no la- Opportunity, Department of Labor.’’ borer or mechanic shall be required to work 2. Copeland ‘‘Anti-Kickback’’ Act (18 U.S.C. in surroundings or under working conditions 874 and 40 U.S.C. 276c)— All contracts and which are unsanitary, hazardous or dan- subgrants in excess of $2,000 for construction gerous. These requirements do not apply to or repair awarded by recipients and sub- the purchases of supplies or materials or ar- recipients shall include a provision for com- ticles ordinarily available on the open mar- pliance with the Copeland ‘‘Anti-Kickback’’ ket, or contracts for transportation or trans- Act, 18 U.S.C. 874, as supplemented by De- mission of intelligence.

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5. Rights to Inventions Made Under a Con- APPENDIXES B–D TO PART 74 tract or Agreement— Contracts or agreements [RESERVED] for the performance of experimental, developmental, or research work shall provide for APPENDIX E TO PART 74—PRINCIPLES the rights of the Federal Government and FOR DETERMINING COSTS APPLICA- the recipient in any resulting invention in BLE TO RESEARCH AND DEVELOP- accordance with 37 CFR part 401, ‘‘Rights to MENT UNDER GRANTS AND CON- Inventions Made by Nonprofit Organizations TRACTS WITH HOSPITALS and Small Business Firms Under Govern- ment Grants, Contracts and Cooperative I. PURPOSE AND SCOPE Agreements,’’ and any further implementing regulations issued by HHS. A. Objectives. This appendix provides principles for determining the costs applicable to 6. Clean Air Act (42 U.S.C. 7401 et seq.) and research and development work performed the Federal Water Pollution Control Act as by hospitals under grants and contracts with amended (33 U.S.C. 1251 et seq.)— Contracts the Department of Health and Human Serv- and subgrants of amounts in excess of ices. These principles are confined to the $100,000 shall contain a provision that re- subject of cost determination and make no quires the recipient to agree to comply with attempt to identify the circumstances or all applicable standards, orders or regula- dictate the extent of hospital participation tions issued pursuant to the Clean Air Act, in the financing of a particular research or 42 U.S.C. 7401 et seq., and the Federal Water development project. The principles are de- Pollution Control Act, as amended 33 U.S.C. signed to provide recognition of the full allo- 1251 et seq. Violations shall be reported to cated costs of such research work under gen- the HHS and the appropriate Regional Office erally accepted accounting principles. These of the Environmental Protection Agency. principles will be applicable to both propri- 7. Byrd Anti-Lobbying Amendment (31 U.S.C. etary and non-profit hospitals. No provision 1352)— Contractors who apply or bid for an for profit or other increment above cost is award of more than $100,000 shall file the re- provided for in these principles. However, quired certification. Each tier certifies to this is not to be interpreted as precluding a the tier above that it will not and has not negotiated fee between contracting parties used Federal appropriated funds to pay any when a fee is appropriate. person or organization for influencing or at- B. Policy guides. The successful application tempting to influence an officer or employee of these principles requires development of of any Federal agency, a member of Con- mutual understanding between representatives of hospitals and of the Department of gress, officer or employee of Congress, or an Health and Human Services as to their employee of a member of Congress in connec- scope, applicability and interpretation. It is tion with obtaining any Federal contract, recognized that: grant or any other award covered by 31 1. The arrangements for hospital participa- U.S.C. 1352. Each tier shall also disclose any tion in the financing of a research and devel- lobbying with non-Federal funds that takes opment project are properly subject to nego- place in connection with obtaining any Fed- tiation between the agency and the hospital eral award. Such disclosures are forwarded concerned in accordance with such Govern- from tier to tier up to the recipient. (See ment-wide criteria as may be applicable. also 45 CFR part 93). 2. Each hospital, possessing its own unique 8. Debarment and Suspension (E.O.s 12549 combination of staff, facilities and experi- and 12689)— Certain contracts shall not be ence, should be encouraged to conduct re- made to parties listed on the nonprocure- search in a manner consonant with its own ment portion of the General Services Admin- institutional philosophies and objectives. istration’s ‘‘Lists of Parties Excluded from 3. Each hospital in the fulfillment of its Federal Procurement or Nonprocurement contractual obligations should be expected Programs’’ in accordance with E.O.s 12549 to employ sound management practices. and 12689, ‘‘Debarment and Suspension.’’ (See 4. The application of the principles estab- 45 CFR part 76.) This list contains the names lished herein shall be in conformance with of parties debarred, suspended, or otherwise the generally accepted accounting practices excluded by agencies, and contractors de- of hospitals. clared ineligible under statutory authority 5. Hospitals receive reimbursements from other than E.O. 12549. Contractors with the Federal Government for differing types awards that exceed the simplified acquisi- of services under various programs such as tion threshold shall provide the required cer- support of Research and Development (in- tification regarding their exclusion status cluding discrete clinical centers) Health and that of their principals prior to award. Services Projects, Medicare, etc. It is essential that consistent procedures for deter- [59 FR 43760, Aug. 25, 1994, as amended at 61 mining reimbursable costs for similar serv- FR 11747, Mar. 22, 1996; 62 FR 41878, Aug. 4, ices be employed without regard to program 1997] differences. Therefore, both the direct and

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indirect costs of research programs must be means the cost of these services applicable identified as a cost center(s) for the cost to patients involved in research programs. finding and step-down requirements of the G. Allocation means the process by which Medicare program, or in its absence the Med- the indirect costs are assigned as between: icaid program. 1. Organized research, C. Application. All operating agencies with- 2. Patient care including departmental re- in the Department of Health and Human search. Services that sponsor research and develop- 3. Instruction and training, and ment work in hospitals will apply these prin- 4. Other hospital activities. ciples and related policy guides in deter- H. Cost center means an identifiable depart- mining the costs incurred for such work ment or area (including research) within the under grants and cost-reimbursement type hospital which has been assigned an account contracts and subcontracts. These principles number in the hospital accounting system will also be used as a guide in the pricing of for the purpose of accumulating expense by fixed-price contracts and subcontracts. department or area. I. Cost finding is the process of recasting II. DEFINITIONS OF TERMS the data derived from the accounts ordinarily kept by a hospital to ascertain costs A. Organized research means all research of the various types of services rendered. It activities of a hospital that may be identi- is the determination of direct costs by spe- fied whether the support for such research is cific identification and the proration of indi- from a federal, non-federal or internal rect costs by allocation. source. J. Step down is a cost finding method that B. Departmental research means research recognizes that services rendered by certain activities that are not separately budgeted nonrevenue-producing departments or cen- and accounted for. Such work, which in- ters are utilized by certain other nonrevenue cludes all research activities not encom- producing centers as well as by the revenue- passed under the term organized research, is producing centers. All costs of nonrevenue- regarded for purposes of this document as a producing centers are allocated to all cen- part of the patient care activities of the hos- ters which they serve, regardless of whether pital. or not these centers produce revenue. Fol- C. Research agreement means any valid ar- lowing the apportionment of the cost of the rangement to perform federally-sponsored nonrevenue-producing center, that center research or development including grants, will be considered closed and no further costs cost-reimbursement type contracts, cost-re- are apportioned to that center. imbursement type subcontracts, and fixed- K. Scatter bed is a bed assigned to a re- price contracts and subcontracts. search patient based on availability. Re- D. Instruction and training means the for- search patients occupying these beds are not mal or informal programs of educating and physically segregated from nonresearch pa- training technical and professional health tients occupying beds. Scatter beds are geo- services personnel, primarily medical and graphically dispersed among all the beds nursing training. This activity, if separately available for use in the hospital. There are budgeted or identifiable with specific costs, no special features attendant to a scatter should be considered as a cost objective for bed that distinguishes it from others that purposes of indirect cost allocations and the could just as well have been occupied. development of patient care costs. L. Discrete bed is a bed or beds that have E. Other hospital activities means all orga- been set aside for occupancy by research pa- nized activities of a hospital not imme- tients and are physically segregated from diately related to the patient care, research, other hospital beds in an environment that and instructional and training functions permits an easily ascertainable allocation of which produce identifiable revenue from the costs associated with the space they occupy performance of these activities. If a non-re- and the services they generate. lated activity does not produce identifiable revenue, it may be necessary to allocate this III. BASIC CONSIDERATIONS expense using an appropriate basis. In such a A. Composition of total costs. The cost of a case, the activity may be included as an allo- research agreement is comprised of the al- cable cost (See paragraph III D below.) Also lowable direct costs incident to its perform- included under this definition is any cat- ance plus the allocable portion of the allow- egory of cost treated as ‘‘Unallowable,’’ pro- able indirect costs of the hospital less appli- vided such category of cost identifies a func- cable credits. (See paragraph III-E.) tion or activity to which a portion of the in- B. Factors affecting allowability of costs. The stitution’s indirect cost (as defined in para- tests of allowability of costs under these graph V. A.) are properly allocable. principles are: F. Patient care means those departments or 1. They must be reasonable. cost centers which render routine or ancil- 2. They must be assigned to research agree- lary services to in-patients and/or out-pa- ments under the standards and methods pro- tients. As used in paragraph IX B.23, it vided herein.

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3. They must be accorded consistent treat- meet deficiencies caused by overruns or ment through application of those generally other fund considerations, to avoid restric- accepted accounting principles appropriate tions imposed by law or by terms of the re- to the circumstances (See paragraph I-E.5.) search agreement, or for other reasons of and convenience. 4. They must conform to any limitations E. Applicable credits. 1. The term applicable or exclusions set forth in these principles or credits refers to those receipts or negative in the research agreement as to types or expenditure types of transactions which op- amounts of cost items. erate to offset or reduce expense items that C. Reasonable costs. A cost may be consid- are allocable to research agreements as di- ered reasonable if the nature of the goods or rect or indirect costs as outlined in para- services acquired or applied, and the amount graph V-A. Typical examples of such trans- involved therefor reflect the action that a actions are: purchase discounts, rebates, or prudent person would have taken under the allowances; recoveries or indemnities on circumstances prevailing at the time the de- losses; sales of scrap or incidental services; cision to incur the cost was made. Major tuition; adjustments of overpayments or er- considerations involved in the determination roneous charges; and services rendered to pa- of the reasonableness of a cost are: 1. Whether or not the cost is of a type gen- tients admitted to federally funded clinical erally recognized as necessary for the oper- research centers, primarily for care though ation of the hospital or the performance of also participating in research protocols. the research agreement, 2. In some instances, the amounts received 2. The restraints or requirements imposed from the Federal Government to finance hos- by such factors as arm’s length bargaining, pital activities or service operations should federal and state laws and regulations, and be treated as applicable credits. Specifically, research agreement terms and conditions, the concept of netting such credit items 3. Whether or not the individuals con- against related expenditures should be ap- cerned acted with due prudence in the cir- plied by the hospital in determining the cumstances, considering their responsibil- rates or amounts to be charged to govern- ities to the hospital, its patients, its employment research for services rendered when- ees, its students, the Government, and the ever the facilities or other resources used in public at large, and providing such services have been financed 4. The extent to which the actions taken directly, in whole or in part, by federal with respect to the incurrence of the cost are funds. Thus, where such items are provided consistent with established hospital policies for or benefit a particular hospital activity, and practices applicable to the work of the i.e., patient care, research, instruction and hospital generally, including Government re- training, or other, they should be treated as search. an offset to the indirect costs apportioned to D. Allocable costs. 1. A cost is allocable to a that activity. Where the benefits are com- particular cost center (i.e., a specific func- mon to all hospital activities they should be tion, project, research agreement, depart- treated as a credit to the total indirect cost ment, or the like) if the goods or services in- pool before allocation to the various cost ob- volved are chargeable or assignable to such jectives. cost center in accordance with relative benefits received or other equitable relationship. IV. DIRECT COSTS Subject to the foregoing, a cost is allocable to a research agreement if it is incurred sole- A. General. Direct costs are those that can ly to advance the work under the research be identified specifically with a particular agreement; or it benefits both the research cost center. For this purpose, the term cost agreement and other work of the hospital in center refers not only to the ultimate cen- proportions that can be approximated ters against which costs are finally lodged through use of reasonable methods; or it is such as research agreements, but also to necessary to the overall operation of the hos- other established cost centers such as the in- pital and, in light of the standards provided dividual accounts for recording particular in this chapter, is deemed to be assignable in objects or items of expense, and the separate part to organized research. Where the pur- account groupings designed to record the ex- chase of equipment or other capital items penses incurred by individual organizational are specifically authorized under a research units, functions, projects and the like. In agreement, the amounts thus authorized for general, the administrative functions and such purchases are allocable to the research service activities described in paragraph VI agreement regardless of the use that may are identifiable as separate cost centers, and subsequently be made of the equipment or the expenses associated with such centers be- other capital items involved. come eligible in due course for distribution 2. Any costs allocable to a particular re- as indirect costs of research agreements and search agreement under the standards pro- other ultimate cost centers. vided in these principles may not be shifted B. Application to research agreements. Identi- to other research agreements in order to fiable benefit to the research work rather

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than the nature of the goods and services in- achieve this objective with reasonable preci- volved is the determining factor in distin- sion, it may be necessary to provide for se- guishing direct from indirect costs of re- lective distribution by establishing separate search agreements. Typical of transactions groupings of cost within one or more of the chargeable to a research agreement as direct functional categories of indirect costs re- costs are the compensation of employees for ferred to in paragraph V-A. In general, the the time or effort devoted to the perform- cost groupings established within a func- ance of work under the research agreement, tional category should constitute, in each including related staff benefit and pension case, a pool of those items of expense that plan costs to the extent that such items are are considered to be of like character in consistently accorded to all employees and terms of their relative contribution to (or treated by the hospital as direct rather than degree of remoteness from) the particular indirect costs (see paragraph V. B4b); the cost centers to which distribution is appro- costs of materials consumed or expended in priate. Each such pool or cost grouping the performance of such work; and other should then be distributed individually to items of expense incurred for the research the related cost centers, using the distribu- agreement, such as extraordinary utility tion base or method most appropriate in the consumption. The cost of materials supplied light of the guides set out in B3 below. While from stock or services rendered by special- this paragraph places primary emphasis on a ized facilities or other institutional service step-down method of indirect cost computa- operations may be included as direct costs of tion, paragraph VIII provides an alternate research agreements provided such items are method which may be used under certain consistently treated by the institution as di- conditions. rect rather than indirect costs and are 3. Selection of distribution method. Actual charged under a recognized method of cost- conditions must be taken into account in se- ing or pricing designed to recover only the lecting the method or base to be used in dis- actual direct and indirect costs of such ma- tributing to related cost centers the ex- terial or service and conforming to generally penses assembled under each of the indi- accepted cost accounting practices consist- vidual cost groups established as indicated ently followed by the institution. under B2 above. Where a distribution can be made by assignment of a cost grouping di- V. INDIRECT COSTS rectly to the area benefited, the distribution should be made in that manner. Care should A. General. Indirect costs are those that be given, however, to eliminate similar or have been incurred for common or joint ob- duplicative costs from any other distribution jectives, and thus are not readily subject to made to this area. Where the expenses under treatment as direct costs of research agree- a cost grouping are more general in nature, ments or other ultimate or revenue pro- the distribution to related cost centers ducing cost centers. In hospitals such costs should be made through use of a selected normally are classified but not necessarily base which will produce results which are eq- restricted to the following functional cat- uitable to both the Government and the hos- egories: Depreciation; Administrative and pital. In general, any cost element or cost- General (including fringe benefits if not related factor associated with the hospital’s charged directly); Operation of Plant; Main- work is potentially adaptable for use as a tenance of Plant; Laundry and Linen Serv- distribution base provided: ice; Housekeeping; Dietary; Maintenance of a. It can readily be expressed in terms of Personnel; and Medical Records and Library. dollars or other quantitative measure (total B. Criteria for distribution—1. Base period. A direct expenditures, direct salaries, base period for distribution of indirect costs manhours applied, square feet utilized, hours is the period during which such costs are in- of usage, number of documents processed, curred and accumulated for distribution to population served, and the like); and work performed within that period. The base b. It is common to the related cost centers period normally should coincide with the fis- during the base period. The essential consid- cal year established by the hospital, but in eration in selection of the distribution base any event the base period should be so se- in each instance is that it be the one best lected as to avoid inequities in the distribu- suited for assigning the pool of costs to re- tion of costs. lated cost centers in accord with the relative 2. Need for cost groupings. The overall objec- benefits derived; the traceable cause and ef- tive of the allocation process is to distribute fect relationship; or logic and reason, where the indirect costs described in paragraph VI neither benefit nor cause and effect relation- to organized research, patient care, instruc- ship is determinable. tion and training, and other hospital activi- 4. General consideration on cost groupings. ties in reasonable proportions consistent The extent to which separate cost groupings with the nature and extent of the use of the and selective distribution would be appro- hospital’s resources by research personnel, priate at a hospital is a matter of judgment medical staff, patients, students, and other to be determined on a case-by-case basis. personnel or organizations. In order to Typical situations which may warrant the

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establishment of two or more separate cost C. Administration of limitations on allowances groups (based on account classification or for indirect costs. 1. Research grants may be analysis) within a functional category in- subject to laws and/or administrative regula- clude but are not limited to the following: tions that limit the allowance for indirect a. Where certain items or categories of ex- costs under each such grant to a stated per- pense relate solely to one of the major divi- centage of the direct costs allowed. Agencies sions of the hospital (patient care, sponsored that sponsor such grants will establish pro- research, instruction and training, or other cedures which will assure that: hospital activities) or to any two but not all, a. The terms and amount authorized in such expenses should be set aside as a sepa- each case conform with the provisions of rate cost grouping for direct assignment or paragraphs III, V and IX of these principles selective distribution in accordance with the as they apply to matters involving the con- guides provided in B2 and B3 above. sistent treatment and allowability of indi- b. Where any types of expense ordinary vidual items of cost; and treated as indirect cost as outlined in para- b. The amount actually allowed for indi- graph V-A are charged to research agree- rect costs under each such research grant ments as direct costs, the similar type ex- does not exceed the maximum allowable penses applicable to other activities of the under the limitation or the amount other- institution must through separate cost wise allowable under these principles, which- grouping be excluded from the indirect costs ever is the smaller. allocable to research agreements. 2. Where the actual allowance for indirect costs on any research grant must be re- c. Where it is determined that certain ex- stricted to the smaller of the two alternative penses are for the support of a service unit or amounts referred to in C1 above, such alter- facility whose output is susceptible of meas- native amounts should be determined in ac- urement on a workload or other quantitative cordance with the following guides: basis, such expenses should be set aside as a a. The maximum allowable under the limi- separate cost grouping for distribution on tation should be established by applying the such basis to organized research and other stated percentage to a direct cost base which hospital activities. shall include all items of expenditure au- d. Where organized activities (including thorized by the sponsoring agency for inclu- identifiable segments of organized research sion as part of the total cost for the direct as well as the activities cited in paragraph benefit of the work under the grant; and II-E) provide their own purchasing, personnel b. The amount otherwise allowable under administration, building maintenance, or these principles should be established by ap- housekeeping or similar service, the dis- plying the current institutional indirect cost tribution of such elements of indirect cost to rate to those elements of direct cost which such activities should be accomplished were included in the base on which the rate through cost grouping which includes only was computed. that portion of central indirect costs (such 3. When the maximum amount allowable as for overall management) which are prop- under a statutory limitation or the terms of erly allocable to such activities. a research agreement is less than the e. Where the hospital elects to treat as in- amount otherwise allocable as indirect costs direct charges the costs of pension plans and under these principles, the amount not re- other staff benefits, such costs should be set coverable as indirect costs under the re- aside as a separate cost grouping for selec- search agreement involved may not be shift- tive distribution to related cost centers, ined to other research agreements. cluding organized research. f. Where the hospital is affiliated with a VI. IDENTIFICATION AND ASSIGNMENT OF medical school or some other institution INDIRECT COSTS which performs organized research on the A. Depreciation or use charge. 1. The ex- hospital’s premises, every effort should be penses under this heading should include de- made to establish separate cost groupings in preciation (as defined in paragraph IX-B.9a) the Administrative and General or other ap- on buildings, fixed equipment, and movable plicable category which will reasonably re- equipment, except to the extent purchased flect the use of services and facilities by such through federal funds. Where adequate research. (See also paragraph VII-A.3) records for the recording of depreciation are 5. Materiality. Where it is determined that not available, a use charge may be sub- the use of separate cost groupings and selec- stituted for depreciation (See paragraph IX- tive distribution are necessary to produce B.) equitable results, the number of such sepa- 2. The expenses included in this category rate cost groupings within a functional cat- should be allocated to applicable cost cen- egory should be held within practical limits, ters in a manner consistent with the guides after taking into consideration the materi- set forth in paragraph V-B, on a basis that ality of the amounts involved and the degree gives primary emphasis to (a) space utiliza- of precision attainable through less selective tion with respect to depreciation on build- methods of distribution. ings and fixed equipment; and (b) specific

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identification of assets and their use with re- the use of facilities by research personnel spect to movable equipment as it relates to and others, including patients. patient care, organized research, instruction D. Maintenance of plant. 1. The expenses and training, and other hospital activities. under this heading should include: Where such records are not sufficient for the a. All salaries and wages pertaining to or- purpose of the foregoing, reasonable esti- dinary repair and maintenance work per- mates will suffice as a means for effecting formed by employees on the payroll of the distribution of the amounts involved. hospital; B. Administration and general expenses. 1. b. All supplies and parts used in the ordi- The expenses under this heading are those nary repairing and maintaining of buildings that have been incurred for the administra- and general equipment; and tive offices of the hospital including ac- c. Amounts paid to outside concerns for counting, personnel, purchasing, information the ordinary repairing and maintaining of centers, telephone expense, and the like buildings and general equipment. which do not relate solely to any major divi- 2. The expenses included in this category sion of the institution, i.e., solely to patient should be allocated to applicable cost cen- care, organized research, instruction and ters in a manner consistent with the guides training, or other hospital activities. provided in paragraph V-B. on a basis that 2. The expenses included in this category gives primary emphasis to space utilization. may be allocated on the basis of total ex- The allocations and apportionments should penditures exclusive of capital expenditures, be developed as follows: a. Where actual space and related cost or salaries and wages in situations where the records are available and can readily be de- results of the distribution made on this basis veloped and maintained without significant are deemed to be equitable both to the Gov- change in the accounting practices, the ernment and the hospital; otherwise the dis- amount distributed should be based on such tribution of Administration and General ex- records; penses should be made through use of se- b. Where the space and related cost records lected bases, applied to separate cost maintained are not sufficient for purposes of groupings established within this category of the foregoing, a reasonable estimate of the expenses in accordance with the guides set proportion of total space assigned to the var- out in paragraph V-B. ious cost centers normally will suffice as a C. Operation of plant. 1. The expenses under means for effecting distribution of the this heading are those that have been in- amounts involved; or curred by a central service organization or c. Where it can be demonstrated that an at the departmental level for the administra- area or volume of space basis of allocation is tion, supervision, and provision of utilities impractical or inequitable, other basis may (exclusive of telephone expense) and protec- be used provided consideration is given to tive services to the physical plant. They in- the use of facilities by research personnel clude expenses incurred for such items as and others, including patients. power plant operations, general utility costs, E. Laundry and linen. 1. The expenses under elevator operations, protection services, and this heading should include: general parking lots. a. Salaries and wages of laundry depart- 2. The expenses included in this category ment employees, seamstresses, clean linen should be allocated to applicable cost cen- handlers, linen delivery men, etc.; ters in a manner consistent with the guides b. Supplies used in connection with the provided in paragraph V-B, on a basis that laundry operation and all linens purchased; gives primary emphasis to space utilization. and The allocations should be developed as fol- c. Amounts paid to outside concerns for lows: purchased laundry and/or linen service. a. Where actual space and related cost 2. The expense included in this category records are available or can readily be devel- should be allocated to related cost centers in oped and maintained without significant a manner consistent with the guides pro- change in the accounting practices, the vided in paragraph V-B. on a basis that gives amount distributed should be based on such primary emphasis to actual pounds of linen records; used. The allocations should be developed as b. Where the space and related cost records follows: maintained are not sufficient for purposes of a. Where actual poundage and related cost the foregoing, a reasonable estimate of the records are available or can readily be devel- proportion of total space assigned to the var- oped and maintained without significant ious costs centers normally will suffice as a change in the accounting practices, the means for effecting distribution of the amount distributed should be based on such amounts involved; or records; c. Where it can be demonstrated that an b. Where it can be demonstrated that a area or volume or space basis of allocation is poundage basis of allocation is impractical impractical or inequitable, other bases may or inequitable other bases may be used pro- be used provided consideration is given to vided consideration is given to the use of

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linen by research personnel and others, in- 2. The expenses included in this category cluding patients. should be allocated to related cost centers in F. Housekeeping. 1. The expenses under this a manner consistent with the guides pro- heading should include: vided in paragraph V-B. on a basis that gives a. All salaries and wages of the department primary emphasis to employee utilization of head, foreman, maids, porters, janitors, wall housing facilities. The allocation should be washers, and other housekeeping employees; developed as follows: b. All supplies used in carrying out the a. Appropriate credit should be given for housekeeping functions; and all payments received from employees or c. Amounts paid to outside concerns for otherwise to reduce the expense to be allo- purchased services such as window washing, cated; insect extermination, etc. b. A net cost per housed employee may 2. The expenses included in this category then be computed; and should be allocated to related cost centers in c. Allocation should be made on a depart- a manner consistent with the guides pro- mental basis based on the number of housed vided in paragraph V-B. on a basis that gives employees in each respective department. primary emphasis to space actually serviced I. Medical records and library. 1. The ex- by the housekeeping department. The alloca- penses under this heading should include: tions and apportionments should be devel- a. The salaries and wages of the records librarian, medical librarian, clerks, stenog- oped as follows: raphers, etc.; and a. Where actual space serviced and related b. All supplies such as medical record cost records are available or can readily be forms, chart covers, filing supplies, sta- developed and maintained without signifi- tionery, medical library books, periodicals, cant change in the accounting practices, the etc. amount distributed should be based on such 2. The expenses included in this category records; should be allocated to related cost centers in b. Where the space serviced and related a manner consistent with the guides pro- cost records maintained are not sufficient vided in paragraph V-B. on a basis that gives for purposes of the foregoing, a reasonable primary emphasis to a special time survey of estimate of the proportion of total space as- medical records personnel. If this appears to signed to the various cost centers normally be impractical or inequitable, other bases will suffice as a means for effecting distribu- may be used provided consideration is given tion of the amounts of housekeeping ex- to the use of these facilities by research per- penses involved; or sonnel and others, including patients. c. Where it can be demonstrated that the space serviced basis of allocation is imprac- VII. DETERMINATION AND APPLICATION OF tical or inequitable, other bases may be used INDIRECT COST RATE OR RATES provided consideration is given to the use of A. Indirect cost pools. 1. Subject to (2) housekeeping services by research personnel below, indirect costs allocated to organized and others, including patients. research should be treated as a common G. Dietary. 1. These expenses, as used here- pool, and the costs in such common pool in, shall mean only the subsidy provided by should be distributed to individual research the hospital to its employees including re- agreements benefiting therefrom on a single search personnel through its cafeteria oper- rate basis. ation. The hospital must be able to dem- 2. In some instances a single rate basis for onstrate through the use of proper cost ac- use on all government research at a hospital counting techniques that the cafeteria oper- may not be appropriate since it would not ates at a loss to the benefit of employees. take into account those different environ- 2. The reasonable operating loss of a sub- mental factors which may affect substan- sidized cafeteria operation should be allo- tially the indirect costs applicable to a par- cated to related cost centers in a manner ticular segment of government research at consistent with the guides provided in para- the institution. For this purpose, a par- graph V-B. on a basis that gives primary em- ticular segment of government research may phasis to number of employees. be that performed under a single research H. Maintenance (housing) of personnel. 1. agreement or it may consist of research The expenses under this heading should in- under a group of research agreements per- clude: formed in a common environment. The envi- a. The salaries and wages of matrons, ronmental factors are not limited to the clerks, and other employees engaged in work physical location of the work. Other impor- in nurses’ residences and other employees’ tant factors are the level of the administra- quarters; tive support required, the nature of the fa- b. All supplies used in connection with the cilities or other resources employed, the sci- operation of such dormitories; and entific disciplines or technical skills in- c. Payments to outside agencies for the volved, the organizational arrangements rental of houses, apartments, or rooms used used, or any combination thereof. Where a by hospital personnel. particular segment of government research

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is performed within an environment which are allocated should be appropriately ad- appears to generate a significantly different justed. level of indirect costs, provision should be D. Predetermined overhead rates. The utiliza- made for a separate indirect cost pool appli- tion of predetermined fixed overhead rates cable to such work. An example of this dif- may offer potential advantages in the ad- ferential may be in the development of a sep- ministration of research agreements by fa- arate indirect cost pool for a clinical re- cilitating the preparation of research budg- search center grant. The separate indirect ets and permitting more expeditious close cost pool should be developed during the out of the agreements when the work is com- course of the regular distribution process, pleted. Therefore, to the extent allowed by and the separate indirect cost rate resulting law, consideration may be given to the nego- therefrom should be utilized provided it is tiation of predetermined fixed rates in those determined that: situations where the cost experience and a. Such indirect cost rate differs signifi- other pertinent factors available are deemed cantly from that which would have obtained sufficient to enable the Government and the under (1) above; and hospital to reach a reasonable conclusion as b. The volume of research work to which to the probable level of the indirect cost rate such rate would apply is material in relation for the ensuing accounting period. to other government research at the institution. VIII. SIMPLIFIED METHOD FOR SMALL 3. It is a common practice for grants or INSTITUTIONS contracts awarded to other institutions, A. General. 1. Where the total direct cost of typically University Schools of Medicine, to all government-sponsored research and de- be performed on hospital premises. In these velopment work at a hospital in a year is cases the hospital should develop a separate minimal, the use of the abbreviated proce- indirect cost pool applicable to the work dure described in paragraph VIII-B below under such grants or contracts. This pool may be acceptable in the determination of should be developed by a selective distribu- allowable indirect costs. This method may tion of only those indirect cost categories also be used to initially determine a provi- which benefit the work performed by the sional indirect cost rate for hospitals that other institution, within the practical limits have not previously established a rate. Under dictated by available data and the materi- this abbreviated procedure, data taken di- ality of the amounts involved. Hospital costs rectly from the institution’s most recent an- determined to be allocable to grants or con- nual financial report and immediately avail- tracts awarded to another institution may able supporting information will be utilized not be recovered as a cost of grants or con- as a basis for determining the indirect cost tracts awarded directly to the hospital. rate applicable to research agreements at B. The distribution base. Preferably, indirect the institution. costs allocated to organized research should 2. The rigid formula approach provided be distributed to applicable research agree- under the abbreviated procedure has limita- ments on the basis of direct salaries and tions which may preclude its use at some wages. However, where the use of salaries hospitals either because the minimum data and wages results in an inequitable alloca- required for this purpose are not readily tion of costs to the research agreements, available or because the application of the total direct costs or a variation thereof, may abbreviated procedure to the available data be used in lieu of salaries and wages. Regard- produces results which appear inequitable to less of the base used, an indirect cost rate the Government or the hospital. In any such should be determined for each of the sepa- case, indirect costs should be determined rate indirect cost pools developed pursuant through use of the regular procedure rather to paragraph VII-A. The rate in each case than the abbreviated procedure. should be stated as the percentage which the 3. In certain instances where the total di- amount of the particular indirect cost pool is rect cost of all government-sponsored re- of the total direct salaries and wages (or search and development work at the hospital other base selected) for all research agree- is more than minimal, the abbreviated pro- ments identified with such a pool. cedure may be used if prior permission is ob- C. Negotiated lump sum for overhead. A nego- tained. This alternative will be granted only tiated fixed amount in lieu of indirect costs in those cases where it can be demonstrated may be appropriate for self-contained or off- that the step-down technique cannot be fol- campus research activities where the bene- lowed. fits derived from a hospital’s indirect serv- B. Abbreviated procedure. 1. Total expendi- ices cannot be readily determined. Such tures as taken from the most recent annual amount negotiated in lieu of indirect costs financial report will be adjusted by elimi- will be treated as an offset to the appro- nating from further consideration expendi- priate indirect cost pool after allocation to tures for capital items as defined in para- patient care, organized research, instruction graph IX-B.4 and unallowable costs as de- and training, and other hospital activities. fined under various headings in paragraph IX The base on which such remaining expenses and paragraph III-E.

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2. Total expenditures as adjusted under the rect cost or space and total direct cost or foregoing will then be distributed among (a) space will be that cost or space identified expenditures applicable to administrative with the functional categories classified and general overhead functions, (b) expendi- under Expenditures for all other purposes tures applicable to all other overhead func- under paragraph VIII-B.2. tions, and (c) expenditures for all other purposes. The first group shall include amounts IX. GENERAL STANDARDS FOR SELECTED ITEMS associated with the functional categories, OF COST Administration and General, and Dietary, as A. General. This section provides standards defined in paragraph VI. The second group to be applied in establishing the allowability shall include Depreciation, Operation of of certain items involved in determining Plant, Maintenance of Plant, and House- cost. These standards should apply irrespec- keeping. The third group—expenditures for tive of whether a particular item of cost is all other purposes—shall include the properly treated as direct cost or indirect amounts applicable to all other activities, cost. Failure to mention a particular item of namely, patient care, organized research, in- cost in the standards is not intended to struction and training, and other hospital imply that it is either allowable or unallow- activities as defined under paragraph II-E. able; rather, determination as to allow- For the purposes of this section, the func- ability in each case should be based on the tional categories of Laundry and Linen, treatment or standards provided for similar Maintenance of Personnel, and Medical or related items of cost. In case of discrep- Records and Library as defined in paragraph ancy between the provisions of a specific re- VI shall be considered as expenditures for all search agreement and the applicable stand- other purposes. ards provided, the provisions of the research 3. The expenditures distributed to the first agreement should govern. However, in some two groups in paragraph VIII-B.2 should then cases advance understandings should be be adjusted by those receipts or negative ex- reached on particular cost items in order penditure types of transactions which tend that the full costs of research be supported. to reduce expense items allocable to research The extent of allowability of the selected agreements as indirect costs. Examples of items of cost covered in this section has been such receipts or negative expenditures are stated to apply broadly to many accounting itemized in paragraph III-E.1. systems in varying environmental situa- 4. In applying the procedures in paragraphs tions. Thus, as to any given research agree- VIII-B.1 and B.2, the cost of unallowable ac- ment, the reasonableness and allocability of tivities such as Gift Shop, Investment Prop- certain items of costs may be difficult to de- erty Management, Fund Raising, and Public termine, particularly in connection with Relations, when they benefit from the hos- hospitals which have medical school or other pital’s indirect cost services, should be treat- affiliations. In order to avoid possible subse- ed as expenditures for all other purposes. quent disallowance or dispute based on Such activities are presumed to benefit from unreasonableness or nonallocability, it is the hospital’s indirect cost services when important that prospective recipients of fed- they include salaries of personnel working in eral funds particularly those whose work is the hospital. When they do not include such predominantly or substantially with the salaries, they should be eliminated from the Government, seek agreement with the Gov- indirect cost rate computation. ernment in advance of the incurrence of spe- 5. The indirect cost rate will then be com- cial or unusual costs in categories where rea- puted in two stages. The first stage requires sonableness or allocability are difficult to the computation of an Administrative and determine. Such agreement may also be ini- General rate component. This is done by ap- tiated by the Government. Any such agree- plying a ratio of research direct costs over ment should be incorporated in the research total direct costs to the Administrative and agreement itself. However, the absence of General pool developed under paragraphs such an advance agreement on any element VIII-B.2 and B.3 above. The resultant of cost will not in itself serve to make that amount—that which is allocable to re- element either allowable or unallowable. Ex- search—is divided by the direct research cost amples of costs on which advance agree- base. The second stage requires the computa- ments may be particularly important are: tion of an All Other Indirect Cost rate com- 1. Facilities costs, such as; ponent. This is done by applying a ratio of a. Depreciation research direct space over total direct space b. Rental to All Other Indirect Cost pool developed c. Use charges for fully depreciated assets under paragraphs VIII-B.2 and B.3 above. The d. Idle facilities and idle capacity resultant amount—that which is allocable to e. Plant reconversion research—is divided by the direct research f. Extraordinary or deferred maintenance cost base. and repair The total of the two rate components will g. Acquisition of automatic data proc- be the institution’s indirect cost rate. For essing equipment. the purposes of this section, the research di- 2. Preaward costs

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3. Non-hospital professional activities Included are such types as bid, perform- 4. Self-insurance ance, payment, advance payment, infringe- 5. Support services charged directly (comment, and fidelity bonds. puter services, printing and duplicating serv- b. Costs of bonding required pursuant to ices, etc.) the terms of the research agreement are al- 6. Employee compensation, travel, and lowable. other personnel costs, including; c. Costs of bonding required by the hospital a. Compensation for personal service, in- in the general conduct of its business are al- cluding wages and salaries, bonuses and in- lowable to the extent that such bonding is in centives, premium payments, pay for time accordance with sound business practice and not worked, and supplementary compensa- the rates and premiums are reasonable under tion and benefits, such as pension and retire- the circumstances. ment, group insurance, severance pay plans, 4. Capital expenditures. The costs of equip- and other forms of compensation ment, buildings, and repairs which materi- b. Morale, health, welfare, and food service ally increase the value or useful life of build- and dormitory costs ings or equipment should be capitalized and c. Training and education costs are unallowable except as provided for in the d. Relocation costs, including special or research agreement. mass personnel movement 5. Civil defense costs. Civil defense costs are B. Selected items—1. Advertising costs. The those incurred in planning for, and the pro- term advertising costs means the costs of ad- tection of life and property against the pos- vertising media and corollary administrative sible effects of enemy attack. Reasonable costs. Advertising media include magazines, costs of civil defense measures (including newspapers, radio and television programs, costs in excess of normal plant protection costs, first-aid training and supplies, fire- direct mail, exhibits, and the like. The only fighting training, posting of additional exit advertising costs allowable are those which notices and directions, and other approved are solely for; civil defense measures) undertaken on the a. The recruitment of persons required for institution’s premises pursuant to sugges- the performance by the institution of obligations or requirements of civil defense au- tions arising under the research agreement, thorities are allowable when distributed to when considered in conjunction with all all activities of the institution. Capital ex- other recruitment costs as set forth in para- penditures for civil defense purposes will not graph IX-B.34. be allowed, but a use allowance or deprecia- b. The procurement of scarce items for the tion may be permitted in accordance with performance of the research agreement; or provisions set forth elsewhere. Costs of local c. The disposal of scrap or surplus mate- civil defense projects not on the institution’s rials acquired in the performance of the re- premises are unallowable. search agreement. 6. Communication costs. Costs incurred for Costs of this nature, if incurred for more telephone services, local and long distance than one research agreement or for both re- telephone calls, telegrams, radiograms, post- search agreement work and other work of age, and the like are allowable. the institution, are allowable to the extent 7. Compensation for personal services— a. that the principles in paragraphs IV and V General. Compensation for personal services are observed. covers all remuneration paid currently or ac- 2. Bad debts. Losses arising from crued to employees of the hospital for serv- uncollectible accounts and other claims and ices rendered during the period of perform- related collection and legal costs are unal- ance under government research agreements. lowable except that a bad debt may be in- Such remuneration includes salaries, wages, cluded as a direct cost of the research agree- staff benefits (see paragraph IX-B.10), and ment to the extent that it is caused by a re- pension plan costs (see paragraph IX-B.25). search patient and approved by the awarding The costs of such remuneration are allow- agency. This inclusion is only intended to able to the extent that the total compensa- cover the situation of the patient admitted tion to individual employees is reasonable for research purposes who subsequently or in for the services rendered and conforms to the conjunction with the research receives clin- established policy of the institution consist- ical care for which a charge is made to the ently applied, and provided that the charges patient. If, after exhausting all means of col- for work performed directly on government lecting these charges, a bad debt results, it research agreements and for other work allo- may be considered an appropriate charge to cable as indirect costs to sponsored research the research agreement. are determined and supported as hereinafter 3. Bonding costs. a. Bonding costs arise provided. For non-profit, non-proprietary in- when the Government requires assurance stitutions, where federally supported pro- against financial loss to itself or others by grams constitute less than a preponderance reason of the act or default of the hospital. of the activity at the institution the primary They arise also in instances where the hos- test of reasonableness will be to require that pital requires similar assurance. the institution’s compensation policies be

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applied consistently both to federally-spon- ering special lectures about specific aspects sored and non-sponsored activities alike. of the ongoing research, writing research re- However, where special circumstances so dic- ports and articles, participating in appro- tate a contractual clause may be utilized priate research seminars, consulting with which calls for application of the test of colleagues with respect to related research, comparability in determining the reason- and attending appropriate scientific meet- ableness of compensation. ings and conferences. The term ‘‘all other b. Payroll distribution. Amounts charged to hospital activities’’ would include depart- organized research for personal services, re- mental research, administration, committee gardless of whether treated as direct costs or work, and public services undertaken on be- allocated as indirect costs, will be based on half of the hospital. hospital payrolls which have been approved e. Application of budget estimates. Estimates and documented in accordance with gen- determined before the performance of serv- erally accepted hospital practices. In order ices, such as budget estimates on a monthly, to develop necessary direct and indirect allo- quarterly, or yearly basis do not qualify as cations of cost, supplementary data on time estimates of effort spent. or effort as provided in paragraph (c) below, f. Non-hospital professional activities. A hos- normally need be required only for individ- pital must not alter or waive hospital-wide uals whose compensation is properly charge- policies and practices dealing with the per- able to two or more research agreements or missible extent of professional services over to two or more of the following broad func- and above those traditionally performed tional categories: (1) Patient care; (2) orga- without extra hospital compensation, unless nized research; (3) instruction and training; such arrangements are specifically author- (4) indirect activities as defined in paragraph ized by the sponsoring agency. Where hos- V-A; or (5) other hospital activities as de- pital-wide policies do not adequately define fined in paragraph II-E. the permissible extent of consultantships or c. Reporting time or effort. Charges for sala- other non-hospital activities undertaken for ries and wages of individuals other than extra pay, the Government may require that members of the professional staff will be sup- the effort of professional staff working under ported by daily time and attendance and research agreements be allocated as between payroll distribution records. For members of (1) hospital activities, and (2) non-hospital the professional staff, current and reasonable professional activities. If the sponsoring estimates of the percentage distribution of agency should consider the extent of non- their total effort may be used as support in hospital professional effort excessive, appro- the absence of actual time records. The term priate arrangements governing compensa- professional staff for purposes of this section tion will be negotiated on a case by case includes physicians, research associates, and basis. other personnel performing work at respon- g. Salary rates for part-time appointments. sible levels of activities. These personnel Charges for work performed on government normally fulfill duties, the competent per- research by staff members having only part- formance of which usually requires persons time appointments will be determined at a possessing degrees from accredited institu- rate not in excess of that for which he is reg- tions of higher learning and/or state licen- ularly paid for his part-time staff assign- sure. In order to qualify as current and rea- ment. sonable, estimates must be made no later 8. Contingency provisions. Contributions to than one month (though not necessarily a a contingency reserve or any similar provi- calendar month) after the month in which sions made for events the occurrence of the services were performed. which cannot be foretold with certainty as d. Preparation of estimates of effort. Where to time, intensity, or with an assurance of required under paragraph (c) above, esti- their happening, are unallowable. mates of effort spent by a member of the pro- 9. Depreciation and use allowances. a. Hos- fessional staff on each research agreement pitals may be compensated for the use of should be prepared by the individual who buildings, capital improvements and usable performed the services or by a responsible in- equipment on hand through depreciation or dividual such as a department head or super- use allowances. Depreciation is a charge to visor having first-hand knowledge of the current operations which distributes the cost services performed on each research agree- of a tangible capital asset, less estimated re- ment. Estimates must show the allocation of sidual value, over the estimated useful life of effort between organized research and all the asset in a systematic and logical man- other hospital activities in terms of the per- ner. It does not involve a process of valu- centage of total effort devoted to each of the ation. Useful life has reference to the pro- broad functional categories referred to in (b) spective period of economic usefulness in the above. The estimate of effort spent on a re- particular hospital’s operations as distin- search agreement may include a reasonable guished from physical life. Use allowances amount of time spent in activities contrib- are the means of allowing compensation uting and intimately related to work under when depreciation or other equivalent costs the agreement, such as preparing and deliv- are not considered.

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b. Due consideration will be given to gov- ble capital assets must be determined on a ernment-furnished research facilities uti- realistic basis which takes into consider- lized by the institution when computing use ation such factors as type of construction, allowances and/or depreciation if the govern- nature of the equipment used, technological ment-furnished research facilities are mate- developments in the particular research rial in amount. Computation of the use al- area, and the renewal and replacement poli- lowance and/or depreciation will exclude cies followed for the individual items or both the cost or any portion of the cost of classes of assets involved. Where the depre- grounds, buildings and equipment borne by ciation method is introduced for application or donated by the Federal Government, irre- to assets acquired in prior years, the annual spective of where title was originally vested charges therefrom must not exceed the or where it presently resides, and secondly, amounts that would have resulted had the the cost of grounds. Capital expenditures for depreciation method been in effect from the land improvements (paved areas, fences, date of acquisition of such assets. streets, sidewalks, utility conduits, and e. Depreciation on idle or excess facilities similar improvements not already included shall not be allowed except on such facilities in the cost of buildings) are allowable pro- as are reasonably necessary for standby pur- vided the systematic amortization of such poses. capital expenditures has been provided in the f. Where an institution elects to go on a de- institution’s books of accounts, based on rea- preciation basis for a particular class of as- sonable determinations of the probable use- sets, no depreciation, rental or use charge ful lives of the individual items involved, may be allowed on any such assets that and the share allocated to organized research would be viewed as fully depreciated; pro- is developed from the amount thus amortized vided, however, that reasonable use charges for the base period involved. may be negotiated for any such assets if war- c. Normal depreciation on a hospital’s ranted after taking into consideration the plant, equipment, and other capital facili- cost of the facility or item involved, the esti- ties, except as excluded by (d) below, is an al- mated useful life remaining at time of nego- lowable element of research cost provided tiation, the actual replacement policy fol- that the amount thereof is computed: lowed in the light of service lives used for 1. Upon the property cost basis used by the calculating depreciation, the effect of any hospital for Federal Income Tax purposes increased maintenance charges or decreased (See section 167 of the Internal Revenue Code efficiency due to age, and any other factors of 1954); or pertinent to the utilization of the facility or 2. In the case of non-profit or tax exempt item for the purpose contemplated. organizations, upon a property cost basis g. Hospitals which choose a depreciation which could have been used by the hospital allowance for assets purchased prior to 1966 for Federal Income Tax purposes, had such based on a percentage of operating costs in hospital been subject to the payment of in- lieu of normal depreciation for purposes of come tax; and in either case reimbursement under Pub. L. 89–97 (Medi- 3. By the consistent application to the as- care) shall utilize that method for deter- sets concerned of any generally accepted ac- mining depreciation applicable to organized counting method, and subject to the limita- research. tions of the Internal Revenue Code of 1954 as The operating costs to be used are the amended, including— lower of the hospital’s 1965 operating costs or i. The straight line method; the hospital’s current year’s allowable costs. ii. The declining balance method, using a The percent to be applied is 5 percent start- rate not exceeding twice the rate which ing with the year 1966–67, with such percent- would have been used had the annual allow- age being uniformity reduced by one-half ance been computed under the method de- percent each succeeding year. The allowance scribed in (i) above; based on operating costs is in addition to iii. The sum of the years-digits method; regular depreciation on assets acquired after and 1965. However, the combined amount of such iv. Any other consistent method produc- allowance on pre-1966 assets and the allow- tive of an annual allowance which, when ance for actual depreciation on assets ac- added to all allowances for the period com- quired after 1965 may not exceed 6 percent of mencing with the use of the property and in- the hospital’s allowable cost for the current cluding the current year, does not during the year. After total depreciation has been com- first two-thirds of the useful life of the prop- puted, allocation methods are used to deter- erty exceed the total of such allowances mine the share attributable to organized re- which would have been used had such allow- search. ances been computed under the method de- For purposes of this section, Operating scribed in (ii) above. Costs means the total costs incurred by the d. Where the depreciation method is fol- hospital in operating the institution, and in- lowed, adequate property records must be cludes patient care, research, and other ac- maintained. The period of useful service tivities. Allowable Costs means operating (service life) established in each case for usa- costs less unallowable costs as defined in

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these principles; by the application of alloca- 11. Entertainment costs. Except as pertains tion methods to the total amount of such al- to 10 above, costs incurred for amusement, lowable costs, the share attributable to Fed- social activities, entertainment, and any erally-sponsored research is determined. items relating thereto, such as meals, lodg- A hospital which elects to use this proce- ing, rentals, transportation, and gratuities dure under Pub. L. 89–97 and subsequently are unallowable. changes to an actual depreciation basis on 12. Equipment and other facilities. The cost pre-1966 assets in accordance with the option of equipment or other facilities are allowable afforded under the Medicare program shall on a direct charge basis where such pur- simultaneously change to an actual depre- chases are approved by the sponsoring agen- ciation basis for organized research. cy concerned or provided for by the terms of Where the hospital desires to change to ac- the research agreement. tual depreciation but either has no historical 13. Fines and penalties. Costs resulting from cost records or has incomplete records, the violations of, or failure of the institution to determination of historical cost could be comply with federal, state and local laws and made through appropriate means involving regulations are unallowable except when in- expert consultation with the determination curred as a result of compliance with specific being subject to review and approval by the provisions of the research agreement, or in- Department of Health and Human Services. structions in writing from the awarding h. Where the use allowance method is fol- agency. lowed, the use allowance for buildings and 14. Insurance and indemnification. a. Costs improvements will be computed at an annual of insurance required or approved and main- rate not exceeding two percent of acquisition tained pursuant to the research agreement cost. The use allowance for equipment will are allowable. be computed at an annual rate not exceeding six and two-thirds percent of acquisition cost b. Costs of other insurance maintained by of usable equipment in those cases where the the hospital in connection with the general institution maintains current records with conduct of its activities are allowable sub- respect to such equipment on hand. Where ject to the following limitations: (1) Types the institution’s records reflect only the cost and extent and cost of coverage must be in (actual or estimated) of the original com- accordance with sound institutional prac- plement of equipment, the use allowance will tice; (2) costs of insurance or of any con- be computed at an annual rate not exceeding tributions to any reserve covering the risk of ten percent of such cost. Original com- loss of or damage to government owned prop- plement for this purpose means the com- erty are unallowable except to the extent plement of equipment initially placed in that the Government has specifically re- buildings to perform the functions currently quired or approved such costs; and (3) costs being performed in such buildings; however, of insurance on the lives of officers or trust- where a permanent change in the function of ees are unallowable except where such insur- a building takes place, a redetermination of ance is part of an employee plan which is not the original complement of equipment may unduly restricted. be made at that time to establish a new c. Contributions to a reserve for an ap- original complement. In those cases where proved self-insurance program are allowable no equipment records are maintained, the in- to the extent that the types of coverage, ex- stitution will justify a reasonable estimate tent of coverage, and the rates and premiums of the acquisition cost of usable equipment would have been allowed had insurance been which may be used to compute the use allow- purchased to cover the risks. Such contribu- ance at an annual rate not exceeding six and tions are subject to prior approval of the two-thirds percent of such estimate. Government. i. Depreciation and/or use charges should d. Actual losses which could have been cov- usually be allocated to research and other ered by permissible insurance (through an activities as an indirect cost. approved self-insurance program or other- 10. Employee morale, health, and welfare costs wise) are unallowable unless expressly pro- and credits. The costs of house publications, vided for in the research agreement, except health or first-aid benefits, recreational ac- that costs incurred because of losses not cov- tivities, employees’ counseling services, and ered under nominal deductible insurance other expenses incurred in accordance with coverage provided in keeping with sound the hospital’s established practice or custom management practice as well as minor losses for the improvement of working conditions, not covered by insurance such as spoilage, employer-employee relations, employee mo- breakage and disappearance of small hand rale, and employee performance, are allow- tools which occur in the ordinary course of able. Such costs will be equitably appor- operations are allowable. tioned to all activities of the hospital. In- 15. Interest, fund raising and investment man- come generated from any of these activities agement costs. a. Costs incurred for interest will be credited to the cost thereof unless on borrowed capital or temporary use of en- such income has been irrevocably set over to dowment funds, however represented, are un- employee welfare organizations. allowable.

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b. Costs of organized fund raising, includ- for any excess materials retained or returned ing financial campaigns, endowment drives, to vendors. Due credit should be given for all solicitation of gifts and bequests, and similar proceeds or value received for any scrap re- expenses incurred solely to raise capital or sulting from work under the research agree- obtain contributions are not allowable. ment. Where government donated or fur- c. Costs of investment counsel and staff nished material is used in performing the re- and similar expenses incurred solely to en- search agreement, such material will be used hance income from investments are not al- without charge. lowable. 20. Memberships, subscriptions and profes- d. Costs related to the physical custody sional activity costs. a. Costs of the hospital’s and control of monies and securities are al- membership in civic, business, technical and lowable. professional organizations are allowable. 16. Labor relations costs. Costs incurred in b. Costs of the hospital’s subscriptions to maintaining satisfactory relations between civic, business, professional and technical the hospital and its employees, including periodicals are allowable. costs of labor management committees, em- c. Costs of meetings and conferences, when ployees’ publications, and other related ac- the primary purpose is the dissemination of tivities are allowable. technical information, are allowable. This 17. Losses on research agreements or con- includes costs of meals, transportation, rent- tracts. Any excess of costs over income under al of facilities, and other items incidental to any agreement or contract of any nature is such meetings or conferences. unallowable. This includes, but is not lim- 21. Organization costs. Expenditures such as ited to, the hospital’s contributed portion by incorporation fees, attorneys’ fees, account- reason of cost-sharing agreements, under-re- ants’ fees, brokers’ fees, fees to promoters coveries through negotiation of flat amounts and organizers in connection with (a) organi- for overhead, or legal or administrative limi- zation or reorganization of a hospital, or (b) tations. raising capital, are unallowable. 18. Maintenance and repair costs. a. Costs 22. Other business expenses. Included in this necessary for the upkeep of property (includ- item are such recurring expenses as registry ing government property unless otherwise and transfer charges resulting from changes provided for), which neither add to the per- in ownership of securities issued by the hos- manent value of the property nor appre- pital, cost of shareholders meetings prepara- ciably prolong its intended life, but keep it tion and publication of reports to share- in an efficient operating condition, are to be holders, preparation and submission of re- treated as follows: quired reports and forms to taxing and other 1. Normal maintenance and repair costs regulatory bodies, and incidental costs of di- are allowable; rectors and committee meetings. The above 2. Extraordinary maintenance and repair and similar costs are allowable when allo- costs are allowable, provided they are allocated on an equitable basis. cated to the periods to which applicable for 23. Patient care. The cost of routine and an- purposes of determining research costs. cillary or special services to research pa- b. Expenditures for plant and equipment, tients is an allowable direct cost of research including rehabilitation thereof, which ac- agreements. cording to generally accepted accounting a. Routine services shall include the costs principles as applied under the hospital’s es- of the regular room, dietary and nursing tablished policy, should be capitalized and services, minor medical and surgical supplies subjected to depreciation, are allowable only and the use of equipment and facilities for on a depreciation basis. which a separate charge is not customarily 19. Material costs. Costs incurred for pur- made. chased materials, supplies and fabricated b. Ancillary or special services are the parts directly or indirectly related to the re- services for which charges are customarily search agreement, are allowable. Purchases made in addition to routine services, such as made specifically for the research agreement operating rooms, anesthesia, laboratory, should be charged thereto at their actual BMR-EKG, etc. prices after deducting all cash discounts, c. Patient care, whether expressed as a trade discounts, rebates, and allowances re- rate or an amount, shall be computed in a ceived by the institution. Withdrawals from manner consistent with the procedures used general stores or stockrooms should be to determine reimbursable costs under Pub. charged at their cost under any recognized L. 89–97 (Medicare Program) as defined under method of pricing stores withdrawals con- the ‘‘Principles Of Reimbursement For Pro- forming to sound accounting practices con- vider Costs’’ published by the Social Secu- sistently followed by the hospital. Incoming rity Administration of the Department of transportation charges are a proper part of Health and Human Services. The allow- material cost. Direct material cost should ability of specific categories of cost shall be include only the materials and supplies actu- in accordance with those principles rather ally used for the performance of the research than the principles for research contained agreement, and due credit should be given herein. In the absence of participation in the

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Medicare program by a hospital, all ref- over or any other contingencies that can re- erences to the Medicare program in these sult in forfeitures by employees which inure principles shall be construed as meaning the to the benefit of the hospital. Medicaid program. 26. Plan security costs. Necessary expenses i. Once costs have been recognized as al- incurred to comply with government secu- lowable, the indirect costs or general service rity requirements including wages, uniforms center’s cost shall be allocated (stepped- and equipment of personnel engaged in plant down) to special service centers, and all pa- protection are allowable. tient and nonpatient costs centers based 27. Preresearch agreement costs. Costs in- upon actual services received or benefiting curred prior to the effective date of the re- these centers. search agreement, whether or not they ii. After allocation, routine and ancillary would have been allowable thereunder if in- costs shall be apportioned to scatter-bed re- curred after such date, are unallowable un- search patients on the same basis as is used less specifically set forth and identified in to apportion costs to Medicare patients, i.e. the research agreement. using either the departmental method or the 28. Professional services costs. a. Costs of combination method, as those methods are professional services rendered by the mem- defined by the Social Security Administra- bers of a particular profession who are not tion; except that final settlement shall be on employees of the hospital are allowable sub- a grant-by-grant basis. However, to the ex- ject to (b) and (c) below when reasonable in tent that the Social Security Administration relation to the services rendered and when has recognized any other method of cost ap- not contingent upon recovery of the costs portionment, that method generally shall from the Government. Retainer fees to be al- also be recognized as applicable to the deter- lowable must be reasonably supported by mination of research patient care costs. evidence of services rendered. iii. A cost center must be established on Medicare reimbursement forms for each dis- b. Factors to be considered in determining crete-bed unit grant award received by a hos- the allowability of costs in a particular case pital. Routine costs should be stepped-down include (1) the past pattern of such costs, to this line item(s) in the normal course of particularly in the years prior to the award stepping-down costs under Medicare/Med- of government research agreements on the icaid requirements. However, in stepping- institution’s total activity; (2) the nature down routine costs, consideration must be and scope of managerial services expected of given to preventing a step-down of those the institution’s own organizations; and (3) costs to discrete-bed unit line items that whether the proportion of government work have already been paid for directly by the to the hospital’s total activity is such as to grant, such as bedside nursing costs. Ancil- influence the institution in favor of incur- lary costs allocable to research discrete-bed ring the cost, particularly where the services units shall be determined and proposed in ac- rendered are not of a continuing nature and cordance with Section 23.c.ii. have little relationship to work under gov- d. Where federally sponsored research pro- ernment research agreements. grams provide specifically for the direct re- c. Costs of legal, accounting and consulting imbursement of nursing, dietary, and other services, and related costs incurred in con- services, appropriate adjustment must be nection with organization and reorganiza- made to patient care costs to preclude dupli- tion or the prosecution of claims against the cation and/or misallocation of costs. Government are unallowable. Costs of legal, 24. Patent costs. Costs of preparing disclo- accounting and consulting services, and re- sures, reports and other documents required lated costs incurred in connection with pat- by the research agreement and of searching ent infringement litigation are unallowable the art to the extent necessary to make such unless otherwise provided for in the research invention disclosures are allowable. In ac- agreement. cordance with the clauses of the research 29. Profits and losses on disposition of plant agreement relating to patents, costs of pre- equipment, or other assets. Profits or losses of paring documents and any other patent any nature arising from the sale or exchange costs, in connection with the filing of a pat- of plant, equipment, or other capital assets, ent application where title is conveyed to including sales or exchange of either short- the Government, are allowable. (See also or long-term investments, shall be excluded paragraph IX-B.36.) in computing research agreement costs. 25. Pension plan costs. Costs of the hos- 30. Proposal costs. Proposal costs are the pital’s pension plan which are incurred in ac- costs of preparing bids or proposals on poten- cordance with the established policies of the tial government and non-government re- institution are allowable, provided such poli- search agreements or projects, including the cies meet the test of reasonableness and the development of technical data and cost data methods of cost allocation are not discrimi- necessary to support the institution’s bids or natory, and provided appropriate adjust- proposals. Proposal costs of the current ac- ments are made for credits or gains arising counting period of both successful and un- out of normal and abnormal employee turn- successful bids and proposals normally

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should be treated as indirect costs and allo- rect cost, and the newly hired employee re- cated currently to all activities of the insti- signs for reasons within his control within tution, and no proposal costs of past ac- twelve months after hire, the institution will counting periods will be allocable in the cur- be required to refund or credit such reloca- rent period to the government research tions costs as were charged to the Govern- agreement. However, the institution’s estab- ment. lished practices may be to treat proposal 35. Rental costs (including sale and lease-back costs by some other recognized method. Re- of facilities). a. Rental costs of land, building, gardless of the methods used, the results ob- and equipment and other personal property tained may be accepted only if found to be are allowable if the rates are reasonable in reasonable and equitable. light of such factors as rental costs of com- 31. Public information services costs. Costs of parable facilities and market conditions in news releases pertaining to specific research the area, the type, life expectancy, condi- or scientific accomplishment are unallowable unless specifically authorized by the tion, and value of the facilities leased, op- sponsoring agency. tions available, and other provisions of the 32. Rearrangement and alteration costs. Costs rental agreement. Application of these fac- incurred for ordinary or normal rearrange- tors, in situations where rentals are exten- ment and alteration of facilities are allow- sively used, may involve among other con- able. Special rearrangement and alteration siderations comparison of rental costs with costs incurred specifically for a project are the amount which the hospital would have allowable only as a direct charge when such received had it owned the facilities. work has been approved in advance by the b. Charges in the nature of rent between sponsoring agency concerned. organizations having a legal or other affili- 33. Reconversion costs. Costs incurred in the ation or arrangement such as hospitals, med- restoration or rehabilitation of the institu- ical schools, foundations, etc., are allowable tion’s facilities to approximately the same to the extent such charges do not exceed the condition existing immediately prior to com- normal costs of ownership such as deprecia- mencement of government research agree- tion, taxes, insurance, and maintenance, pro- ment work, fair wear and tear excepted, are vided that no part of such costs shall dupli- allowable. cate any other allowed costs. 34. Recruiting costs. a. Subject to (b), (c), c. Unless otherwise specifically provided in and (d) below, and provided that the size of the agreement, rental costs specified in sale the staff recruited and maintained is in and lease-back agreements incurred by hos- keeping with workload requirements, costs pitals through selling plant facilities to in- of ‘‘help wanted’’ advertising, operating vestment organizations such as insurance costs of an employment office necessary to companies or to private investors, and con- secure and maintain an adequate staff, costs currently leasing back the same facilities of operating an aptitude and educational are allowable only to the extent that such testing program, travel costs of employees rentals do not exceed the amount which the while engaged in recruiting personnel, travel hospital would have received had it retained costs of applicants for interviews for pro- legal title to the facilities. spective employment, and relocation costs 36. Royalties and other costs for use of pat- incurred incident to recruitment of new em- Royalties on a patent or amortization ployees are allowable to the extent that such ents. costs are incurred pursuant to a well man- of the cost of acquiring a patent or invention aged recruitment program. Where an institu- or rights thereto necessary for the proper tion uses employment agencies, costs not in performance of the research agreement and excess of standard commercial rates for such applicable to tasks or processes thereunder services are allowable. are allowable unless the Government has a b. In publications, costs of help wanted ad- license or the right to free use of the patent, vertising that includes color, includes adver- the patent has been adjudicated to be in- tising material for other than recruitment valid, or has been administratively deter- purposes, or is excessive in size (taking into mined to be invalid, the patent is considered consideration recruitment purposes for to be unenforceable, or the patent has ex- which intended and normal institutional pired. practices in this respect) are unallowable. 37. Severance pay. a. Severance pay is com- c. Costs of help wanted advertising, special pensation in addition to regular salaries and emoluments; fringe benefits, and salary al- wages which is paid by a hospital to employ- lowances incurred to attract professional ees whose services are being terminated. personnel from other institutions that do Costs of severance pay are allowable only to not meet the test of reasonableness or do not the extent that such payments are required conform with the established practices of the by law, by employer-employee agreement, by institution are unallowable. established policy that constitutes in effect d. Where relocation costs incurred incident an implied agreement on the institution’s to recruitment of a new employee have been part, or by circumstances of the particular allowed either as an allocable direct or indi- employment.

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b. Severance payments that are due to nor- paragraph IX-B.25), hospital costs or remis- mal, recurring turnover, and which other- sion of hospital charges to the extent of wise meet the conditions of (a) above may be costs for individual employees or their fami- allowed provided the actual costs of such lies, and the like are allowable provided such severance payments are regarded as expenses benefits are granted in accordance with es- applicable to the current fiscal year and are tablished hospital policies, and provided equitably distributed among the institu- such contributions and other expenses tion’s activities during that period. whether treated as indirect costs or an incre- c. Severance payments that are due to ab- ment of direct labor costs are distributed to normal or mass terminations are of such particular research agreements and other ac- conjectural nature that allowability must be tivities in a manner consistent with the pat- determined on a case-by-case basis. However, tern of benefits accruing to the individuals the Government recognizes its obligation to or groups of employees whose salaries and participate to the extent of its fair share in wages are chargeable to such research agree- any specific payment. ments and other activities. 38. Specialized service facilities operated by a 41. Taxes. a. In general, taxes which the hospital. a. The costs of institutional services hospital is required to pay and which are involving the use of highly complex and spe- paid or accrued in accordance with generally cialized facilities such as electronic com- accepted accounting principles, and pay- puters and reactors are allowable provided ments made to local governments in lieu of the charges therefor meet the conditions of taxes which are commensurate with the (b) or (c) below, and otherwise take into ac- local government services received are al- count any items of income or federal financ- lowable except for (1) taxes from which ex- ing that qualify as applicable credits under emptions are available to the hospital di- paragraph III-E. rectly or which are available to the hospital b. The costs of such hospital services nor- based on an exemption afforded the Govern- mally will be charged directly to applicable ment and in the latter case when the spon- research agreements based on actual usage soring agency makes available the necessary or occupancy of the facilities at rates that exemption certificates, (2) special assess- (1) are designed to recover only actual costs ments on land which represent capital im- of providing such services, and (2) are applied provements, and (3) Federal Income Taxes. on a nondiscriminatory basis as between or- b. Any refund of taxes, interest, or pen- ganized research and other work of the hos- alties, and any payment to the hospital of pital including commercial or accommoda- interest thereon attributable to taxes, inter- tion sales and usage by the hospital for in- est or penalties, which were allowed as re- ternal purposes. This would include use of search agreement costs will be credited or such facilities as radiology, laboratories, paid to the Government in the manner di- maintenance men used for a special purpose, rected by the Government provided any in- medical art, photography, etc. terest actually paid or credited to a hospital c. In the absence of an acceptable arrange- incident to a refund of tax, interest, and pen- ment for direct costing as provided in (b) alty will be paid or credited to the Govern- above, the costs incurred for such institu- ment only to the extent that such interest tional services may be assigned to research accrued over the period during which the agreements as indirect costs, provided the hospital had been reimbursed by the Govern- methods used achieve substantially the same ment for the taxes, interest, and penalties. results. Such arrangements should be 42. Transportation costs. Costs incurred for worked out in coordination with all govern- inbound freight, express, cartage, postage ment users of the facilities in order to assure and other transportation services relating ei- equitable distribution of the indirect costs. ther to goods purchased, in process, or deliv- 39. Special administrative costs. Costs in- ered are allowable. When such costs can curred for general public relations activities, readily be identified with the items involved, catalogs, alumni activities, and similar serv- they may be charged directly as transpor- ices are unallowable. tation costs or added to the cost of such 40. Staff and/or employee benefits. a. Staff items. Where identification with the mate- and/or employee benefits in the form of reg- rial received cannot readily be made, in- ular compensation paid to employees during bound transportation costs may be charged periods of authorized absences from the job to the appropriate indirect cost accounts if such as for annual leave, sick leave, military the institution follows a consistent equitable leave and the like are allowable provided procedure in this respect. Outbound freight, such costs are absorbed by all hospital ac- if reimbursable under the terms of the re- tivities including organized research in pro- search agreement, should be treated as a di- portion to the relative amount of time or ef- rect cost. fort actually devoted to each. 43. Travel costs. a. Travel costs are the ex- b. Staff benefits in the form of employer penses for transportation, lodging, subsist- contributions or expenses for Social Security ence, and related items incurred by employ- taxes, employee insurance, Workmen’s Com- ees who are in travel status on official busi- pensation insurance, the Pension Plan (see ness of the hospital. Such costs may be

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charged on an actual basis, on a per diem or the effective date of termination, such costs mileage basis in lieu of actual costs in- are generally allowable within the limita- curred, or on a combination of the two pro- tions set forth in these principles, except vided the method used is applied to an entire that any such costs continuing after termi- trip and not to selected days of the trip, and nation due to the negligent or willful failure results in charges consistent with those nor- of the hospital to discontinue such costs will mally allowed by the institution in its reg- be considered unacceptable. ular operations. d. Loss of useful value of special tooling b. Travel costs are allowable subject to (c) and special machinery and equipment is gen- and (d) below when they are directly attrib- erally allowable, provided (1) such special utable to specific work under a research tooling, machinery or equipment is not rea- agreement or when they are incurred in the sonably capable of use in the other work of normal course of administration of the hos- the hospital; (2) the interest of the Govern- pital or a department or research program ment is protected by transfer of title or by thereof. other means deemed appropriate by the con- c. The difference in cost between first class tracting officer; and (3) the loss of useful air accommodations and less than first class value as to any one terminated contract is air accommodations is unallowable except limited to that portion of the acquisition when less than first class air accommoda- cost which bears the same ratio to the total tions are not reasonably available to meet acquisition cost as the terminated portion of necessary mission requirements such as the contract bears to the entire terminated where less than first class accommodations contract and other government contracts for would (1) require circuitous routing, (2) re- which the special tooling, special machinery quire travel during unreasonable hours, (3) or equipment was acquired. greatly increase the duration of the flight, e. Rental costs under unexpired leases are (4) result in additional costs which would off- generally allowable where clearly shown to set the transportation savings, or (5) offer have been reasonably necessary for the per- accommodations which are not reasonably formance of the terminated contract, less adequate for the medical needs of the trav- the residual value of such leases, if (1) the eler. amount of such rental claimed does not ex- d. Costs of personnel movements of a spe- ceed the reasonable use value of the property cial or mass nature are allowable only when leased for the period of the contract and such authorized or approved in writing by the further period as may be reasonable; and (2) sponsoring agency or its authorized rep- the hospital makes all reasonable efforts to resentative. terminate, assign, settle, or otherwise reduce 44. Termination costs applicable to contracts. the cost of such lease. There also may be in- a. Contract terminations generally give rise cluded the cost of alterations of such leased to the incurrence of costs or to the need for property, provided such alterations were nec- special treatment of costs which would not essary for the performance of the contract have arisen had the contract not been termi- and of reasonable restoration required by the nated. Items peculiar to termination are set provisions of the lease. forth below. They are to be used in conjunc- f. Settlement expenses including the fol- tion with all other provisions of these prin- lowing are generally allowable: (1) Account- ciples in the case of contract termination. ing, legal, clerical, and similar costs reason- b. The cost of common items of material ably necessary for the preparation and pres- reasonably usable on the hospital’s other entation to contracting officers of settle- work will not be allowable unless the hos- ment claims and supporting data with re- pital submits evidence that it could not respect to the terminated portion of the contain such items at cost without sustaining a tract and the termination and settlement of loss. In deciding whether such items are rea- subcontracts; and (2) reasonable costs for the sonably usable on other work of the institu- storage, transportation, protection, and dis- tion, consideration should be given to the position of property provided by the Govern- hospital’s plans for current scheduled work ment or acquired or produced by the institu- or activities including other research agree- tion for the contract. ments. Contemporaneous purchases of com- g. Subcontractor claims including the allo- mon items by the hospital will be regarded cable portion of claims which are common to as evidence that such items are reasonably the contract and to other work of the con- usable on the hospital’s other work. Any ac- tractor are generally allowable. ceptance of common items as allowable to 45. Voluntary services. The value of vol- the terminated portion of the contract untary services provided by sisters or other should be limited to the extent that the members of religious orders is allowable pro- quantities of such items on hand, in transit, vided that amounts do not exceed that paid and on order are in excess of the reasonable other employees for similar work. Such quantitative requirement of other work. amounts must be identifiable in the records c. If in a particular case, despite all reason- of the hospital as a legal obligation of the able efforts by the hospital, certain costs hospital. This may be reflected by an agree- cannot be discontinued immediately after ment between the religious order and the

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hospital supported by evidence of payments present in a recipient organization’s to the order. administration of a letter of credit, it may take remedial actions against the APPENDIXES F–H TO PART 74 organization: [RESERVED] (a) A recipient organization draws PART 77—REMEDIAL ACTIONS AP- Federal funds through its letter of credit in excess of the aggregate grant PLICABLE TO LETTER OF CREDIT award or contract authority currently ADMINISTRATION available to it. (b) A recipient organization draws Sec. 77.1 Purpose. Federal funds for a particular program 77.2 Scope. in excess of currently available grant 77.3 Conditions that may give rise to reme- award or contract authority for that dial actions. program, even though the organization 77.4 Remedial actions. may not have exceeded its aggregate 77.5 Remedial action procedures. grant award or contract authority. 77.6 Emergency procedures. (c) A recipient organization fails to AUTHORITY: 5 U.S.C. 301. file timely all reports and other data SOURCE: 50 FR 781, Jan. 7, 1985, unless oth- required by the Department in connec- erwise noted. tion with its grant awards, contracts, or letter of credit. § 77.1 Purpose. (d) A recipient organization accumu- Letters of credit with the United lates, through its letter of credit or States Treasury, issued by the Depart- otherwise, excess amounts of Federal ment to States or other grantees and funds relative to its actual and imme- contractors, are a convenient means diate disbursement requirements. for disbursing Federal funds to recipi- (e) A recipient organization’s cash ents of grant awards or contracts (re- management system fails to comply cipient organizations) under the programs of this and other Executive De- with generally accepted accounting partments. The sound and efficient op- principles or Departmental regulations eration of the letter-of-credit system is or demonstrates irregularities, mis- dependent in large part upon the hon- representations, fraud, or abuse in its esty, good faith, and responsible finan- operation. cial management of recipient organizations that receive funds pursuant to § 77.4 Remedial actions. letters of credit. This part sets forth If, after the conclusion of the proce- conditions that may prompt the De- dures set forth in § 77.5 or § 77.6 the De- partment to seek remedial action partment finds that one or more of the against a recipient organization oper- conditions set forth in § 77.3 is or has ating under a letter of credit and the been present, the Department may procedures that will be used to reach a take the following remedial actions final decision regarding the taking of against a recipient organization’s use remedial actions against a recipient or- of its letter of credit: ganization. (a) The Department may place spe- § 77.2 Scope. cial limits, restrictions, or controls upon the recipient organization’s use of The regulations in this part apply to its letter of credit. all recipient organizations under any (b) The Department may require program administered by the Depart- ment through which the organization more frequent or more detailed finan- receives Federal funds under a letter of cial reporting from the recipient orga- credit. nization. (c) The Department may suspend, re- § 77.3 Conditions that may give rise to duce, or terminate the recipient orga- remedial actions. nization’s use of its letter of credit. If the Department determines that any of the following conditions is

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§ 77.5 Remedial action procedures. ment’s final administrative action on the matter. Except as provided in § 77.6, the De- (d) Informal conference. If, in the judg- partment will use the following proce- ment of the official designated to make dures whenever it seeks the remedial a final decision, it would materially action specified in § 77.4. enhance his ability to resolve the mat- (a) Notice. Prior to taking remedial ters in dispute, he may convene an inaction, the Department will provide formal conference to question or hear the recipient organization written no- an oral presentation by the parties. If tice of its intended action setting forth an informal conference is convened it both the legal and factual reasons will be transcribed. therefor. Notice may be provided by (e) Effect of decision. The decision in a certified or express mail, TWX, tele- proceeding under this section affects gram, delivery, or similar means. only the recipient organization’s obli- (b) Opportunity to respond. (1) The re- gations related to its letter of credit cipient organization has 30 days after and does not determine the organiza- receipt of the notice in which to sub- tion’s ultimate liability with respect to mit to the Department a written state- improperly spent funds or other mis- ment setting forth any legal and fac- conduct. tual reasons why it believes the proposed remedial action would be inap- § 77.6 Emergency procedures. propriate. If no response is received by (a) Should the Department determine the Department within the 30-day pe- that it cannot adequately protect as- riod, the Department may make the sets of the Federal government avail- proposed remedial action effective im- able to a recipient organization under mediately. If a response opposing the its letter of credit without taking re- taking of remedial action is received medial action prior to the procedures from the recipient organization within specified in § 77.5, it may immediately the 30-day period, no remedial action take remedial action subject to the will be taken until a final decision has subsequent completion of those proce- been reached under paragraph (c) of dures. this section. (2) The Department may (b) Where the Department has taken prepare a written reply to the recipient remedial action as described in para- organization’s response. Any such graph (a) of this section, it will notify reply will be forwarded to the deciding the recipient organization orally of the official together with the notice sent remedial action within one business to the recipient organization and the day of its imposition and in writing organization’s response, and a copy of within seven business days of its impo- the reply will be served on the recipi- sition. The written notice will conform ent organization. to that described in § 77.5(a). (c) Departmental decision. The Depart- (c) After receipt of the written no- ment’s decision to take remedial ac- tice, the recipient organization will tion under this part will be made by an have the same opportunity to respond official of the Department who had no as described in § 77.5(b)(1). involvement with the initial deter- (d) The Department will issue a final mination to seek remedial action. The decision in writing no later than twen- deciding official may affirm, reverse, ty days following receipt of any re- or modify the initial determination. In sponse submitted by the recipient orga- making the decision, the official will nization. consider only the notice provided by the Department, the recipient organi- PART 78—CONDITIONS FOR WAIV- zation’s statement, the Department’s ER OF DENIAL OF FEDERAL BENE- reply, together with any other docu- FITS ments attached to them, and statements at any informal conference held Sec. pursuant to paragraph (d) of this sec- 78.1 Applicability. tion. The official’s decision will be pro- 78.2 Definitions. vided to the recipient organization in 78.3 Benefits not denied to rehabilitated of- writing and will constitute the Depart- fenders.

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AUTHORITY: Section 5301 of Pub. L. 100–690, grams for addiction under 21 U.S.C. the Anti-Drug Abuse Act of 1988, 102 Stat. 853a(a)(2) if: 4310, 21 U.S.C. 853a. (1) The individual declares himself or SOURCE: 56 FR 29592, June 28, 1991, unless herself to be an addict and submits to otherwise noted. a long-term treatment program for addiction as defined by § 78.2(b), provided § 78.1 Applicability. that in the determination of the sen- This part is applicable to any deci- tencing court there is a reasonable sion to deny Federal benefits, under body of evidence to substantiate the in- authority of 21 U.S.C. 853a, to an indi- dividual’s declaration that such individual is an addict; or vidual convicted of a Federal or State (2) The individual is, in the deter- offense involving distribution or pos- mination of the sentencing court, session of a controlled substance as de- deemed to be rehabilitated as defined fined by the Controlled Substances by § 78.2(a). Act, 21 U.S.C. 802. (b) No individual convicted of any Federal or State offense involving the § 78.2 Definitions. possession of controlled substances For the purposes of denying Federal shall be denied any Federal benefit, or benefits under 21 U.S.C. 853a: otherwise subject to penalties and con- (a) Deemed to be rehabilitated means ditions, under 21 U.S.C. 853a(b)(2) if: that an individual has abstained from (1) The individual declares himself or the illicit use of a controlled substance herself to be an addict and submits to for the period of at least 180 days im- a long-term treatment program for ad- mediately prior to and including the diction as defined by § 78.2(b), provided date of sentencing provided that such that in the determination of the sen- abstinence is documented by the re- tencing court there is a reasonable sults of periodic urine drug testing con- body of evidence to substantiate the in- ducted during that period; and provided dividual’s declaration that such indi- further that such drug testing is con- vidual is an addict; or ducted using an immunoassay test ap- (2) The individual is, in the deter- proved by the Food and Drug Adminis- mination of the sentencing court, tration for commercial distribution or, deemed to be rehabilitated as defined in the case of a State offense, either by § 78.2(a). using an immunoassay test approved by the Food and Drug Administration PART 79—PROGRAM FRAUD CIVIL for commercial distribution or pursu- REMEDIES ant to standards approved by the State. Sec. (b) Long-term treatment program or 79.1 Basis and purpose. long-term drug treatment program means 79.2 Definitions. any drug abuse treatment program of 79.3 Basis for civil penalties and assess- 180 days or more where the provider ments. 79.4 Investigation. has been accredited by the Joint Com- 79.5 Review by the reviewing official. mission on Accreditation of Health Or- 79.6 Prerequisites for issuing a complaint. ganizations, the Commission on Ac- 79.7 Complaint. creditation of Rehabilitation Facili- 79.8 Service of complaint. ties, or the Council on Accreditation of 79.9 Answer. Services for Families and Children, or 79.10 Default upon failure to file an answer. licensed or otherwise approved by the 79.11 Referral of complaint and answer to the ALJ. State to provide drug abuse treatment. 79.12 Notice of hearing. 79.13 Parties to the hearing. § 78.3 Benefits not denied to rehabili- 79.14 Separation of functions. tated offenders. 79.15 Ex parte contacts. (a) No individual convicted of any 79.16 Disqualification of reviewing official or ALJ. Federal or State offense involving the 79.17 Rights of parties. distribution of controlled substances 79.18 Authority of the ALJ. shall be denied Federal benefits relat- 79.19 Prehearing conferences. ing to long-term drug treatment pro- 79.20 Disclosure of documents.

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79.21 Discovery. suant to 5 U.S.C. 3105 or detailed to the 79.22 Exchange of witness lists, statements authority pursuant to 5 U.S.C. 3344. and exhibits. Authority means the Department of 79.23 Subpoenas for attendance at hearing. Health and Human Services. 79.24 Protective order. Authority head means the Depart- 79.25 Fees. 79.26 Form, filing and service of papers. mental Grant Appeals Board of the De- 79.27 Computation of time. partment of Health and Human Serv- 79.28 Motions. ices. 79.29 Sanctions. Benefit means, in the context of state- 79.30 The hearing and burden of proof. ment, anything of value, including but 79.31 Determining the amount of penalties not limited to any advantage, pref- and assessments. erence, privilege, license, permit, fa- 79.32 Location of hearing. vorable decision, ruling, status, or loan 79.33 Witnesses. guarantee. 79.34 Evidence. Claim means any request, demand, or 79.35 The record. 79.36 Post-hearing briefs. submission— 79.37 Initial decision. (a) Made to the authority for prop- 79.38 Reconsideration of initial decision. erty, services, or money (including 79.39 Appeal to authority head. money representing grants, loans, in- 79.40 Stays ordered by the Department of surance, or benefits); Justice. (b) Made to a recipient of property, 79.41 Stay pending appeal. services, or money from the authority 79.42 Judicial review. or to a party to a contract with the au- 79.43 Collection of civil penalties and as- thority— sessments. 79.44 Right to administrative offset. (1) For property or services if the 79.45 Deposit in Treasury of United States. United States— 79.46 Compromise or settlement. (i) Provided such property or serv- 79.47 Limitations. ices; (ii) Provided any portion of the funds AUTHORITY: 31 U.S.C. 3801–3812. for the purchase of such property or SOURCE: 53 FR 11659, Apr. 8, 1988, unless services; or otherwise noted. (iii) Will reimburse such recipient or party for the purchase of such property § 79.1 Basis and purpose. or services; or (a) Basis. This part implements the (2) For the payment of money (in- Program Fraud Civil Remedies Act of cluding money representing grants, 1986, Pub. L. 99–509, §§ 6101–6104, 100 loans, insurance, or benefits) if the Stat. 1874 (October 21, 1986), to be codi- United States— fied at 31 U.S.C. 3801–3812, 31 U.S.C. 3809 (i) Provided any portion of the money of the statute requires each authority requested or demanded; or head to promulgate regulations nec- (ii) Will reimburse such recipient or essary to implement the provisions of party for any portion of the money the statute. paid on such request or demand: or (b) Purpose. This part (1) establishes (c) Made to the authority which has administrative procedures for imposing the effect of decreasing an obligation civil penalties and assessments against to pay or account for property, serv- persons who make, submit, or present, ices, or money. or cause to be made, submitted, or pre- Complaint means the administrative sented, false, fictitious, or fraudulent complaint served by the reviewing offi- claims or written statements to au- cial on the defendant under § 79.7. thorities or to their agents, and (2) Defendant means any person alleged specifies the hearing and appeal rights in a complaint under § 79.7 to be liable of persons subject to allegations of li- for a civil penalty or assessment under ability for such penalties and assess- § 79.3. ments. Department means the Department of Health and Human Services. § 79.2 Definitions. Government means the United States ALJ means an Administrative Law Government. Judge in the authority appointed pur- Individual means a natural person.

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Initial decision means the written de- Statement means any representation, cision of the ALJ required by §§ 79.10 or certification, affirmation, document, 79.37, and includes a revised initial de- record, or accounting or bookkeeping cision issued following a remand or a entry made— motion for reconsideration. (a) With respect to a claim or to ob- Investigating official means the In- tain the approval or payment of a spector General of the Department of claim (including relating to eligibility Health and Human Services or an offi- to make a claim); or cer or employee of the Office of the In- (b) With respect to (including relat- spector General designated by the In- ing to eligibility for)— spector General and serving in a posi- (1) A contract with, or a bid or pro- tion for which the rate of basic pay is posal for a contract with; or not less than the minimum rate of (2) A grant, loan, or benefit from, the basic pay for grade GS–16 under the General Schedule. authority, or any State, political subdivision of a State, or other party, if Knows or has reason to know, means the United States Government provides that a person, with respect to a claim or statement— any portion of the money or property under such contract or for such grant, (a) Has actual knowledge that the claim or statement is false, fictitious, loan, or benefit, or if the Government or fraudulent; will reimburse such State, political subdivision, or party for any portion of (b) Acts in deliberate ignorance of the money or property under such con- the truth or falsity of the claim or statement; or tract or for such grant, loan, or benefit, (c) Acts in reckless disregard of the truth or falsity of the claim or state- § 79.3 Basis for civil penalties and as- ment. sessments. Makes, wherever it appears, shall include the terms presents, submits, and (a) Claims. (1) Except as provided in causes to be made, presented, or subparagraph (c) of this section, any permitted. As the context requires, making son who makes a claim that the person or made, shall likewise include the cor- knows or has reason to know— responding forms of such terms. (i) Is false, fictitious, or fraudulent; Person means any individual, part- (ii) Includes, or is supported by, any nership, corporation, association or written statement which asserts a ma- private organization, and includes the terial fact which is false, fictitious, or plural of that term. fraudulent; Representative means an attorney who (iii) Includes, or is supported by, any is a member in good standing of the bar written statement that— of any State, Territory, or possession (A) Omits a material fact; of the United States or of the District (B) Is false, fictitious, or fraudulent of Columbia or the Commonwealth of as a result of such omission; and Puerto Rico. (C) Is a statement in which the per- Reviewing official means the General son making such statement has a duty Counsel of the Department or his or to include such material fact; or her designee who is— (iv) Is for payment for the provision (a) Not subject to supervision by, or of property or services which the per- required to report to, the investigating son has not provided as claimed, shall official; be subject, in addition to any other (b) Not employed in the organiza- remedy that may be prescribed by law, tional unit of the authority in which to a civil penalty of not more than the investigating official is employed; $5,5001for each such claim. and (c) Serving in a position for which 1 As adjusted in accordance with the Fed- the rate of basic pay is not less than eral Civil Monetary Penalty Inflation Ad- the minimum rate of basic pay for justment Act of 1990 (Pub. L. 101–140), as grade GS–16 under the General Sched- amended by the Debt Collection Improve- ule. ment Act of 1996 (Pub. L. 104–143).

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(2) Each voucher, invoice, claim ment is actually made to an agent, fis- form, or other individual request or de- cal intermediary, or other entity, in- mand for property, services, or money cluding any State or political subdivi- constitutes a separate claim. sion thereof, acting for or on behalf of (3) A claim shall be considered made the authority. to the authority, recipient, or party (c) Applications for certain benefits. (1) when such claim is actually made to an In the case of any claim or statement agent, fiscal intermediary, or other en- made by any individual relating to any tity, including any State or political of the benefits listed in paragraph (c)(2) subdivision thereof, acting for or on be- of this section received by such indi- half of the authority, recipient, or vidual, such individual may be held lia- party. ble for penalties and assessments under (4) Each claim for property, services, this section only if such claim or state- or money is subject to a civil penalty ment is made by such individual in regardless of whether such property, making application for such benefits services, or money is actually delivered with respect to such individual’s eligi- or paid. bility to receive such benefits. (5) If the Government has made any (2) For purposes of paragraph (c) of payment (including transferred prop- this section, the term benefits means— erty or provided services) on a claim, a (i) Benefits under the supplemental person subject to a civil penalty under security income program under title paragraph (a)(1) of this section shall XVI of the Social Security Act; also be subject to an assessment of not (ii) Old age, survivors, and disability more than twice the amount of such insurance benefits under title II of the claim or that portion thereof that is Social Security Act; determined to be in violation of para- (iii) Benefits under title XVIII of the graph (a)(1). Such assessment shall be Social Security Act; in lieu of damages sustained by the (iv) Aid to families with dependent Government because of such claim. children under a State plan approved (b) Statements. (1) Except as provided under section 402(a) of the Social Secu- in paragraph (c) of this section, any rity Act; person who makes a written statement (v) Medical assistance under a State that— plan approved under section 1902(a) of (i) The person knows or has reason to the Social Security Act; know— (vi) Benefits under title XX of the So- (A) Asserts a material fact which is cial Security Act; false, factitious, or fraudulent; or (vii) Benefits under section 336 of the (B) Is false, factitious, or fraudulent Older Americans Act; or, because it omits a material fact that (viii) Benefits under the Low-Income the person making the statement has a Home Energy Assistance Act of 1981, duty to include in such statement; and which are intended for the personal use (ii) Contains, or is accompanied by, of the individual who receives the ben- an express certification or affirmation of the truthfulness and accuracy of the efits or for a member of the individ- contents of the statement, shall be sub- ual’s family. ject, in addition to any other remedy (d) No proof of specific intent to de- that may be prescribed by law, to a fraud is required to establish liability civil penalty of not more than $5,500 2 under this section. for each such statement. (e) In any case in which it is deter- (2) Each representation, certifi- mined that more than one person is lia- cation, or affirmation constitutes a ble for making a claim or statement separate statement. under this section, each such person (3) A statement shall be considered may be held liable for a civil penalty. made to the authority when such state- (f) In any case in which it is determined that more than one person is liable for making a claim under this sec- 2 As adjusted in accordance with the Fed- eral Civil Monetary Penalty Inflation Ad- tion on which the Government has justment Act of 1990 (Pub. L. 101–140), as made payment (including transferred amended by the Debt Collection Improve- property or provided services), an as- ment Act of 1996 (Pub. L 104–143). sessment may be imposed against any

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such person or jointly and severally reviewing official shall transmit to the against any combination of such per- Attorney General a written notice of sons. the reviewing official’s attention to [53 FR 11659, Apr. 8, 1988, as amended at 61 issue a complaint under § 79.7. FR 52301, Oct. 7, 1996] (b) Such notice shall include— (1) A statement of the reviewing offi- § 79.4 Investigation. cial’s reasons for issuing a complaint; (a) If an investigating official con- (2) A statement specifying the evi- cludes that a subpoena pursuant to the dence that supports the allegations of authority conferred by 31 U.S.C. 3804(a) liability; is warranted— (3) A description of the claims or (1) The subpoena so issued shall no- statements upon which the allegations tify the person to whom it is addressed of liability are based; of the authority under which the sub- (4) An estimate of the amount of poena is issued and shall identify the money, or the value of property, serv- records or documents sought; ices, or other benefits, requested or de- (2) The investigating official may manded in violation of § 79.3 of this designate a person to act on his or her part; behalf to receive the documents (5) A statement of any exculpatory or sought; and mitigating circumstances that may re- (3) The person receiving such sub- late to the claims or statements known poena shall be required to tender to the by the reviewing official or the inves- investigating official, or the person tigating official; and designated to receive the documents, a (6) A statement that there is a rea- certification that— sonable prospect of collecting an ap- (i) The documents sought have been propriate amount of penalties and as- produced; sessments. (ii) Such documents are not available and the reasons therefor; or § 79.6 Prerequisites for issuing a com- (iii) Such documents suitably identi- plaint. fied, have been withheld based upon the (a) The reviewing official may issue a assertion of an identified privilege. complaint under § 79.7 only if— (b) If the investigating official con- (1) The Department of Justice ap- cludes that an action under the Pro- proves the issuance of a complaint in a gram Fraud Civil Remedies Act may be written statement described in 31 warranted, the investigating official U.S.C. 3803(b)(1), and shall submit a report containing the (2) In the case of allegations of liabil- findings and conclusions of such inves- ity under § 79.3(a) with respect to a tigation to the reviewing official. claim, the reviewing official deter- (c) Nothing in this section shall pre- mines that, with respect to such claim clude or limit an investigating offi- or a group of related claims submitted cial’s discretion to refer allegations di- at the same time such claim is sub- rectly to the Department of Justice for mitted (as defined in paragraph (b) of suit under the False Claims Act or this section), the amount of money, or other civil relief, or to defer or post- the value of property or services, de- pone a report or referral to the review- manded or requested in violation of ing official to avoid interference with a § 79.3(a) does not exceed $150,000. criminal investigation or prosecution. (b) For the purposes of this section, a (d) Nothing in this section modifies related group of claims submitted at any responsibility of an investigating the same time shall include only those official to report violations of criminal claims arising from the same trans- law to the Attorney General. action (e.g., grant, loan, application, or contract) that are submitted simulta- § 79.5 Review by the reviewing official. neously as part of a single request, de- (a) If, based on the report of the in- mand, or submission. vestigating official under § 79.4(b), the (c) Nothing in this section shall be reviewing official determines that construed to limit the reviewing offi- there is adequate evidence to believe cial’s authority to join in a single com- that a person is liable under § 79.3, the plaint against a person claims that are

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unrelated or were not submitted simul- § 79.9 Answer. taneously, regardless of the amount of (a) The defendant may request a money, or the value of property or hearing by filing an answer with the services, demanded or requested. reviewing official within 30 days of § 79.7 Complaint. service of the complaint. An answer shall be deemed to be a request for (a) On or after the date the Depart- hearing. ment of Justice approves the issuance (b) In the answer, the defendant— of a complaint in accordance with 31 (1) Shall admit or deny each of the U.S.C. 3803(b)(1), the reviewing official allegations of liability made in the may serve a complaint on the defend- complaint; ant, as provided in § 79.8. (2) Shall state any defense on which (b) The complaint shall state— the defendant intends to rely; (1) The allegations of liability (3) May state any reasons why the de- against the defendant, including the fendant contends that the penalties statutory basis for liability, an identi- and assessments should be less than fication of the claims or statements the statutory maximum; and that are the basis for the alleged liabil- (4) Shall state the name, address, and ity, and the reasons why liability alleg- telephone number of the person author- edly arises from such claims or state- ized by the defendant to act as defend- ments; ant’s representative, if any. (2) The maximum amount of pen- (c) If the defendant is unable to file alties and assessments for which the an answer meeting the requirements of defendant may be held liable; paragraph (b) of this section within the (3) Instructions for filing an answer time provided, the defendant, before to request a hearing, including a spe- that time expires, may file with the re- cific statement of the defendant’s right viewing official a general answer deny- to request a hearing by filing an an- ing liability and requesting a hearing, swer and to be represented by a rep- and a request for an extension of time resentative; and within which to file an answer meeting (4) That failure to file an answer as the requirements of paragraph (b) of set forth in § 79.9 will result in the im- this section. As provided in § 79.11, the position of the maximum amount of reviewing official shall file promptly penalties and assessments without with the ALJ the complaint, the gen- right to appeal, as provided in § 79.10. eral answer denying liability, and the (c) At the same time the reviewing request for an extension of time. For official serves the complaint, he or she good cause shown, the ALJ may grant shall serve the defendant with a copy the defendant up to 30 additional days of these regulations. within which to file an answer meeting the requirements of paragraph (b) of § 79.8 Service of complaint. this section. (a) Service of a complaint must be made by certified or registered mail or § 79.10 Default upon failure to file an by delivery in any manner authorized answer. by Rule 4(d) of the Federal Rules of (a) If the defendant does not file an Civil Procedure. Service is complete answer within the time prescribed in upon receipt. § 79.9(a), the reviewing official may (b) Proof of service, stating the name refer the complaint to the ALJ. and address of the person on whom the (b) Upon the referral of the com- complaint was served, and the manner plaint, the ALJ shall promptly serve and date of service, may be made by— on the defendant in the manner pre- (1) Affidavit of the individual serving scribed in § 79.8, a notice that an initial the complaint by delivery; decision will be issued under this sec- (2) A United States Postal Service re- tion. turn receipt card acknowledging re- (c) The ALJ shall assume the facts ceipt; or alleged in the complaint to be true and, (3) Written acknowledgment of re- if such facts establish liability under ceipt by the defendant or his or her § 79.3, the ALJ shall issue an initial de- representative. cision imposing the maximum amount

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of penalties and assessments allowed answer is not excused, the authority under the statute. head shall reinstate the initial decision (d) Except as otherwise provided in of the ALJ, which shall become final this section, by failing to file a timely and binding upon the parties 30 days answer, the defendant waives any right after the authority head issues such de- to further review of the penalties and cision. assessments imposed under paragraph (c) of this section, and the initial deci- § 79.11 Referral of complaint and an- sion shall become final and binding swer to the ALJ. upon the parties 30 days after it is Upon receipt of an answer, the re- issued. viewing official shall file the complaint (e) If, before such an initial decision and answer with the ALJ. becomes final, the defendant files a motion with the ALJ seeking to reopen § 79.12 Notice of hearing. on the grounds that extraordinary cir- (a) When the ALJ receives the com- cumstances prevented the defendant plaint and answer, the ALJ shall from filing an answer, the initial deci- promptly serve a notice of hearing sion shall be stayed pending the ALJ’s upon the defendant in the manner pre- decision on the motion. scribed by § 79.8. At the same time, the (f) If, on such motion, the defendant ALJ shall send a copy of such notice to can demonstrate extraordinary cir- the representative for the Government. cumstances excusing the failure to file (b) Such notice shall include— a timely answer, the ALJ shall with- (1) The tentative time and place, and draw the initial decision in paragraph the nature of the hearing; (c) of this section, if such a decision (2) The legal authority and jurisdic- has been issued, and shall grant the de- tion under which the hearing is to be fendant an opportunity to answer the held; complaint. (3) The matters of fact and law to be (g) A decision of the ALJ denying a asserted; defendant’s motion under paragraph (e) (4) A description of the procedures for of this section is not subject to recon- the conduct of the hearing; sideration under § 79.38. (5) The name, address, and telephone (h) The defendant may appeal to the number of the representative of the authority head the decision denying a Government and of the defendant, if motion to reopen by filing a notice of any; and appeal with the authority head within (6) Such other matters as the ALJ 15 days after the ALJ denies the mo- deems appropriate. tion. The timely filing of a notice of appeal shall stay the initial decision § 79.13 Parties to the hearing. until the authority head decides the (a) The parities to the hearing shall issue. be the defendant and the authority. (i) If the defendant files a timely no- (b) Pursuant to 31 U.S.C. 3730(c)(5), a tice of appeal with the authority head, private plaintiff under the False the ALJ shall forward the record of the Claims Act may participate in these proceeding to the authority head. proceedings to the extent authorized (j) The authority head shall decide by the provisions of that Act. expeditiously whether extraordinary circumstances excuse the defendant’s § 79.14 Separation of functions. failure to file a timely answer based (a) The investigating official, the re- solely on the record before the ALJ. viewing official, and any employee or (k) If the authority head decides that agent of the authority who takes part extraordinary circumstances excuse in investigating, preparing, or pre- the defendant’s failure to file a timely senting a particular case may not, in answer, the authority head shall re- such case or a factually related case— mand the case to the ALJ with instruc- (1) Participate in the hearing as the tions to grant the defendant an oppor- ALJ; tunity to answer. (2) Participate or advise in the initial (l) If the authority head decides that decision or the review of the initial de- the defendant’s failure to file a timely cision by the authority head, except as

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a witness or a representative in public (f)(1) If the ALJ determines that a re- proceedings; or viewing official is disqualified, the ALJ (3) Make the collection of penalties shall dismiss the complaint without and assessments under 31 U.S.C. 3806. prejudice. (b) The ALJ shall not be responsible (2) If the ALJ disqualifies himself or to, or subject to the supervision or di- herself, the case shall be reassigned rection of, the investigating official or promptly to another ALJ. the reviewing official. (3) If the ALJ denies a motion to dis- (c) Except as provided in paragraph qualify, the authority head may deter- (a) of this section, the representative mine the matter only as part of his or for the Government may be employed her review of the initial decision upon anywhere in the authority, including appeal, if any. in the offices of either the investigating official or the reviewing offi- § 79.17 Rights of parties. cial. Except as otherwise limited by this part, all parties may— § 79.15 Ex parte contacts. (a) Be accompanied, represented, and No party or person (except employees advised by a representative; of the ALJ’s office) shall communciate (b) Participate in any conference in any way with the ALJ on any mat- held by the ALJ; ter at issue in a case, unless on notice (c) Conduct discovery; and opportunity for all parties to par- (d) Agree to stipulations of fact or ticipate. This provision does not pro- law, which shall be made part of the hibit a person or party from inquiring record; about the status of a case or asking (e) Present evidence relevant to the routine questions concerning adminis- issues at the hearing; trative functions or procedures. (f) Present and cross-examine wit- § 79.16 Disqualification of reviewing nesses; official or ALJ. (g) Present oral arguments at the hearing as permitted by the ALJ; and (a) A reviewing official or ALJ in a (h) Submit written briefs and pro- particular case may disqualify himself posed findings of fact and conclusions or herself at any time. (b) A party may file with the ALJ a of law after the hearing. motion for disqualification of a review- § 79.18 Authority of the ALJ. ing official or an ALJ. Such motion shall be accompanied by an affidavit (a) The ALJ shall conduct a fair and alleging personal bias or other reason impartial hearing, avoid delay, main- for disqualification. tain order, and assure that a record of (c) Such motion and affidavit shall be the proceeding is made. filed promptly upon the party’s dis- (b) The ALJ has the authority to— covery of reasons requiring disquali- (1) Set and change the date, time, fication, or such objections shall be and place of the hearing upon reason- deemed waived. able notice to the parties; (d) Such affidavit shall state specific (2) Continue or recess the hearing in facts that support the party’s belief whole or in part for a reasonable period that personal bias or other reason for of time; disqualification exists and the time (3) Hold conferences to identify or and circumstances of the party’s dis- simplify the issues, or to consider covery of such facts. It shall be accom- other matters that may aid in the ex- panied by a certificate of the rep- peditious disposition of the proceeding; resentative of record that it is made in (4) Administer oaths and affirma- good faith. tions; (e) Upon the filing of such a motion (5) Issue subpoenas requiring the at- and affidavit, the ALJ shall proceed no tendance of witnesses and the produc- further in the case until he or she re- tion of documents at depositions or at solves the matter of disqualification in hearings; accordance with paragraph (f) of this (6) Rule on motions and other proce- section. dural matters;

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(7) Regulate the scope and timing of (10) Such other matters as may tend discovery; to expedite the fair and just disposition (8) Regulate the course of the hearing of the proceedings. and the conduct of representatives and (d) The ALJ may issue an order con- parties; taining all matters agreed upon by the (9) Examine witnesses; parties or ordered by the ALJ at a pre- (10) Receive, rule on, exclude, or hearing conference. limit evidence; § 79.20 Disclosure of documents. (11) Upon motion of a party, take official notice of facts; (a) Upon written request to the re- (12) Upon motion of a party, decide viewing official, the defendant may re- cases, in whole or in part, by summary view any relevant and material docu- judgment where there is no disputed ments, transcripts, records, and other issue of material fact; materials that relate to the allegations set out in the complaint and upon (13) Conduct any conference, argu- which the findings and conclusions of ment, or hearing on motions in person the investigating official under § 79.4(b) or by telephone; and are based, unless such documents are (14) Exercise such other authority as subject to a privilege under Federal is necessary to carry out the respon- law. Upon payment of fees for duplica- sibilities of the ALJ under this part. tion, the defendant may obtain copies (c) The ALJ does not have the au- of such documents. thority to find Federal statutes or reg- (b) Upon written request to the re- ulations invalid. viewing official, the defendant also may obtain a copy of all exculpatory § 79.19 Prehearing conferences. information in the possession of the re- (a) The ALJ may schedule prehearing viewing official or investigating offi- conferences as appropriate. cial relating to the allegations in the (b) Upon the motion of any party, the complaint, even if it is contained in a ALJ shall schedule at least one pre- document that would otherwise be hearing conference at a reasonable privileged. If the document would oth- time in advance of the hearing. erwise be privileged, only that portion (c) The ALJ may use prehearing con- containing exculpatory information ferences to discuss the following: must be disclosed. (1) Simplication of the issues; (c) The notice sent to the Attorney (2) The necessity or desirability of General from the reviewing official as amendments to the pleadings, includ- described in § 79.5 is not discoverable ing the need for a more definite state- under any circumstances. ment; (d) The defendant may file a motion to compel disclosure of the documents (3) Stipulations and admissions of subject to the provisions of this sec- factll, or as to the contents and au- tion. Such a motion may only be filed thenticity of documents; with the ALJ following the filing of an (4) Whether the parties can agree to answer pursuant to § 79.9. submission of the case on a stipulated record; § 79.21 Discovery. (5) Whether a party chooses to waive (a) The following types of discovery appearance at an oral hearing and to are authorized: submit only documentary evidence (1) Requests for production of docu- (subject to the objection of other par- ments for inspection and copying; ties) and written argument; (2) Requests for admission of the con- (6) Limitation of the number of wit- tents or authenticity of any relevant nesses; document or of the truth of any (7) Scheduling dates for the exchange revelant fact; of witness lists and of proposed exhib- (3) Written interrogatories; and its; (4) Depositions. (8) Discovery; (b) For the purpose of this section (9) The time and place for the hear- and §§ 79.22 and 79.23, the term docu- ing; and ments includes information, documents,

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reports, answers, records, accounts, pa- § 79.22 Exchange of witness lists, state- pers, and other data and documentary ments and exhibits. evidence. Nothing contained herein (a) At least 15 days before the hear- shall be interpreted to require the cre- ing or at such other time as may be or- ation of a document. dered by the ALJ, the parties shall ex- (c) Unless mutually agreed to by the change witness lists, copies of prior parties, discovery is available only as statements of proposed witnesses, and ordered by the ALJ. The ALJ shall reg- copies of proposed hearing exhibits, in- ulate the timing of discovery. cluding copies of any written state- (d) Motions for discovery. (1) A party ments that the party intends to offer seeking discovery may file a motion in lieu of live testimony in accordance with the ALJ. Such a motion shall be with § 79.33(b). At the time the above accompanied by a copy of the requested documents are exchanged, any party discovery, or in the case of depositions, that intends to rely on the transcript a summary of the scope of the proposed of deposition testimony in lieu of live deposition. testimony at the hearing, if permitted (2) Within ten days of service, a party by the ALJ, shall provide each party may file an opposition to the motion with a copy of the specific pages of the and/or a motion for protective order as transcript it intends to introduce into provided in § 79.24. evidence. (3) The ALJ may grant a motion for (b) If a party objects, the ALJ shall discovery only if he or she finds that not admit into evidence the testimony the discovery sought— of any witness whose name does not ap- (i) Is necessary for the expeditious, pear on the witness list or any exhibit fair, and reasonable consideration of not provided to the opposing party as the issues; provided above unless the ALJ finds (ii) Is not unduly costly or burden- good cause for the failure or that there some; is no prejudice to the objecting party. (iii) Will not unduly delay the pro- (c) Unless another party objects ceeding; and within the time set by the ALJ, docu- (iv) Does not seek privileged informa- ments exchanged in accordance with tion. paragraph (a) of this section shall be (4) The burden of showing that dis- deemed to be authentic for the purpose covery should be allowed is on the of admissibility at the hearing. party seeking discovery. (5) The ALJ may grant discovery sub- § 79.23 Subpoenas for attendance at ject to a protective order under § 79.24. hearing. (e) Depositions. (1) If a motion for dep- (a) A party wishing to procure the osition is granted, the ALJ shall issue appearance and testimony of any indi- a subpoena for the deponent, which vidual at the hearing may request that may require the deponent to produce the ALJ issue a subpoena. documents. The subpoena shall specify (b) A subpoena requiring the attend- the time and place at which the deposi- ance and testimony of an individual tion will be held. may also require the individual to (2) The party seeking to depose shall produce documents at the hearing. serve the subpoena in the manner pre- (c) A party seeking a subpoena shall scribed in § 79.8. file a written request therefor not less (3) The deponent may file with the than 15 days before the date fixed for ALJ a motion to quash the subpoena or the hearing unless otherwise allowed a motion for a protective order within by the ALJ for good cause shown. Such ten days of service. request shall specify any documents to (4) The party seeking to depose shall be produced and shall designate the provide for the taking of a verbatim witnesses and describe the address and transcript of the deposition, which it location thereof with sufficient par- shall make available to all other particularity to permit such witnesses to ties for inspection and copying. be found. (f) Each party shall bear its own (d) The subpoena shall specify the costs of discovery. time and place at which the witness is

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to appear and any documents the wit- enclosed in sealed envelopes to be ness is to produce. opened as directed by the ALJ. (e) The party seeking the subpoena shall serve it in the manner prescribed § 79.25 Fees. in § 79.8, except that a subpoena on a The party requesting a subpoena party or upon an individual under the shall pay the cost of the fees and mile- control of a party may be served as age of any witness subpoenaed in the prescribed in § 79.26(b). amounts that would be payable to a (f) A party or the individual to whom witness in a proceeding in United the subpoena is directed may file with States District Court. A check for wit- the ALJ a motion to quash the sub- ness fees and mileage shall accompany poena within ten days after service or the subpoena when served, except that on or before the time specified in the when a subpoena is issued on behalf of subpoena for compliance if it is less the authority, a check for witness fees than ten days after service. and mileage need not accompany the subpoena. § 79.24 Protective order. (a) A party or a prospective witness § 79.26 Form, filing and service of pa- or deponent may file a motion for a pers. protective order with respect to dis- (a) Form. (1) Documents filed with the covery sought by an opposing party or ALJ shall include an original and two with respect to the hearing, seeking to copies. limit the availability or disclosure of (2) Every pleading and paper filed in evidence. the proceeding shall contain a caption (b) In issuing a protective order, the setting forth the title of the action, the ALJ may make any order which justice case number assigned by the ALJ, and requires to protect a party or person a designation of the paper (e.g., motion from annoyance, embarrassment, op- to quash subpoena). pression, or undue burden or expense, (3) Every pleading and paper shall be including one or more of the following: signed by, and shall contain the ad- (1) That the discovery not be had; dress and telephone number of, the (2) That the discovery may be had party or the person on whose behalf the only on specified terms and conditions, paper was filed, or his or her represent- including a designation of the time or ative. place; (4) Papers are considered filed when (3) That the discovery may be had they are mailed. Date of mailing may only through a method of discovery be established by a certificate from the other than that requested: party or its representative or by proof (4) That certain matters not be in- that the document was sent by cer- quired into, or that the scope of dis- tified or registered mail. covery be limited to certain matters; (b) Service. A party filing a document (5) That discovery be conducted with with the ALJ shall, at the time of fil- no one present except persons des- ing, serve a copy of such document on ignated by the ALJ; every other party. Service upon any (6) That the contents of discovery or party of any document other than evidence be sealed; those required to be served as pre- (7) That a deposition after being scribed in § 79.8 shall be made by deliv- sealed be opened only by order of the ering a copy or by placing a copy of the ALJ; document in the United States mail, (8) That a trade secret or other con- postage prepaid, and addressed to the fidential research, development, com- party’s last known address. When a mercial information, or facts per- party is represented by a representa- taining to any criminal investigation, tive, service shall be made upon such proceeding, or other administrative in- representative in lieu of the actual vestigation not be disclosed or be dis- party. closed only in a designated way; or (c) Proof of service. A certificate of (9) That the parties simultaneously the individual serving the document by file specified documents or information personal delivery or by mail, setting

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forth the manner of service, shall be (1) Failing to comply with an order, proof of service. rule, or procedure governing the proceeding; § 79.27 Computation of time. (2) Failing to prosecute or defend an (a) In computing any period of time action; or under this part or in an order issued (3) Engaging in other misconduct thereunder, the time begins with the that interferes with the speedy, or- day following the act, event, or default, derly, or fair conduct of the hearing. and includes the last day of the period, (b) Any such sanction, including but unless it is a Saturday, Sunday, or not limited to those listed in para- legal holiday observed by the Federal graphs (c), (d), and (e) of this section, government, in which event it includes shall reasonably relate to the severity the next business day. and nature of the failure or mis- (b) Except as provided in paragraph conduct. (c) of this section, when the period of (c) When a party fails to comply with time allowed is less than seven days, an order, including an order for taking intermediate Saturdays, Sundays, and a deposition, the production of evi- legal holidays observed by the Federal dence within the party’s control, or a government shall be excluded from the request for admission, the ALJ may— computation. (1) Draw an inference in favor of the (c) Where a document has been served requesting party with regard to the in- or issued by placing it in the mail, an formation sought; additional five calendar days will be (2) In the case of requests for admis- added to the time permitted for any re- sion, deem each matter of which an ad- sponse. mission is requested to be admitted; (3) Prohibit the party failing to com- § 79.28 Motions. ply with such order from introducing (a) Any application to the ALJ for an evidence concerning, or otherwise rely- order or ruling shall be by motion. Mo- ing upon, testimony relating to the in- tions shall state the relief sought, the formation sought; and authority relied upon, and the facts al- (4) Strike any part of the pleadings leged, and shall be filed with the ALJ or other submissions of the party fail- and served on all other parties. ing to comply with such request. (b) Except for motions made during a (d) If a party fails to prosecute or de- prehearing conference or at the hear- fend an action under this part coming, all motions shall be in writing. menced by service of a notice of hear- The ALJ may require that oral mo- ing, the ALJ may dismiss the action or tions be reduced to writing. may issue an initial decision imposing (c) Within 15 days after a written mo- penalties and assessments. tion is served, or such other time as (e) The ALJ may refuse to consider may be fixed by the ALJ, any party any motion, request, response, brief or may file a response to such motion. other document which is not filed in a (d) The ALJ may not grant a written timely fashion. motion before the time for filing responses thereto has expired, except § 79.30 The hearing and burden of upon consent of the parties or fol- proof. lowing a hearing on the motion, but (a) The ALJ shall conduct a hearing may overrule or deny such motion on the record in order to determine without awaiting a response. whether the defendant is liable for a (e) The ALJ shall make a reasonable civil penalty or assessment under § 79.3 effort to dispose of all outstanding mo- and, if so, the appropriate amount of tions prior to the beginning of the any such civil penalty or assessment hearing. considering any aggravating or mitigating factors. § 79.29 Sanctions. (b) The authority shall prove defend- (a) The ALJ may sanction a person, ant’s liability and any aggravating fac- including any party or representative, tors by a preponderance of the evi- for— dence.

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(c) The defendant shall prove any af- (8) Whether the defendant has en- firmative defenses and any mitigating gaged in a pattern of the same or simi- factors by a preponderance of the evi- lar misconduct; dence. (9) Whether the defendant attempted (d) The hearing shall be open to the to conceal the misconduct; public unless otherwise ordered by the (10) The degree to which the defend- ALJ for good cause shown. ant has involved others in the misconduct or in concealing it; § 79.31 Determining the amount of (11) Where the misconduct of employ- penalties and assessments. ees or agents is imputed to the defend- (a) In determining an appropriate ant, the extent to which the defend- amount of civil penalties and assess- ant’s practices fostered or attempted ments, the ALJ and the authority to preclude such misconduct; head, upon appeal, should evaluate any (12) Whether the defendant cooper- circumstances that mitigate or aggra- ated in or obstructed an investigation vate the violation and should articu- of the misconduct; late in their opinions the reasons that (13) Whether the defendant assisted support the penalties and assessments in identifying and prosecuting other they impose. Because of the intangible wrongdoers; costs of fraud, the expense of inves- (14) The complexity of the program tigating such conduct, and the need to or transaction, and the degree of the deter others who might be similarly defendant’s sophistication with respect tempted, ordinarily double damages to it, including the extent of the de- and a significant civil penalty should fendant’s prior participation in the be imposed. program or in similar transactions; (b) Although not exhaustive, the following factors are among those that (15) Whether the defendant has been may influence the ALJ and the author- found, in any criminal, civil, or admin- ity head in determining the amount of istrative proceeding, to have engaged penalties and assessments to impose in similar misconduct or to have dealt with respect to the misconduct (i.e., dishonestly with the Government of the false, fictitious, or fraudulent the United States or of a State, di- claims or statements) charged in the rectly or indirectly; and complaint: (16) The need to deter the defendant (1) The number of false, fictitious, or and others from engaging in the same fraudulent claims or statements; or similar misconduct. (2) The time period over which such (c) Nothing in this section shall be claims or statements were made; construed to limit the ALJ or the au- (3) The degree of the defendant’s cul- thority head from considering any pability with respect to the mis- other factors that in any given case conduct; may mitigate or aggravate the offense for which penalties and assessments (4) The amount of money or the value are imposed. of the property, services, or benefit falsely claimed; § 79.32 Location of hearing. (5) The value of the Government’s actual loss as a result of the misconduct, (a) The hearing may be held— including foreseeable consequential (1) In any judicial district of the damages and the costs of investigation; United States in which the defendant (6) The relationship of the amount resides or transacts business; imposed as civil penalties to the (2) In any judicial district of the amount of the Government’s loss; United States in which the claim or (7) The potential or actual impact of statement in issue was made; or the misconduct upon national defense, (3) In such other place as may be public health or safety, or public con- agreed upon by the defendant and the fidence in the management of Govern- ALJ. ment programs and operations, includ- (b) Each party shall have the oppor- ing particularly the impact on the in- tunity to present argument with re- tended beneficiaries of such programs; spect to the location of the hearing.

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(c) The hearing shall be held at the se or designated by the party’s rep- place and at the time ordered by the resentative; or ALJ. (3) An individual whose presence is shown by a party to be essential to the § 79.33 Witnesses. presentation of its case, including an (a) Except as provided in paragraph individual employed by the Govern- (b) of this section, testimony at the ment engaged in assisting the rep- hearing shall be given orally by wit- resentative for the Government. nesses under oath or affirmation. § 79.34 Evidence. (b) At the discretion of the ALJ, testimony may be admitted in the form of (a) The ALJ shall determine the ad- a written statement or deposition. Any missibility of evidence. such written statement must be pro- (b) Except as provided in this part, vided to all other parties along with the ALJ shall not be bound by the Fed- the last known address of such witness, eral Rules of Evidence. However, the in a manner which allows sufficient ALJ may apply the Federal Rules of time for other parties to subpoena such Evidence where appropriate, e.g., to ex- witness for cross-examination at the clude unreliable evidence. (c) The ALJ shall exclude irrelevant hearing. Prior written statements of and immaterial evidence. witnesses proposed to testify at the (d) Although relevant, evidence may hearing and deposition transcripts be excluded if its probative value is shall be exchanged as provided in substantially outweighed by the danger § 79.22(a). of unfair prejudice, confusion of the (c) The ALJ shall exercise reasonable issues, or by considerations of undue control over the mode and order of in- delay or needless presentation of cumu- terrogating witnesses and presenting lative evidence. evidence so as to (1) make the interro- (e) Although relevant, evidence may gation and presentation effective for be excluded if it is privileged under the ascertainment of the truth, (2) Federal law. avoid needless consumption of time, (f) Evidence concerning offers of com- and (3) protect witnesses from harass- promise or settlement shall be inad- ment or undue embarrassment. missible to the extent provided in Rule (d) The ALJ shall permit the parties 408 of the Federal Rules of Evidence. to conduct such cross-examination as (g) The ALJ shall permit the parties may be required for a full and true dis- to introduce rebuttal witnesses and closure of the facts. evidence. (e) At the discretion of the ALJ, a (h) All documents and other evidence witness may be cross-examined on mat- offered or taken for the record shall be ters relevant to the proceeding without open to examination by all parties, un- regard to the scope of his or her direct less otherwise ordered by the ALJ pur- examination. To the extent permitted suant to § 79.24. by the ALJ, cross-examination on matters outside the scope of direct exam- § 79.35 The record. ination shall be conducted in the man- (a) The hearing will be recorded and ner of direct examination and may pro- transcribed. Transcripts may be ob- ceed by leading questions only if the tained following the hearing from the witness is a hostile witness, an adverse ALJ at a cost not to exceed the actual party, or a witness identified with an cost of duplication. adverse party. (b) The transcript of testimony, ex- (f) Upon motion of any party, the hibits and other evidence admitted at ALJ shall order witnesses excluded so the hearing, and all papers and re- that they cannot hear the testimony of quests filed in the proceeding con- other witnesses. This rule does not au- stitute the record for the decision by thorize exclusion of— the ALJ and the authority head. (1) A party who is an individual; (c) The record may be inspected and (2) In the case of a party that is not copied (upon payment of a reasonable an individual, an officer or employee of fee) by anyone, unless otherwise or- the party appearing for the entity pro dered by the ALJ pursuant to § 79.24.

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§ 79.36 Post-hearing briefs. § 79.38 Reconsideration of initial decision. The ALJ may require the parties to file post-hearing briefs. In any event, (a) Except as provided in paragraph any party may file a post-hearing brief. (d) of this section, any party may file a The ALJ shall fix the time for filing motion for reconsideration of the ini- such briefs, not to exceed 60 days from tial decision within 20 days of receipt the date the party receives the tran- of the initial decision. If service was script of the hearing or, if applicable, made by mail, receipt will be presumed the stipulated record. Such briefs may to be five days from the date of mailing be accompanied by proposed findings of in the absence of contrary proof. fact and conclusions of law. The ALJ (b) Every such motion must set forth may permit the parties to file reply the matters claimed to have been erro- briefs. neously decided and the nature of the alleged errors. Such motion shall be § 79.37 Initial decision. accompanied by a supporting brief. (c) Responses to such motions shall (a) The ALJ shall issue an initial de- be allowed only upon request of the cision based only on the record, which ALJ. shall contain findings of fact, conclu- (d) No party may file a motion for re- sions of law, and the amount of any consideration of an initial decision penalties and assessments imposed. that has been revised in response to a (b) The findings of fact shall include previous motion for reconsideration. a finding on each of the following (e) The ALJ may dispose of a motion issues: for reconsideration by denying it or by (1) Whether the claims or statements issuing a revised initial decision. identified in the complaint, or any por- (f) If the ALJ denies a motion for re- tions thereof, violate § 79.3; consideration, the initial decision shall (2) If the person is liable for penalties constitute the final decision of the au- or assessments, the appropriate thority head and shall be final and amount of any such penalties or assess- binding on the parties 30 days after the ments considering any mitigating or ALJ denies the motion, unless the ini- aggravating factors that he or she finds tial decision is timely appealed to the in the case, such as those described in authority head in accordance with § 79.31. § 79.39. (c) The ALJ shall promptly serve the (g) If the ALJ issues a revised initial initial decision on all parties within 90 decision, that decision shall constitute days after the time for submission of the final decision of the authority head post-hearing briefs and reply briefs (if and shall be final and binding on the permitted) has expired. The ALJ shall parties 30 days after it is issued, unless at the same time serve all parties with it is timely appealed to the authority a statement describing the right of any head in accordance with § 79.39. defendant determined to be liable for a civil penalty or assessment to file a § 79.39 Appeal to authority head. motion for reconsideration with the (a) Any defendant who has filed a ALJ or a notice of appeal with the au- timely answer and who is determined thority head. If the ALJ fails to meet in an initial decision to be liable for a the deadline contained in this para- civil penalty or assessment may appeal graph, he or she shall notify the parties such decision to the authority head by of the reason for the delay and shall set filing a notice of appeal with the au- a new deadline. thority head in accordance with this (d) Unless the initial decision of the section. ALJ is timely appealed to the author- (b)(1) A notice of appeal may be filed ity head, or a motion for reconsider- at any time within 30 days after the ation of the initial decision is timely ALJ issues an initial decision. How- filed, the initial decision shall con- ever, if another party files a motion for stitute the final decision of the author- reconsideration under § 79.38, consider- ity head and shall be final and binding ation of the appeal shall be stayed on the parties 30 days after it is issued automatically pending resolution of by the ALJ. the motion for reconsideration.

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(2) If a motion for reconsideration is right of any person determined to be timely filed, a notice of appeal must be liable for a penalty or assessment to filed within 30 days after the ALJ de- seek judicial review. nies the motion or issues a revised ini- (l) Unless a petition for review is tial decision, whichever applies. filed as provided in 31 U.S.C. 3805 after (3) If no motion for reconsideration is a defendant has exhausted all adminis- timely filed, a notice of appeal must be trative remedies under this part and filed within 30 days after the ALJ within 60 days after the date on which issues the initial decision. the authority head serves the defend- (4) The authority head may extend ant with a copy of the authority head’s the initial 30-day period for an addi- decision, a determination that a de- tional 30-days if the defendant files fendant is liable under § 79.3 is final and with the authority head a request for is not subject to judicial review. an extension within the initial 30 day period and shows good cause. § 79.40 Stays ordered by the Depart- (c) If the defendant files a timely no- ment of Justice. tice of appeal with the authority head, If at any time the Attorney General and the time for filing motions for re- or an Assistant Attorney General des- consideration under § 79.38 has expired, the ALJ shall forward the record of the ignated by the Attorney General trans- proceeding to the authority head. mits to the authority head a written (d) A notice of appeal shall be accom- finding that continuation of the admin- panied by a written brief specifying ex- istrative process described in this part ceptions to the initial decision and rea- with respect to a claim or statement sons supporting the exceptions. may adversely affect any pending or (e) The representative for the Gov- potential criminal or civil action re- ernment may file a brief in opposition lated to such claim or statement, the to exceptions within 30 days of receiv- authority head shall stay the process ing the notice of appeal and accom- immediately. The authority head may panying brief. order the process resumed only upon (f) There is no right to appear person- receipt of the written authorization of ally before the authority head. the Attorney General. (g) There is no right to appeal any interlocutory ruling by the ALJ. § 79.41 Stay pending appeal. (h) In reviewing the initial decision, (a) An initial decision is stayed auto- the authority head shall not consider matically pending disposition of a mo- any objection that was not raised be- tion for reconsideration or of an appeal fore the ALJ unless a demonstration is to the authority head. made of extraordinary circumstances (b) No administrative stay is avail- causing the failure to raise the objec- able following a final decision of the tion. authority head. (i) If any party demonstrates to the satisfaction of the authority head that § 79.42 Judicial review. additional evidence not presented at such hearing is material and that there Section 3805 of title 31, United States were reasonable grounds for the failure Code, authorizes judicial review by an to present such evidence at such hear- appropriate United States District ing, the authority head shall remand Court of a final decision of the author- the matter to the ALJ for consider- ity head imposing penalties or assess- ation of such additional evidence. ments under this part and specifies the (j) The authority head may affirm, procedures for such review. reduce, reverse, compromise, remand, or settle any penalty or assessment de- § 79.43 Collection of civil penalties and termined by the ALJ in any initial de- assessments. cision. Sections 3806 and 3808(b) of title 31, (k) The authority head shall prompt- United States Code, authorize actions ly serve each party to the appeal with for collection of civil penalties and as- a copy of the decision of the authority sessments imposed under this part and head and a statement describing the specify the procedures for such actions.

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§ 79.44 Right to administrative offset. § 79.47 Limitations. The amount of any penalty or assess- (a) The notice of hearing with respect ment which has become final, or for to a claim or statement must be served which a judgment has been entered in the manner specified in § 79.8 within under § 79.42 or § 79.43, or any amount 6 years after the date on which such agreed upon in a compromise or settle- claim or statement is made. ment under § 79.46, may be collected by (b) If the defendant fails to file a administrative offset under 31 U.S.C. timely answer, service of a notice 3716, except that an administrative off- under § 79.10(b) shall be deemed a notice set may not be made under this sub- of hearing for purposes of this section. section against a refund of an overpay- (c) The statute of limitations may be ment of Federal taxes, then or later extended by agreement of the parties. owing by the United States to the defendant. PART 80—NONDISCRIMINATION § 79.45 Deposit in Treasury of United UNDER PROGRAMS RECEIVING States. FEDERAL ASSISTANCE THROUGH All amounts collected pursuant to THE DEPARTMENT OF HEALTH this part shall be deposited as miscella- AND HUMAN SERVICES EFFEC- neous receipts in the Treasury of the TUATION OF TITLE VI OF THE United States, except as provided in 31 CIVIL RIGHTS ACT OF 1964 U.S.C. 3806(g). Sec. § 79.46 Compromise or settlement. 80.1 Purpose. (a) Parties may make offers of com- 80.2 Application of this regulation. 80.3 Discrimination prohibited. promise or settlement at any time. 80.4 Assurances required. (b) The reviewing official has the ex- 80.5 Illustrative application. clusive authority to compromise or 80.6 Compliance information. settle a case under this part at any 80.7 Conduct of investigations. time after the date on which the re- 80.8 Procedure for effecting compliance. viewing official is permitted to issue a 80.9 Hearings. complaint and before the date on which 80.10 Decisions and notices. the ALJ issues an initial decision. 80.11 Judicial review. (c) The authority head has exclusive 80.12 Effect on other regulations; forms and instructions. authority to compromise or settle a 80.13 Definitions. case under this part at any time after APPENDIX A TO PART 80—FEDERAL FINANCIAL the date on which the ALJ issues an ASSISTANCE TO WHICH THESE REGULA- initial decision, except during the TIONS APPLY pendency of any review under § 79.42 or APPENDIX B TO PART 80—GUIDELINES FOR during the pendency of any action to ELIMINATING DISCRIMINATION AND DENIAL collect penalties and assessments OF SERVICES ON THE BASIS OF RACE, under § 79.43. COLOR, NATIONAL ORIGIN, SEX, AND HAND- (d) The Attorney General has exclu- ICAP IN VOCATIONAL EDUCATION PROGRAMS sive authority to compromise or settle AUTHORITY: Sec. 602, 78 Stat. 252; 42 U.S.C. a case under this part during the pend- 2000d–1. ency of any review under § 79.42 or of any action to recover penalties and as- § 80.1 Purpose. sessments under 31 U.S.C. 3806. The purpose of this part is to effec- (e) The investigating official may tuate the provisions of title VI of the recommend settlement terms to the re- Civil Rights Act of 1964 (hereafter reviewing official, the authority head, or ferred to as the ‘‘Act’’) to the end that the Attorney General, as appropriate. no person in the United States shall; The reviewing official may recommend on the ground of race, color, or na- settlement terms to the authority tional origin, be excluded from partici- head, or the Attorney General, as ap- pation in, be denied the benefits of, or propriate. be otherwise subjected to discrimina- (f) Any compromise or settlement tion under any program or activity re- must be in writing. ceiving Federal financial assistance

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from the Department of Health and not, directly or through contractual or Human Services. other arrangements, on ground of race, (Sec. 601, Civil Rights Act of 1964, 78 Stat. 252 color, or national origin: (42 U.S.C. 2000d)) (i) Deny an individual any service, financial aid, or other benefit provided [29 FR 16298, Dec. 4, 1964, as amended at 38 FR 17982, July 5, 1973] under the program; (ii) Provide any service, financial aid, § 80.2 Application of this regulation. or other benefit to an individual which This regulation applies to any pro- is different, or is provided in a different gram to which Federal financial assist- manner, from that provided to others ance is authorized to be extended to a under the program; recipient under a law administered by (iii) Subject an individual to segrega- the Department, including the Federal tion or separate treatment in any mat- financial assistance listed in appendix ter related to his receipt of any service, A to this part. It applies to money financial aid, or other benefit under paid, property transferred, or other the program; Federal financial assistance extended (iv) Restrict an individual in any way after the effective date of the regula- in the enjoyment of any advantage or tion pursuant to an application ap- privilege enjoyed by others receiving proved prior to such effective date. any service, financial aid, or other ben- This regulation does not apply to (a) efit under the program; any Federal financial assistance by (v) Treat an individual differently way of insurance or guaranty con- from others in determining whether he tracts, (b) money paid, property trans- satisfies any admission, enrollment, ferred, or other assistance extended be- quota, eligibility, membership or other fore the effective date of this regula- requirement or condition which indi- tion, (c) the use of any assistance by viduals must meet in order to be pro- any individual who is the ultimate ben- vided any service, financial aid, or eficiary under any such program, or (d) other benefit provided under the pro- any employment practice, under any gram; such program, or any employer, em- (vi) Deny an individual an oppor- ployment agency, or labor organiza- tunity to participate in the program tion, except to the extent described in through the provision of services or § 80.3. The fact that a type of Federal otherwise or afford him an opportunity assistance is not listed in appendix A to do so which is different from that af- to this part shall not mean, if title VI forded others under the program (in- of the Act is otherwise applicable, that cluding the opportunity to participate a program is not covered. Federal fi- in the program as an employee but nancial assistance under statutes now only to the extent set forth in para- in force or hereinafter enacted may be graph (c) of this section). added to this list by notice published in (vii) Deny a person the opportunity the FEDERAL REGISTER. to participate as a member of a plan- (Secs. 602, 604, Civil Rights Act of 1964, 78 ning or advisory body which is an inte- Stat. 252, 253 (42 U.S.C. 2000d–1, 2000d–3)) gral part of the program. [38 FR 17979, July 5, 1973, as amended at 70 (2) A recipient, in determining the FR 24318, May 9, 2005] types of services, financial aid, or other benefits, or facilities which will be pro- § 80.3 Discrimination prohibited. vided under any such program, or the (a) General. No person in the United class of individuals to whom, or the sit- States shall, on the ground of race, uations in which, such services, finan- color, or national origin be excluded cial aid, other benefits, or facilities from participation in, be denied the will be provided under any such pro- benefits of, or be otherwise subjected gram, or the class of individuals to be to discrimination under any program afforded an opportunity to participate to which this part applies. in any such program, may not, directly (b) Specific discriminatory actions pro- or through contractual or other ar- hibited. (1) A recipient under any pro- rangements, utilize criteria or methods gram to which this part applies may of administration which have the effect

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of subjecting individuals to discrimina- vertising, employment, layoff or termi- tion because of their race, color, or na- nation, upgrading, demotion, or trans- tional origin, or have the effect of defer, rates of pay or other forms of com- feating or substantially impairing ac- pensation, and use of facilities), includ- complishment of the objectives of the ing programs where a primary objec- program as respect individuals of a par- tive of the Federal financial assistance ticular race, color, or national origin. is (i) to reduce the employment of such (3) In determining the site or loca- individuals or to help them through tion of a facilities, an applicant or reemployment to meet subsistence needs, cipient may not make selections with (ii) to assist such individuals through the effect of excluding individuals employment to meet expenses incident from, denying them the benefits of, or to the commencement or continuation subjecting them to discrimination of their education or training, (iii) to under any programs to which this regu- provide work experience which contrib- lation applies, on the ground of race, utes to the education or training of color, or national origin; or with the such individuals, or (iv) to provide re- purpose or effect of defeating or sub- munerative activity to such individ- stantially impairing the accomplish- uals who because of handicaps cannot ment of the objectives of the Act or be readily absorbed in the competive this regulation. labor market. The following, under ex- (4) As used in this section, the serv- isting laws, have one of the above ob- ices, financial aid, or other benefits jectives as a primary objective: provided under a program receiving (a) Projects under the Public Works Federal financial assistance shall be Acceleration Act, Pub. L. 87–658, 42 deemed to include any service, finan- U.S.C. 2641–2643. cial aid, or other benefits provided in (b) Work-study under the Vocational or through a facility provided with the Education Act of 1963, as amended, 20 aid of Federal financial assistance. U.S.C. 1371–1374. (5) The enumeration of specific forms (c) Programs assisted under laws list- of prohibited discrimination in this paragraph and paragraph (c) of this ed in Appendix A to this part as re- section does not limit the generality of spects employment opportunities pro- the prohibition in paragraph (a) of this vided thereunder, or in facilities pro- section. vided thereunder, which are limited, or (6)(i) In administering a program re- for which preference is given, to stu- garding which the recipient has pre- dents, fellows, or other persons in viously discriminated against persons training for the same or related em- on the ground of race, color, or na- ployments. tional origin, the recipient must take (d) Assistance to rehabilitation fa- affirmative action to overcome the ef- cilities under the Vocational Rehabili- fects of prior discrimination. tation Act, 29 U.S.C. 32–34, 41a and 41b. (ii) Even in the absence of such prior (2) The requirements applicable to discrimination, a recipient in admin- construction employment under any istering a program may take affirma- such program shall be those specified tive action to overcome the effects of in or pursuant to Part III of Executive conditions which resulted in limiting Order 11246 or any Executive order participation by persons of a particular which supersedes it. race, color, or national origin. (3) Where a primary objective of the (c) Employment practices. (1) Where a Federal financial assistance is not to primary objective of the Federal finan- provide employment, but discrimina- cial assistance to a program to which tion on the ground of race, color, or na- this regulation applies is to provide tional origin in the employment prac- employment, a recipient may not (di- tices of the recipient or other persons rectly or through contractual or other subject to the regulation tends, on the arrangements) subject an individual to ground of race, color, or national ori- discrimination on the ground of race, gin, to exclude individuals from par- color, or national origin in its employ- ticipation in, to deny them the benefits ment practices under such program (in- of, or to subject them to discrimina- cluding recruitment or recruitment ad- tion under any program to which this

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regulation applies, the foregoing provi- which the Federal financial assistance sions of this paragraph (c) shall apply is extended or for another purpose in- to the employment practices of the revolving the provision of similar serv- cipient or other persons subject to the ices or benefits. In the case of personal regulation, to the extent necessary to property the assurance shall obligate assure equality of opportunity to, and the recipient for the period during nondiscriminatory treatment of, bene- which he retains ownership or posses- ficiaries. sion of the property. In all other cases (d) Indian Health and Cuban Refugee the assurance shall obligate the recipi- Services. An individual shall not be ent for the period during which Federal deemed subjected to discrimination by financial assistance is extended pursu- reason of his exclusion from benefits limited by Federal law to individuals ant to the application. The responsible of a particular race, color, or national Department official shall specify the origin different from his. form of the foregoing assurances in the (e) Medical emergencies. Notwith- program, and the extent to which like standing the foregoing provisions of assurances will be required of sub- this section, a recipient of Federal fi- grantees, contractors and subcontrac- nancial assistance shall not be deemed tors, transferees, successors in inter- to have failed to comply with para- est, and other participants in the pro- graph (a) of this section if immediate gram. Any such assurance shall include provision of a service or other benefit provisions which give the United to an individual is necessary to prevent States a right to seek its judicial en- his death or serious impairment of his forcement. health, and such service or other ben- (2) Where Federal financial assist- efit cannot be provided except by or ance is provided in the form of a trans- through a medical institution which fer of real property or interest therein refuses or fails to comply with para- from the Federal Government the in- graph (a) of this section. strument effecting or recording the (Secs. 601, 602, 604, Civil Rights Act of 1964, 78 transfer shall contain a covenant run- Stat. 252, 253 (42 U.S.C. 2000d, 2000d–1, 2000d– ning with the land to assure non- 3)) discrimination for the period during [29 FR 16298, Dec. 4, 1964, as amended at 38 which the real property is used for a FR 17979, 17982, July 5, 1973; 70 FR 24318, May purpose for which the Federal financial 9, 2005] assistance is extended or for another purpose involving the provision of § 80.4 Assurances required. similar services or benefits. Where no (a) General. (1) Every application for transfer of property is involved but Federal financial assistance to which property is improved with Federal fi- this part applies, except an application nancial assistance, the recipient shall to which paragraph (b) of this section agree to include such a covenant to applies, and every application for Fed- any subsequent transfer of the prop- eral financial assistance to provide a erty. Where the property is obtained facility shall, as a condition to its ap- from the Federal Government, such proval and the extension of any Fed- eral financial assistance pursuant to covenant may also include a condition the application, contain or be accom- coupled with a right to be reserved by panied by an assurance that the pro- the Department to revert title to the gram will be conducted or the facility property in the event of a breach of the operated in compliance with all re- covenant where, in the discretion of quirements imposed by or pursuant to the responsible Department official, this part. In the case of an application such a condition and right of reverter for Federal financial assistance to pro- is appropriate to the statute under vide real property or structures there- which the real property is obtained and on, the assurance shall obligate the re- to the nature of the grant and the cipient, or, in the case of a subsequent grantee. In the event a transferee of transfer, the transferee, for the period real property proposes to mortgage or during which the real property or otherwise encumber the real property structures are used for a purpose for as security for financing construction

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of new, or improvement of existing, fa- ment official may reserve the right to cilities on such property for the pur- redetermine, after such period as may poses for which the property was trans- be specified by him, the adequacy of ferred, the responsible Department of- the plan to accomplish the purposes of ficial may agree, upon request of the the Act and the regulations in this transferee and if necessary to accom- part. In any case in which a final order plish such financing, and upon such of a court of the United States for the conditions as he deems appropriate, to desegregation of such school or school forbear the exercise of such right to re- system is entered after submission of vert title for so long as the lien of such such a plan, such plan shall be revised mortgage or other encumbrance re- to conform to such final order, includ- mains effective. ing any future modification of such (b) Continuing Federal financial assist- order. ance. Every application by a State or a (d) Assurance from institutions. (1) In State agency for continuing Federal fi- the case of any application for Federal nancial assistance to which this regu- financial assistance to an institution of lation applies (including the Federal fi- higher education (including assistance nancial assistance listed in Part 2 of for construction, for research, for spe- Appendix A to this part) shall as a con- cial training project, for student loans dition to its approval and the extension or for any other purpose), the assur- of any Federal financial assistance pur- ance required by this section shall ex- suant to the application (1) contain or tend to admission practices and to all be accompanied by a statement that other practices relating to the treat- the program is (or, in the case of a new ment of students. program, will be) conducted in compli- (2) The assurance required with re- ance with all requirements imposed by spect to an institution of higher edu- or pursuant to this regulation, and (2) cation, hospital, or any other institu- provide or be accompanied by provision tion, insofar as the assurance relates to for such methods of administration for the institution’s practices with respect the program as are found by the re- to admission or other treatment of in- sponsible Department official to give dividuals as students, patients, or cli- reasonable assurance that the appli- ents of the institution or to the oppor- cant and all recipients of Federal fi- tunity to participate in the provision nancial assistance under such program of services or other benefits to such in- will comply with all requirements im- dividuals, shall be applicable to the en- posed by or pursuant to this regula- tire institution. tion. (Secs. 601, 602, Civil Rights Act of 1964, 78 (c) Elementary and secondary schools. Stat. 252 (42 U.S.C. 2000d, 2000d–1); sec. 182, 80 The requirements of paragraph (a) or Stat. 1209 (42 U.S.C. 2000d–5)) (b) of this section with respect to any [29 FR 16298, Dec. 4, 1964, as amended at 32 elementary or secondary school or FR 14555, Oct. 19, 1967; 38 FR 17980, 17982, July school system shall be deemed to be 5, 1973; 70 FR 24318, May 9, 2005] satisfied if such school or school system (1) is subject to a final order of a § 80.5 Illustrative application. court of the United States for the de- The following examples will illus- segregation of such school or school trate the programs aided by Federal fi- system, and provides an assurance that nancial assistance of the Department. it will comply with such order, includ- (In all cases the discrimination prohib- ing any future modification of such ited is discrimination on the ground of order, or (2) submits a plan for the de- race, color, or national origin prohib- segregation of such school or school ited by Title VI of the Act and this reg- system which the responsible Depart- ulation, as a condition of the receipt of ment official determines is adequate to Federal financial assistance). accomplish the purposes of the Act and (a) In federally assisted programs for this part, at the earliest practicable the provision of health or welfare serv- time, and provides reasonable assur- ices, discrimination in the selection or ance that it will carry out such plan; in eligibility of individuals to receive the any case of continuing Federal finan- services, and segregation or other dis- cial assistance the responsible Depart- criminatory practices in the manner of

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providing them, are prohibited. This of health, educational or welfare serv- prohibition extends to all facilities and ices, assurances will be required that services provided by the grantee or, if services will be provided without dis- the grantee is a State, by a political crimination, to the same extent that subdivision of the State. It extends discrimination would be prohibited as a also to services purchased or otherwise condition of Federal operating grants obtained by the grantee (or political for the support of such services. Thus, subdivision) from hospitals, nursing as a condition of grants for the con- homes, schools, and similar institu- struction of academic, research, or tions for beneficiaries of the program, other facilities at institutions of high- and to the facilities in which such serv- er education, assurances will be re- ices are provided, subject, however, to quired that there will be no discrimina- the provisions of § 80.3(e). tion in the admission or treatment of (b) In federally-affected area assist- students. In case of hospital construc- ance (Pub. L. 815 and Pub. L. 874) for tion grants the assurance will apply to construction aid and for general sup- patients, to interns, residents, student port of the operation of elementary or nurses, and other trainees, and to the secondary schools, or in more limited privilege of physicians, dentists, and support to such schools such as for the other professionally qualified persons acquisition of equipment, the provision to practice in the hospital, and will of vocational education, or the provi- apply to the entire facility for which, sion of guidance and counseling serv- or for a part of which, the grant is ices, discrimination by the recipient made, and to facilities operated in con- school district in any of its elementary nection therewith. or secondary schools in the admission (f) Upon transfers of real or personal of students, or in the treatment of its surplus property for health or edu- students in any aspect of the educational uses, discrimination is prohib- cational process, is prohibited. In this ited to the same extent as in the case and the following illustrations the proof grants for the construction of facili- hibition of discrimination in the treat- ties or the provision of equipment for ment of students or other trainees in- like purposes. cludes the prohibition of discrimination among the students or trainees in (g) Each applicant for a grant for the the availability or use of any aca- construction of educational television demic, dormitory, eating, recreational, facilities is required to provide an as- or other facilities of the grantee or surance that it will, in its broadcast other recipient. services, give due consideration to the (c) In a research, training, dem- interests of all significant racial or onstration, or other grant to a univer- ethnic groups within the population to sity for activities to be conducted in a be served by the applicant. graduate school, discrimination in the (h) A recipient may not take action admission and treatment of students in that is calculated to bring about indi- the graduate school is prohibited, and rectly what this regulation forbids it the prohibition extends to the entire to accomplish directly. Thus, a State, university. in selecting or approving projects or (d) In a training grant to a hospital sites for the construction of public li- or other nonacademic institution, dis- braries which will receive Federal fi- crimination is prohibited in the selec- nancial assistance, may not base its se- tion of individuals to be trained and in lections or approvals on criteria which their treatment by the grantee during have the effect of defeating or of sub- their training. In a research or dem- stantially impairing accomplishments onstration grant to such an institution of the objectives of the Federal assist- discrimination is prohibited with re- ance as respects individuals of a par- spect to any educational activity and ticular race, color or national origin. any provision of medical or other serv- (i) In some situations, even though ices and any financial aid to individ- past discriminatory practices attrib- uals incident to the program. utable to a recipient or applicant have (e) In grants to assist in the con- been abandoned, the consequences of struction of facilities for the provision such practices continue to impede the

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full availability of a benefit. If the ef- his designee timely, complete and ac- forts required of the applicant or re- curate compliance reports at such cipient under § 80.6(d), to provide infor- times, and in such form and containing mation as to the availability of the such information, as the responsible program or activity and the rights of Department official or his designee beneficiaries under this regulation, may determine to be necessary to en- have failed to overcome these con- able him to ascertain whether the re- sequences, it will become necessary cipient has complied or is complying under the requirement stated in (i) of with this part. For example, recipients § 80.3(b) (6) for such applicant or recipi- should have available for the Depart- ent to take additional steps to make ment racial and ethnic data showing the benefits fully available to racial the extent to which members of minor- and nationality groups previously sub- ity groups are beneficiaries of and par- ject to discrimination. This action ticipants in federally-assisted pro- might take the form, for example, of grams. In the case in which a primary special arrangements for obtaining re- recipient extends Federal financial as- ferrals or making selections which will sistance to any other recipient, such insure that groups previously subjected to discrimination are adequately other recipient shall also submit such served. compliance reports to the primary re- (j) Even though an applicant or recipient as may be necessary to enable cipient has never used discriminatory the primary recipient to carry out its policies, the services and benefits of obligations under this part. the program or activity it administers (c) Access to sources of information. may not in fact be equally available to Each recipient shall permit access by some racial or nationality groups. In the responsible Department official or such circumstances, an applicant or re- his designee during normal business cipient may properly give special con- hours to such of its books, records, ac- sideration to race, color, or national counts, and other sources of informa- origin to make the benefits of its pro- tion, and its facilities as may be perti- gram more widely available to such nent to ascertain compliance with this groups, not then being adequately part. Where any information required served. For example, where a univer- of a recipient is in the exclusive posses- sity is not adequately serving members sion of any other agency, institution or of a particular racial or nationality person and this agency, institution or group, it may establish special recruit- person shall fail or refuse to furnish ment policies to make its program bet- this information the recipient shall so ter known and more readily available certify in its report and shall set forth to such group, and take other steps to what efforts it has made to obtain the provide that group with more adequate information. Asserted considerations of service. privacy or confidentiality may not op- (Secs. 601, 602, Civil Rights Act of 1964, 78 erate to bar the Department from eval- Stat. 252 (42 U.S.C. 2000d, 2000d–1)) uating or seeking to enforce compliance with this part. Information of a [29 FR 16298, Dec. 4, 1964; 29 FR 16988, Dec. 11, 1964, as amended at 38 FR 17980, 17982, July 5, confidential nature obtained in connec- 1973; 70 FR 24318, May 9, 2005] tion with compliance evaluation or enforcement shall not be disclosed except § 80.6 Compliance information. where necessary in formal enforcement (a) Cooperation and assistance. The re- proceedings or where otherwise responsible Department official shall to quired by law. the fullest extent practicable seek the (d) Information to beneficiaries and cooperation of recipients in obtaining participants. Each recipient shall make compliance with this part and shall available to participants, beneficiaries, provide assistance and guidance to re- and other interested persons such in- cipients to help them comply volun- formation regarding the provisions of tarily with this part. this regulation and its applicability to (b) Compliance reports. Each recipient the program for which the recipient re- shall keep such records and submit to ceives Federal financial assistance, and the responsible Department official or make such information available to

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them in such manner, as the respon- (d)(1) of this section the responsible sible Department official finds nec- Department official or his designee will essary to apprise such persons of the so inform the recipient and the com- protections against discrimination as- plainant, if any, in writing. sured them by the Act and this regula- (e) Intimidatory or retaliatory acts pro- tion. hibited. No recipient or other person shall intimidate, threaten, coerce, or (Secs. 601, 602, Civil Rights Act of 1964, 78 Stat. 252 ( 42 U.S.C. 2000d, 2000d–1)) discriminate against any individual for the purpose of interfering with any [29 FR 16298, Dec. 4, 1964, as amended at 32 right or privilege secured by section 601 FR 14555, Oct. 19, 1967; 38 FR 17981, 17982, July of the Act or this part, or because he 5, 1973; 70 FR 24318, May 9, 2005] has made a complaint, testified, as- § 80.7 Conduct of investigations. sisted, or participated in any manner in an investigation, proceeding or hear- (a) Periodic compliance reviews. The re- ing under this part. The identity of sponsible Department official or his complainants shall be kept confiden- designee shall from time to time re- tial except to the extent necessary to view the practices of recipients to de- carry out the purposes of this part, in- termine whether they are complying cluding the conduct of any investiga- with this part. tion, hearing, or judicial proceeding (b) Complaints. Any person who be- arising thereunder. lieves himself or any specific class of individuals to be subjected to discrimi- (Secs. 601, 602, Civil Rights Act of 1964, 78 nation prohibited by this part may by Stat. 252 (42 U.S.C. 2000d, 2000d–1)) himself or by a representative file with [29 FR 16298, Dec. 4, 1964, as amended at 38 the responsible Department official or FR 17981, 17982, July 5, 1973] his designee a written complaint. A complaint must be filed not later than § 80.8 Procedure for effecting compli- 180 days from the date of the alleged ance. discrimination, unless the time for fil- (a) General. If there appears to be a ing is extended by the responsible De- failure or threatened failure to comply partment official or his designee. with this regulation, and if the non- (c) Investigations. The responsible De- compliance or threatened noncompli- partment official or his designee will ance cannot be corrected by informal make a prompt investigation whenever means, compliance with this part may a compliance review, report, com- be effected by the suspension or termi- plaint, or any other information indi- nation of or refusal to grant or to con- cates a possible failure to comply with tinue Federal financial assistance or by this part. The investigation should in- any other means authorized by law. clude, where appropriate, a review of Such other means may include, but are the pertinent practices and policies of not limited to, (1) a reference to the the recipient, the circumstances under Department of Justice with a rec- which the possible noncompliance with ommendation that appropriate pro- this part occurred, and other factors ceedings be brought to enforce any relevant to a determination as to rights of the United States under any whether the recipient has failed to law of the United States (including comply with this part. other titles of the Act), or any assur- (d) Resolution of matters. (1) If an in- ance or other contractual undertaking, vestigation pursuant to paragraph (c) and (2) any applicable proceeding under of this section indicates a failure to State or local law. comply with this part, the responsible (b) Noncompliance with § 80.4. If an ap- Department official or his designee will plicant fails or refuses to furnish an asso inform the recipient and the matter surance required under § 80.4 or other- will be resolved by informal means wise fails or refuses to comply with a whenever possible. If it has been deter- requirement imposed by or pursuant to mined that the matter cannot be re- that section Federal financial assist- solved by informal means, action will ance may be refused in accordance with be taken as provided for in § 80.8. the procedures of paragraph (c) of this (2) If an investigation does not war- section. The Department shall not be rant action pursuant to paragraph required to provide assistance in such a

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case during the pendency of the admin- take such corrective action as may be istrative proceedings under such para- appropriate. graph except that the Department (Secs. 601, 602, Civil Rights Act of 1964, 78 shall continue assistance during the Stat. 252 (42 U.S.C. 2000d, 2000d–1; sec. 182, 80 pendency of such proceedings where Stat. 1209; (42 U.S.C. 2000d–5)) such assistance is due and payable pur- [29 FR 16298, Dec. 4, 1964, as amended at 32 suant to an application therefor ap- FR 14556, Oct. 19, 1967; 38 FR 17982, July 5, proved prior to the effective date of 1973] this part. (c) Termination of or refusal to grant or § 80.9 Hearings. to continue Federal financial assistance. (a) Opportunity for hearing. Whenever No order suspending, terminating or an opportunity for a hearing is re- refusing to grant or continue Federal quired by § 80.8(c), reasonable notice financial assistance shall become effec- shall be given by registered or certified tive until (1) the responsible Depart- mail, return receipt requested, to the ment official has advised the applicant affected applicant or recipient. This or recipient of his failure to comply notice shall advise the applicant or re- and has determined that compliance cipient of the action proposed to be taken, the specific provision under cannot be secured by voluntary means, which the proposed action against it is (2) there has been an express finding on to be taken, and the matters of fact or the record, after opportunity for hear- law asserted as the basis for this ac- ing, of a failure by the applicant or re- tion, and either (1) fix a date not less cipient to comply with a requirement than 20 days after the date of such no- imposed by or pursuant to this part, (3) tice within which the applicant or re- the expiration of 30 days after the Sec- cipient may request of the responsible retary has filed with the committee of Department official that the matter be the House and the committee of the scheduled for hearing or (2) advise the Senate having legislative jurisdiction applicant or recipient that the matter over the program involved, a full writ- in question has been set down for hear- ten report of the circumstances and the ing at a stated place and time. The grounds for such action. Any action to time and place so fixed shall be reason- suspend or terminate or to refuse to able and shall be subject to change for grant or to continue Federal financial cause. The complainant, if any, shall assistance shall be limited to the par- be advised of the time and place of the ticular political entity, or part thereof, hearing. An applicant or recipient may or other applicant or recipient as to waive a hearing and submit written in- whom such a finding has been made formation and argument for the record. and shall be limited in its effect to the The failure of an applicant or recipient particular program, or part thereof, in to request a hearing for which a date which such noncompliance has been so has been set shall be deemed to be a found. waiver of the right to a hearing under section 602 of the Act and § 80.8(c) of (d) Other means authorized by law. No this regulation and consent to the action to effect compliance by any making of a decision on the basis of other means authorized by law shall be such information as may be filed as the taken until (1) the responsible Depart- record. ment official has determined that com- (b) Time and place of hearing. Hear- pliance cannot be secured by voluntary ings shall be held at the offices of the means, (2) the recipient or other person Department in Washington, DC, at a has been notified of its failure to com- time fixed by the responsible Depart- ply and of the action to be taken to ef- ment official unless he determines that fect compliance, and (3) the expiration the convenience of the applicant or re- of at least 10 days from the mailing of cipient or of the Department requires such notice to the recipient or other that another place be selected. Hear- person. During this period of at least 10 ings shall be held before a hearing ex- days additional efforts shall be made to aminer designated in accordance with 5 persuade the recipient or other person U.S.C. 3105 and 3344 (section 11 of the to comply with the regulation and to Administrative Procedure Act).

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(c) Right to counsel. In all proceedings (e) Consolidated or Joint Hearings. In under this section, the applicant or re- cases in which the same or related cipient and the Department shall have facts are asserted to constitute non- the right to be represented by counsel. compliance with this regulation with (d) Procedures, evidence, and record. (1) respect to two or more Federal stat- The hearing, decision, and any admin- utes, authorities, or other means by istrative review thereof shall be con- which Federal financial assistance is ducted in conformity with sections 5–8 extended, to which this part applies, or of the Administrative Procedure Act, noncompliance with this part and the and in accordance with such rules of regulations of one or more other Fed- procedure as are proper (and not incon- eral departments or agencies issued sistent with this section) relating to under Title VI of the Act, the respon- the conduct of the hearing, giving of sible Department official may, by notices subsequent to those provided agreement with such other depart- for in paragraph (a) of this section, ments or agencies where applicable, taking of testimony, exhibits, argu- provide for the conduct of consolidated ments and briefs, requests for findings, or joint hearings, and for the applica- and other related matters. Both the tion to such hearings of rules of proce- Department and the applicant or re- dures not inconsistent with this part. cipient shall be entitled to introduce Final decisions in such cases, insofar as all relevant evidence on the issues as this regulation is concerned, shall be stated in the notice for hearing or as made in accordance with § 80.10. determined by the officer conducting the hearing at the outset of or during (Sec. 602, Civil Rights Act of 1964, 78 Stat. 252 (42 U.S.C. 2000d–1)) the hearing. Any person (other than a Government employee considered to be [29 FR 16298, Dec. 4, 1964, as amended at 32 on official business) who, having been FR 14555, Oct. 19, 1967; 38 FR 17981, 17982, July invited or requested to appear and tes- 5, 1973; 70 FR 24318, May 9, 2005] tify as a witness on the Government’s behalf, attends at a time and place § 80.10 Decisions and notices. scheduled for a hearing provided for by (a) Decisions by hearing examiners. this part, may be reimbursed for his After a hearing is held by a hearing ex- travel and actual expenses of attend- aminer such hearing examiner shall ei- ance in an amount not to exceed the ther make an initial decision, if so au- amount payable under the standardized thorized, or certify the entire record travel regulations to a Government including his recommended findings employee traveling on official business. and proposed decision to the reviewing (2) Technical rules of evidence shall authority for a final decision, and a not apply to hearings conducted pursu- copy of such initial decision or certifi- ant to this part, but rules or principles cation shall be mailed to the applicant designed to assure production of the or recipient and to the complainant, if most credible evidence available and to any. Where the initial decision referred subject testimony to test by cross-ex- to in this paragraph or in paragraph (c) amination shall be applied where rea- of this section is made by the hearing sonably necessary by the officer con- examiner, the applicant or recipient or ducting the hearing. The hearing offi- the counsel for the Department may, cer may exclude irrelevant, immate- within the period provided for in the rial, or unduly repetitious evidence. All rules of procedure issued by the respon- documents and other evidence offered sible Department official, file with the or taken for the record shall be open to reviewing authority exceptions to the examination by the parties and oppor- initial decision, with his reasons there- tunity shall be given to refute facts for. Upon the filing of such exceptions and arguments advanced on either side the reviewing authority shall review of the issues. A transcript shall be the initial decision and issue its own made of the oral evidence except to the decision thereof including the reasons extent the substance thereof is stipu- therefor. In the absence of exceptions lated for the record. All decisions shall the initial decision shall constitute the be based upon the hearing record and final decision, subject to the provisions written findings shall be made. of paragraph (e) of this section.

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(b) Decisions on record or review by the port required under section 602 of the reviewing authority. Whenever a record Act. Failure of an applicant or recipi- is certified to the reviewing authority ent to file an exception with the Re- for decision or it reviews the decision viewing Authority or to request review of a hearing examiner pursuant to under this paragraph shall not be paragraph (a) or (c) of this section, the deemed a failure to exhaust adminis- applicant or recipient shall be given trative remedies for the purpose of ob- reasonable opportunity to file with it taining judicial review. briefs or other written statements of (f) Content of orders. The final deci- its contentions, and a copy of the final sion may provide for suspension or ter- decision of the reviewing authority mination of, or refusal to grant or con- shall be given in writing to the appli- tinue Federal financial assistance, in cant or recipient and to the complain- whole or in part, to which this regula- ant, if any. tion applies, and may contain such (c) Decisions on record where a hearing terms, conditions, and other provisions is waived. Whenever a hearing is waived as are consistent with and will effec- pursuant to § 80.9(a) the reviewing au- tuate the purposes of the Act and this thority shall make its final decision on regulation, including provisions de- the record or refer the matter to a signed to assure that no Federal finan- hearing examiner for an initial deci- cial assistance to which this regulation sion to be made on the record. A copy applies will thereafter be extended of such decision shall be given in writ- under such law or laws to the applicant ing to the applicant or recipient, and or recipient determined by such deci- to the complainant, if any. sion to be in default in its performance (d) Rulings required. Each decision of of an assurance given by it pursuant to a hearing examiner or reviewing au- this regulation, or to have otherwise thority shall set forth a ruling on each failed to comply with this regulation finding, conclusion, or exception pre- unless and until it corrects its non- sented, and shall identify the require- compliance and satisfies the respon- ment or requirements imposed by or sible Department official that it will pursuant to this part with which it is fully comply with this regulation. found that the applicant or recipient (g) Post-termination proceedings. (1) An has failed to comply. applicant or recipient adversely af- (e) Review in certain cases by the Sec- fected by an order issued under para- retary. If the Secretary has not person- graph (f) of this section shall be re- ally made the final decision referred to stored to full eligibility to receive Fed- in paragraph (a), (b), or (c) of this sec- eral financial assistance if it satisfies tion, a recipient or applicant or the the terms and conditions of that order counsel for the Department may re- for such eligibility or if it brings itself quest the Secretary to review a deci- into compliance with this part and pro- sion of the Reviewing Authority in ac- vides reasonable assurance that it will cordance with rules of procedure issued fully comply with this part. An ele- by the responsible Department official. mentary or secondary school or school Such review is not a matter of right system which is unable to file an assur- and shall be granted only where the ance of compliance with § 80.3 shall be Secretary determines there are special restored to full eligibility to receive and important reasons therefor. The Federal financial assistance, if it files Secretary may grant or deny such re- a court order or a plan for desegrega- quest, in whole or in part. He may also tion which meets the requirements of review such a decision upon his own § 80.4(c), and provides reasonable assur- motion in accordance with rules of pro- ance that it will comply with the court cedure issued by the responsible De- order or plan. partment official. In the absence of a (2) Any applicant or recipient ad- review under this paragraph, a final de- versely affected by an order entered cision referred to in paragraphs (a), (b), pursuant to paragraph (f) of this sec- and (c) of this section shall become the tion may at any time request the re- final decision of the Department when sponsible Department official to re- the Secretary transmits it as such to store fully its eligibility to receive Congressional committees with the re- Federal financial assistance. Any such

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request shall be supported by informa- such discrimination is prohibited by tion showing that the applicant or re- this regulation, except that nothing in cipient has met the requirements of this regulation shall be deemed to re- paragraph (g)(1) of this section. If the lieve any person of any obligation as- responsible Department official deter- sumed or imposed under any such su- mines that those requirements have perseded regulation, order, instruction, been satisfied, he shall restore such eli- or like direction prior to the effective gibility. date of this regulation. Nothing in this (3) If the responsible Department of- regulation, however, shall be deemed to ficial denies any such request, the ap- supersede any of the following (includ- plicant or recipient may submit a re- ing future amendments thereof): (1) quest for a hearing in writing, speci- The ‘‘Standards for a Merit System of fying why it believes such official to Personnel Administration,’’ issued have been in error. It shall thereupon jointly by the Secretaries of Defense, be given an expeditious hearing, with a of Health and Human Services, and of decision on the record, in accordance Labor, 45 CFR Part 70; (2) Executive with rules of procedure issued by the Order 11063 and regulations issued responsible Department official. The thereunder, or any other regulations or applicant or recipient will be restored instructions, insofar as such Order, to such eligibility if it proves at such regulations, or instructions prohibit hearing that it satisfied the require- discrimination on the ground of race, ments of paragraph (g)(1) of this sec- color, or national origin in any pro- tion. While proceedings under this gram or situation to which this regula- paragraph are pending, the sanctions tion is inapplicable, or prohibit dis- imposed by the order issued under crimination on any other ground; or (3) paragraph (f) of this section shall re- requirements for Emergency School main in effect. Assistance as published in 35 FR 13442 (Sec. 602, Civil Rights Act of 1964, 78 Stat. 252 and codified as 45 CFR Part 181. (42 U.S.C. 2000d–1)) (b) Forms and instructions. The re- [29 FR 16298, Dec. 4, 1964, as amended at 32 sponsible Department official shall FR 14555, Oct. 19, 1967; 38 FR 17981, 17982, July issue and promptly make available to 5, 1973] interested persons forms and detailed instructions and procedures for effec- § 80.11 Judicial review. tuating this part. Action taken pursuant to section 602 (c) Supervision and coordination. The of the Act is subject to judicial review responsible Department official may as provided in section 603 of the Act. from time to time assign to officials of (Sec. 603, 78 Stat. 253, (42 U.S.C. 2000d–2)) the Department, or to officials of other [29 FR 16298, Dec. 4, 1964, as amended at 32 departments or agencies of the Govern- FR 14556, Oct. 19, 1967] ment with the consent of such departments or agencies, responsibilities in § 80.12 Effect on other regulations; connection with the effectuation of the forms and instructions. purposes of Title VI of the Act and this (a) Effect on other regulations. All reg- regulation (other than responsibility ulations, orders, or like directions for review as provided in § 80.10(e)), in- heretofore issued by any officer of the cluding the achievements of effective Department which impose require- coordination and maximum uniformity ments designed to prohibit any dis- within the Department and within the crimination against individuals on the Executive Branch of the Government ground of race, color, or national ori- in the application of Title VI and this gin under any program to which this regulation to similar programs and in regulation applies, and which authorize similar situations. Any action taken, the suspension or termination of or redetermination made, or requirement fusal to grant or to continue Federal fi- imposed by an official of another De- nancial assistance to any applicant for partment or Agency acting pursuant to or recipient of assistance for failure to an assignment of responsibility under comply with such requirements, are this subsection shall have the same ef- hereby superseded to the extent that fect as though such action had been

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taken by the responsible official of this ment, or other contract which has as Department. one of its purposes the provision of assistance. (Sec. 602, Civil Rights Act of 1964, 78 Stat. 252 (42 U.S.C. 2000d–10)) (g) The term program or activity and the term program mean all of the oper- [29 FR 16298, Dec. 4, 1964, as amended at 32 ations of— FR 14555, Oct. 19, 1967; 38 FR 17981, 17982, July 5, 1973] (1)(i) A department, agency, special purpose district, or other instrumen- § 80.13 Definitions. tality of a State or of a local govern- As used in this part— ment; or (a) The term Department means the (ii) The entity of such State or local Department of Health and Human government that distributes Federal fi- Services, and includes each of its oper- nancial assistance and each such de- ating agencies and other organiza- partment or agency (and each other tional units. State or local government entity) to (b) The term Secretary means the Sec- which the assistance is extended, in the retary of Health and Human Services. case of assistance to a State or local (c) The term responsible Department government; official means the Secretary or, to the (2)(i) A college, university, or other extent of any delegation by the Sec- postsecondary institution, or a public retary of authority to act in his stead system of higher education; or under any one or more provisions of (ii) A local educational agency (as de- this part, any person or persons to fined in 20 U.S.C. 7801), system of voca- whom the Secretary has heretofore del- tional education, or other school sys- egated, or to whom the Secretary may tem; hereafter delegate such authority. (3)(i) An entire corporation, partner- (d) The term reviewing authority ship, or other private organization, or means the Secretary, or any person or an entire sole proprietorship— persons (including a board or other (A) If assistance is extended to such body specially created for that purpose corporation, partnership, private orga- and also including the responsible De- nization, or sole proprietorship as a partment official) acting pursuant to whole; or authority delegated by the Secretary (B) Which is principally engaged in to carry out responsibilities under the business of providing education, § 80.10 (a) through (d). health care, housing, social services, or (e) The term United States means the parks and recreation; or States of the United States, the Dis- (ii) The entire plant or other com- trict of Columbia, Puerto Rico, the parable, geographically separate facil- Virgin Islands, American Samoa, ity to which Federal financial assist- Guam, Wake Island, the Canal Zone, ance is extended, in the case of any and the territories and possessions of other corporation, partnership, private the United States, and the term State organization, or sole proprietorship; or means any one of the foregoing. (4) Any other entity which is estab- (f) The term Federal financial assist- lished by two or more of the entities ance includes (1) grants and loans of described in paragraph (g)(1), (g)(2), or Federal funds, (2) the grant or donation (g)(3) of this section; any part of which of Federal property and interests in is extended Federal financial assist- property, (3) the detail of Federal per- ance. sonnel, (4) the sale and lease of, and the (h) The term facility includes all or permission to use (on other than a cas- any portion of structures, equipment, ual or transient basis), Federal prop- or other real or personal property or erty or any interest in such property interests therein, and the provision of without consideration or at a nominal facilities includes the construction, ex- consideration, or at a consideration pansion, renovation, remodeling, alter- which is reduced for the purpose of as- ation or acquisition of facilities. sisting the recipient, or in recognition (i) The term recipient means any of the public interest to be served by State, political subdivision of any such sale or lease to the recipient, and State, or instrumentality of any State (5) any Federal agreement, arrange- or political subdivision, any public or

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private agency, institution, or organi- 11. Research and training projects in Voca- zation, or other entity, or any indi- tional Education (20 U.S.C. 1281(a), 1282–1284). vidual, in any State, to whom Federal 12. Allowances to institutions training financial assistance is extended, di- NDEA graduate fellows (20 U.S.C. 461–465). rectly or through another recipient, in- 13. Grants for training in librarianship (20 U.S.C. 1031–1033). cluding any successor, assign, or trans- 14. Grants for training personnel for the feree thereof, but such term does not education of handicapped children (20 U.S.C. include any ultimate beneficiary. 1431). (j) The term primary recipient means 15. Allowances for institutions training any recipient which is authorized or re- teachers and related educational personnel quired to extend Federal financial as- in elementary and secondary education, or sistance to another recipient. post-secondary vocational education (20 (k) The term applicant means one U.S.C. 1111–1118). who submits an application, request, or 16. Recruitment, enrollment, training and assignment of Teacher Corps personnel (20 plan required to be approved by a De- U.S.C. 1101–1107a). partment official, or by a primary re- 17. Operation and maintenance of schools cipient, as a condition to eligibility for in Federally-affected and in major disaster Federal financial assistance, and the areas (20 U.S.C. 236–241; 241–1; 242–244). term application means such an appli- 18. Grants or contracts for the operation of cation, request, or plan. training institutes for elementary or secondary school personnel to deal with special (Secs. 602, 606, Civil Rights Act of 1964, (42 educational problems occasioned by desegre- U.S.C. 2000d–1, 2000d–4a)) gation (42 U.S.C. 2000c–3). [29 FR 16298, Dec. 4, 1964; 29 FR 16988, Dec. 11, 19. Grants for in-service training of teach- 1964, as amended at 32 FR 14555, Oct. 19, 1967; ers and other schools personnel and employ- 38 FR 17982, July 5, 1973; 70 FR 24318, May 9, ment of specialists in desegregation prob- 2005] lems (42 U.S.C. 2000c–4). 20. Higher education students loan pro- APPENDIX A TO PART 80—FEDERAL FI- gram (Title II, National Defense Education NANCIAL ASSISTANCE TO WHICH Act, 20 U.S.C. 421–429). THESE REGULATIONS APPLY 21. Educational Opportunity grants and assistance for State and private programs of Part 1. Assistance other than Continuing low-interest insured loans and State loans to Assistance to States students in institutions of higher education 1. Loans for acquisition of equipment for (Title IV, Higher Education Act of 1965, 20 academic subjects, and for minor remodeling U.S.C. 1061–1087). (20 U.S.C. 445). 22. Grants and contracts for the conduct of 2. Construction of facilities for institutions Talent Search, Upward Bound, and Special of higher education (20 U.S.C. 701–758). Services Programs (20 U.S.C. 1068). 3. School Construction in federally-af- 23. Land-grant college aid (7 U.S.C. 301–308; fected and in major disaster areas (20 U.S.C. 321–326; 328–331). 631–647). 24. Language and area centers (Title VI, 4. Construction of educational broadcast National Defense Education Act, 20 U.S.C. facilities (47 U.S.C. 390–399). 511). 5. Loan service of captioned films and edu- 25. American Printing House for the Blind cational media; research on, and production (20 U.S.C. 101–105). and distribution of, educational media for 26. Future Farmers of America (36 U.S.C. the handicapped, and training of persons in 271–391) and similar programs. the use of such media for the handicapped (20 27. Science clubs (Pub. L. 85–875, 20 U.S.C. U.S.C. 1452). 2, note). 6. Demonstration residential vocational 28. Howard University (20 U.S.C. 121–129). education schools (20 U.S.C. 1321). 29. Gallaudet College (31 D.C. Code, Ch. 10). 7. Research and related activities in edu- 30. Establishment and operation of a model cation of handicapped children (20 U.S.C. secondary school for the deaf by Gallaudet 1441). College (31 D.C. Code 1051–1053; 80 Stat. 1027– 8. Educational research, dissemination and 1028). demonstration projects; research training; 31. Faculty development programs, work- and construction under the Cooperation Re- shops and institutes (20 U.S.C. 1131–1132). search Act (20 U.S.C. 331–332(b)). 32. National Technical Institute for the 9. Research in teaching modern foreign Deaf (20 U.S.C. 681–685). languages (20 U.S.C. 512). 33. Institutes and other programs for train- 10. Training projects for manpower devel- ing educational personnel (Parts D, E, and F, opment and training (42 U.S.C. 2601, 2602, Title V, Higher Education Act of 1965) (20 2610a–2610c). U.S.C. 1119–1119c–4).

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34. Grants and contracts for research and school and early education programs for demonstration projects in librarianship (20 handicapped (20 U.S.C. 1423). U.S.C. 1034). 54. Grants to public or private non-profit 35. Acquisition of college library resources agencies to carry on the Follow Through (20 U.S.C. 1021–1028). Program in kindergarten and elementary 36. Grants for strengthening developing in- schools (42 U.S.C. 2809 (a)(2)). stitutions of higher education (20 U.S.C. 55. Grants for programs of cooperative edu- 1051–1054); National Fellowships for teaching cation and grants and contracts for training at developing institutions (20 U.S.C. 1055), and research in cooperative education (20 and grants to retired professors to teach at U.S.C. 1087a–1087c). developing institutions (20 U.S.C. 1056). 56. Grants and contracts to encourage the 37. College Work-Study Program (42 U.S.C. sharing of college facilities and resources 2751–2757). (network for knowledge) (20 U.S.C. 1133– 38. Financial assistance for acquisition of 1133b). higher education equipment, and minor re- 57. Grants, contracts, and fellowships to modeling (20 U.S.C. 1121–1129). improve programs preparing persons for pub- 39. Grants for special experimental dem- lic service and to attract students to public onstration projects and teacher training in service (20 U.S.C. 1134–1134b). adult education (20 U.S.C. 1208). 58. Grants for the improvement of graduate programs (20 U.S.C. 1135–1135c). 40. Grant programs for advanced and un- 59. Contracts for expanding and improving dergraduate international studies (20 U.S.C. law school clinical experience programs (20 1171–1176; 22 U.S.C. 2452(b)). U.S.C. 1136–1136b). 41. Experimental projects for developing 60. Exemplary programs and projects in vo- State leadership or establishment of special cational education (20 U.S.C. 1301–1305). services (20 U.S.C. 865). 61. Grants to reduce borrowing cost for 42. Grants to and arrangements with State construction of residential schools and dor- educational and other agencies to meet spe- mitories (20 U.S.C. 1323). cial educational needs of migratory children 62. Project grants and contracts for re- of migratory agricultural workers (20 U.S.C. search and demonstration relating to new or 241e(c)). improved health facilities and services (sec- 43. Grants by the Commissioner of Edu- tion 304, PHS Act, 42 U.S.C. 242b). cation to local educational agencies for sup- 63. Grants for construction or moderniza- plementary educational centers and services; tion of emergency rooms of general hospitals guidance, counseling, and testing (20 U.S.C. (Title VI, Part C, PHS Act, 42 U.S.C. 291j). 841–844; 844b). 64. Institutional and special projects 44. Resource centers for improvement of grants to schools of nursing (sections 805–808, education of handicapped children (20 U.S.C. PHS Act, 42 U.S.C. 296d–296g). 1421) and centers and services for deaf-blind 65. Grants for construction and initial children (20 U.S.C. 1422). staffing of facilities for prevention and treat- 45. Recruitment of personnel and dissemi- ment of alcoholism (section 241–2, Commu- nation of information on education of handi- nity Mental Health Centers Act (42 U.S.C. capped (20 U.S.C. 1433). 2688 f and g). 46. Grants for research and demonstrations 66. Grants for construction and initial relating to physical education or recreation staffing of specialized facilities for the treat- for handicapped children (20 U.S.C. 1442) and ment of alcoholics requiring care in such fa- training of physical educators and recreation cilities (section 243, Community Mental personnel (20 U.S.C. 1434). Health Centers Act, 42 U.S.C. 2688h). 47. Dropout prevention projects (20 U.S.C. 67. Special project grants for training pro- 887). grams, evaluation of existing treatment pro- 48. Bilingual education programs (20 U.S.C. grams, and conduct of significant programs 880b–880b–6). relating to treatment of alcoholics (section 49. Grants to agencies and organizations 246, Community Mental Health Centers Act, for Cuban refugees (22) U.S.C. 2601(b)(4). 42 U.S.C. 2688j–1). 50. Grants and contracts for special pro- 68. Grants for construction and initial staff grams for children with specific learning dis- of treatment facilities for narcotic addicts abilities including research and related ac- (section 251, Community Mental Health Cen- tivities, training and operating model centers Act, 42 U.S.C. 2688m). ters (20 U.S.C. 1461). 69. Special project grants for training pro- 51. Curriculum development in vocational grams, evaluation of existing treatment pro- and technical education (20 U.S.C. 1391). grams, and conduct of significant programs 52. Establishment, including construction, relating to treatment of narcotics addicts and operation of a National Center on Edu- (section 252, Community Mental Health Cen- cational Media and Materials for the Handi- ters Act, 42 U.S.C. 2688n–1). capped (20 U.S.C. 1453). 70. Grants for consultation services for 53. Grants and contracts for the develop- Community Mental Health Centers, alco- ment and operation of experimental pre- holism prevention and treatment facilities

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for narcotic addicts, and facilities for mental 90. Grants for provision in schools of public health of children (section 264, Community health of training, consultation and tech- Mental Health Centers Act, 42 U.S.C. 2688r). nical assistance in the field of public health 71. Grants for construction and initial staff and in the administration of state or local of facilities for mental health of children public health programs (section 309(c)), Pub- (section 271, Community Mental Health Cen- lic Health Service Act, 42 U.S.C. 242(g)(c)). ters Act, 42 U.S.C. 2688u). 91. Project grants for training, studies, or 72. Special project grants for training pro- demonstrations looking metropolitan area, grams and evaluation of existing treatment or other local area plans for health services program relating to mental health of chil- (section 314(c), Public Health Service Act, 42 dren (section 272, Community Mental Health U.S.C. 246(c)). Centers Act, 42 U.S.C. 2688x). 92. Project grants for training, studies, or 73. Grants and loans for construction and demonstrations looking toward the develop- modernization of medical facilities in the ment of improved comprehensive health District of Columbia (Pub. L. 90–457; 82 Stat. planning (section 314(c), Public Health Serv- 631–3). ice Act, 42 U.S.C. 246(c)). 74. Teaching facilities for nurse training 93. Project grants for health services devel- (sections. 801–804, Public Health Service Act, opment (section 314(e), Public Health Service 42 U.S.C. 296–296c). Act, 42 U.S.C. 246(e)). 75. Teaching facilities for allied health pro- 94. Institutional and special grants to fessions personnel (section 791, Public Health health professions schools (Title VII, Part E, Service Act, 42 U.S.C. 295h). Public Health Service Act, 42 U.S.C. 295f– 76. Mental retardation research facilities 295f–4). (Title VI, Part D, Public Health Service Act, 95. Improvement grants to centers for al- 42 U.S.C. 295–395e). lied health professions (section 792, Public 77. George Washington University Hospital Health Service Act, 42 U.S.C. 295h–1). construction (76 Stat. 83, Pub. L. 87–460, May 96. Scholarship grants to health profes- 31, 1962). sions schools (Title VII, Part F, Public 78. Research projects, including con- Health Service Act, 42 U.S.C. 295h–1). ferences, communication activities and pri- 97. Scholarship grants to schools of nursing mate or other center grants (sections 301, (Title VIII, Part D, Public Health Service 303, 304, and 308, Public Health Service Act, Act, 42 U.S.C. 198c–298c–6). 42 U.S.C. 241, 242a, 242b, and 242f). 79. General research support (section 98. Traineeships for advanced training of 301(d), Public Health Service Act, 42 U.S.C. allied health professions personnel (section 241). 793, Public Health Service Act, 42 U.S.C. 80. Mental Health demonstrations and ad- 295h–2). ministrative studies (section 303(a)(2), Public 99. Contracts to encourage full utilization Health Service Act, 42 U.S.C. 242a). of nursing educational talent (section 868, 81. Migratory workers health services (sec- Public Health Service Act, 42 U.S.C. 298c–7). tion 310, Public Health Service Act, 42 U.S.C. 100. Grants to community mental health 242h). centers for the compensation of professional 82. Immunization programs (section 317, and technical personnel for the initial oper- Public Health Service Act, 42 U.S.C. 247b). ation of new centers or of new services in 83. Health research training projects and centers (Community Mental Health Centers fellowship grants (sections 301, 433, Public Act, Part B, 42 U.S.C. 2688–2688d). Health Service Act, 42 U.S.C. 242, 289c). 101. Grants for the planning, construction, 84. Categorical (heart, cancer, etc.) grants equipment and operation of multicounty for training, traineeships or fellowships (sec- demonstration health projects in the Appa- tions 303, 433, etc., Public Health Service lachian region (section 202 of Appalachian Act, 42 U.S.C. 242a, 289c, etc.). Regional Development Act, Pub. L. 89–4, as 85. Advanced professional nurse amended, Pub. L. 90–103 40 U.S.C. App. 202). traineeships (section 821, Public Health Serv- 102. Education, research, training, and ice Act, 42 U.S.C. 297). demonstrations in the fields of heart disease, 86. Department projects under Appalachian cancer, stroke and related diseases (sections Regional Development Act (40 U.S.C. App. 900–110, Public Health Service Act, 42 U.S.C. A). 299a–j). 87. Grants to institutions for traineeships 103. Assistance to medical libraries (sec- for professional public health personnel sections 390–399, Public Health Service Act, 42 tion 306, Public Health Service Act, 42 U.S.C. U.S.C. 280b–280b–9). 242d). 104. Nursing student loans (sections 822–828. 88. Grants for graduate or specialized Public Health Service Act, 42 U.S.C. 297a–g). training in public health (section 309, Public 105. Hawaii leprosy payments (section 331, Health Service Act, 42 U.S.C. 242g). Public Health Service Act, 42 U.S.C. 255). 89. Health professions school student loan 106. Heart disease laboratories and related program (Title VII, Part C, Public Health facilities for patient care (section 412(d), Service Act, 42 U.S.C. 294–294(k)). Public Health Service Act, 42 U.S.C. 287a(d)).

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107. Grants for construction of hospitals 125. Social Security and welfare coopera- serving Indians (Pub. L. 85–151, 42 U.S.C. tive research or demonstration projects (42 2005). U.S.C. 1310). 108. Indian Sanitation Facilities (Pub. L. 126. Child welfare research, training, or 86–121, 42 U.S.C. 2004a). demonstration projects (42 U.S.C. 626). 109. Research projects relating to maternal 127. Training projects (Title VI, Older and child health services and crippled chil- Americans Act, 42 U.S.C. 3041–3042). dren’s services (42 U.S.C. 712). 128. Grants for expansion of vocational re- 110. Maternal and child health special habilitation services (29 U.S.C. 34(a)(2) (A)). project grants to State agencies and institu- 129. Grants for construction of rehabilita- tions of higher learning (42 U.S.C. 703(s)). tion facilities (29 U.S.C. 41a(a)–(e)) and for 111. Maternity and infant care and family initial staffing of rehabilitation facilities (29 planning services; special project grants to U.S.C. 41a(f)). local health agencies and other organiza- 130. Project development grants for reha- tions (42 U.S.C. 708). bilitation facilities (29 U.S.C. 41a(g)(2)). 112. Special project grants to State agen- 131. Rehabilitation Facility improvement cies and institutions of higher learning for grants (29 U.S.C. 41b(b)). crippled children’s services (42 U.S.C. 704(2)). 132. Agreement for the establishment and 113. Special project grants for health of operation of a national center for deaf-blind school and preschool children (42 U.S.C. 709) youths and adults (29 U.S.C. 42a). and for dental health of children (42 U.S.C. 133. Project grants for services for migra- 710). tory agricultural workers (29 U.S.C. 42b). 114. Grants to institutions of higher learn- 134. Grants for initial staffing of commu- ing for training personnel for health care and nity mental retardation facilities (42 U.S.C. related services for mothers and children (42 2678–2678d). U.S.C. 711). 135. Grants for training welfare personnel 115. Grants and contracts for the conduct and for expansion and development of under- of research, experiments, or demonstrations graduate and graduate social work programs relating to the developments, utilization, (42 U.S.C. 906, 908). quality, organization, and financing of serv- 136. Research and development projects ices, facilities, and resources of hospitals, concerning older Americans (42 U.S.C. 3031– long-term care facilities, for other medical 3032). facilities (section 304, Public Health Service 137. Grants to States for training of nurs- Act, as amended by Pub. L. 90–174, 42 U.S.C. ing home administrators (42 U.S.C. 1396g (e)). 242b). 138. Contracts or jointly financed coopera- 116. Health research facilities (Title VII tive arrangements with industry (29 U.S.C. Part A, Public Health Service Act, 42 U.S.C. 34(a)(2)(B)). 292–292j). 139. Project grants for new careers in reha- 117. Teaching facilities for health profes- bilitation (29 U.S.C. 34(a)(2)(C)). sions personnel (Title VII, Part B, Public Health Service Act, 42 U.S.C. 293–293h). 140. Children of low-income families (20 U.S.C. 241a–241m). 118. Project grants and contracts for research, development, training, and studies in 141. Grants for training (29 U.S.C. 37(a) (2)). the field of electronic product radiation (sec- 142. Grants for projects for training serv- tion 356, Public Health Service Act, 42 U.S.C. ices (29 U.S.C. 41b(a)). 263d). 143. Grants for comprehensive juvenile de- 119. Project grants and contracts for re- linquency planning (42 U.S.C. 3811). search, studies, demonstrations, training, 144. Grants for project planning in juvenile and education relating to coal mine health delinquency (42 U.S.C. 3812). (section 501, Federal Coal Mine Health and 145. Grants for juvenile delinquency reha- Safety Act of 1969, Public Law 91–173). bilitative services projects (42 U.S.C. 3822, 120. Surplus real and related personal prop- 3842). erty disposal (40 U.S.C. 484(k)). 146. Grants for juvenile delinquency pre- 121. Supplementary medical insurance ben- ventive service projects (42 U.S.C. 3861). efits for the aged (Title XVIII, Part A, Social 147. Grants for training projects in juvenile Security Act, 42 U.S.C. 1395c–1395i–2). delinquency fields (42 U.S.C. 3861). 122. Issuance of rent-free permits for vend- 148. Grants for development of improved ing stands, credit unions, employee associa- techniques and practices in juvenile delin- tions, etc. (20 U.S.C. 107–107f; 45 C.F.R. Part quency services (42 U.S.C. 3871). 20; section 25, 12 U.S.C. 1170). 149. Grants for technical assistance in juve- 123. Grants for special vocational rehabili- nile delinquency services (42 U.S.C. 3872). tation projects (29 U.S.C. 34(a)(1)). 150. Grants for State technical assistance 124. Experimental, pilot or demonstration to local units in juvenile delinquency serv- projects to promote the objectives of Title I, ices (42 U.S.C. 3873). X, XIV, XVI, or XIX or Part A of Title IV of 151. Grants for public service centers the Social Security Act (42 U.S.C. 1315). projects (42 U.S.C. 2744).

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152. Grants to public or private non-profit termine construction needs of institutions of agencies to carry on the Project Headstart higher education (20 U.S.C. 715(b)). Program (42 U.S.C. 2809(a)(1)). 20. Grants to States for comprehensive 153. Project grants for new careers for the health planning (section 314(a), Public handicapped (29 U.S.C. 34(a)(2)(D)). Health Service Act, 42 U.S.C. 246(a)). 154. Construction, demonstration, and 21. Grants to States for establishing and training grants for university-affiliated fa- maintaining adequate public health services cilities for persons with developmental dis- (section 314(d), Public Health Service Act, 42 abilities (42 U.S.C. 2661–2666). U.S.C. 246(d)). Part 2. Continuing Assistance to State 22. Grants, loans, and loan guarantees with interest subsidies for hospital and medical 1. Grants to States for public library serv- facilities (Title VI, Public Health Service ices and construction, interlibrary coopera- Act, 42 U.S.C. 291 et seq.). tion and specialized State library services 23. Grants to States for community mental for certain State institutions and the physically handicapped (20 U.S.C. 351–355). health centers construction (Community 2. Grants to States for strengthening in- Mental Health Centers Act, Part A, 42 U.S.C. struction in academic subjects (20 U.S.C. 441– 2681–2687). 444). 24. Cost of rehabilitation services (Title II, 3. Grants to States for vocational edu- Social Security Act section 222(d); 42 U.S.C. cation (20 U.S.C. 1241–1264). 422(d)). 4. Arrangements with State education 25. Surplus personal property disposal do- agencies for training under the Manpower nations for health and educational purposes Development and Training Act (42 U.S.C. through State agencies (40 U.S.C. 484(j)). 2601–2602, 2610a). 26. Grants for State and community pro- 5. Grants to States to assist in the elemen- grams on aging (Title III, Older Americans tary and secondary education of children of Act, 42 U.S.C. 3021–3025). low-income families (20 U.S.C. 241a–241m). 27. Grants to States for planning, provision 6. Grants to States to provide for school li- of services, and construction and operation brary resources, textbooks and other in- of facilities for persons with developmental structional materials for pupils and teachers disabilities (42 U.S.C. 2670–2677c). in elementary and secondary schools (20 U.S.C. 821–827). 28. Grants to States for vocational reha- 7. Grants to States to strengthen State de- bilitation services (29 U.S.C. 32); for innova- partments of education (20 U.S.C. 861–870). tion of vocational rehabilitation services (29 8. Grants to States for community service U.S.C. 33); and for rehabilitation facilities programs (20 U.S.C. 1001–1011). planning (29 U.S.C. 41a(g)(1)). 9. Grants to States for adult basic edu- 29. Designation of State licensing agency cation and related research, teacher training for blind operators of vending stands (20 and special projects (20 U.S.C. 1201–1211). U.S.C. 107–107f). 10. Grants to State educational agencies 30. Grants to States for old-age assistance for supplementary educational centers and (42 U.S.C. 301 et seq.); aid to families with de- services, and guidance, counseling and test- pendent children (42 U.S.C. 601 et seq.); child- ing (20 U.S.C. 841–847). welfare services (42 U.S.C. 620 et seq.); aid to 11. Grants to States for research and train- the blind (42 U.S.C. 1201 et seq.); aid to the ing in vocational education (20 U.S.C. permanently and totally disabled (42 U.S.C. 1281(b)). 1351 et seq.); aid to the aged, blind, or dis- 12. Grants to States for exemplary pro- abled (42 U.S.C. 1381 et seq.); medical assist- grams and projects in vocational education ance (42 U.S.C. 1396 et seq.). (20 U.S.C. 1301–1305). 13. Grants to States for residential voca- 31. Grants to States for maternal and child tional education schools (20 U.S.C. 1321). health and crippled children’s services (42 14. Grants to States for consumer and U.S.C. 701–707); for special projects for mater- homemaking education (20 U.S.C. 1341). nal and infant care (42 U.S.C. 708). 15. Grants to States for cooperative voca- 32. Grants to States for juvenile delin- tional educational program (20 U.S.C. 1351– quency preventive and rehabilitative serv- 1355). ices (42 U.S.C. 3841). 16. Grants to States for vocational [38 FR 17982, July 5, 1973; 40 FR 18173, Apr. 25, workstudy programs (20 U.S.C. 1371–1374). 17. Grants to States to attract and qualify 1975, as amended at 70 FR 24319, May 9, 2005] 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 de-

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APPENDIX B TO PART 80—GUIDELINES ples of recipients covered by these Guide- FOR ELIMINATING DISCRIMINATION lines: AND DENIAL OF SERVICES ON THE 1. The board of education of a public school district and its administrative agency. BASIS OF RACE, COLOR, NATIONAL 2. The administrative board of a specialized ORIGIN, SEX, AND HANDICAP IN VO- vocational high school serving students from CATIONAL EDUCATION PROGRAMS more than one school district. I. SCOPE AND COVERAGE 3. The administrative board of a technical or vocation school that is used exclusively or A. APPLICATION OF GUIDELINES principally for the provision of vocational education to persons who have completed or These Guidelines apply to recipients of any left high school (including persons seeking a Federal financial assistance from the De- certificate or an associate degree through a partment of Health and Human Services that vocational program offered by the school) offer or administer programs of vocational and who are available for study in prepara- education or training. This includes State tion for entering the labor market. agency recipients. 4. The administrative board of a postsec- B. DEFINITION OF RECIPIENT ondary institution, such as a technical institute, skill center, junior college, community The definition of recipient of Federal finan- college, or four year college that has a de- cial assistance is established by Department partment or division that provides voca- regulations implementing title VI, title IX, tional education to students seeking imme- and section 504 (45 CFR 80.13(i), 86.2(h), diate employment, a certificate or an asso- 84.3(f). ciate degree. For the purposes of title VI: 5. The administrative board of a propri- The term recipient means any State, polit- etary (private) vocational education school. ical subdivision of any State, or instrumen- 6. A State agency recipient itself operating tality of any State or political subdivision, a vocational education facility. any public or private agency, institution, or organization, or other entity, or any indi- D. EXAMPLES OF SCHOOLS TO WHICH THESE vidual, in any State, to whom Federal finan- GUIDELINES APPLY cial assistance is extended, directly or through another recipient, for any program, The following are examples of the types of including any successor, assignee, or trans- schools to which these Guidelines apply. feree thereof, but such term does not include 1. A junior high school, middle school, or any ultimate beneficiary [e.g., students] those grades of a comprehensive high school under any such program. (45 CFR 80.13(i)). that offers instruction to inform, orient, or For the purpose of title IX: prepare students for vocational education at Recipient means any State or political sub- the secondary level. division thereof, or any instrumentality of a 2. A vocational education facility operated State or political subdivision thereof, any by a State agency. public or private agency, institution, or or- 3. A comprehensive high school that has a ganization, or other entity, or any person to department exclusively or principally used whom Federal financial assistance is ex- for providing vocational education; or that tended directly or through another recipient offers at least one vocational program to sec- and which operates an education program or ondary level students who are available for activity which receives or benefits from such study in preparation for entering the labor assistance, including any subunit, successor, market; or that offers adult vocational edu- assignee, or transferee thereof. (45 CFR cation to persons who have completed or left 86.2(h)). high school and who are available for study For the purposes of section 504: in preparation for entering the labor market. Recipient means any State or its political 4. A comprehensive high school, offering subdivision, any instrumentality of a State the activities described above, that receives or its political subdivision, any public or pri- students on a contract basis from other vate agency, institution, organization, or school districts for the purpose of providing other entity, or any person to which Federal vocational education. financial assistance is extended directly or 5. A specialized high school used exclu- through another recipient, including any sively or principally for the provision of vo- successor, assignee, or transferee of a recipi- cational education, that enrolls students ent, but excluding the ultimate beneficiary from one or more school districts for the of the assistance. (45 CFR 84.3(f)). purpose of providing vocational education. 6. A technical or vocational school that C. EXAMPLES OF RECIPIENTS COVERED BY THESE primarily provides vocational education to GUIDELINES persons who have completed or left high The following education agencies, when school and who are available for study in they provide vocational education, are exam- preparation for entering the labor market,

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including students seeking an associate de- are submitted to State and Federal officials gree or certificate through a course of voca- under existing authorities; tional instruction offered by the school. 2. Conducting periodic compliance reviews 7. A junior college, a community college, of selected subrecipients (i.e., an investiga- or four-year college that has a department or tion of a subrecipient to determine whether division that provides vocational education it engages in unlawful discrimination in any to students seeking immediate employment, aspect of its program); upon finding unlawful an associate degree or a certificate through discrimination, notifying the subrecipient of a course of vocational instruction offered by steps it must take to attain compliance and the school. attempting to obtain voluntary compliance; 8. A proprietary school, licensed by the 3. Providing technical assistance upon re- State, that offers vocational education. quest to subrecipients. This will include assisting subrecipients identify unlawful dis- NOTE: Subsequent sections of these Guide- lines may use the term secondary vocational crimination and instructing them in rem- education center in referring to the institu- edies for and prevention of such discrimina- tions described in paragraphs 3, 4 and 5 above tion; or the term postsecondary vocational edu- 4. Periodically reporting its activities and cation center in referring to institutions de- findings under the foregoing paragraphs, in- scribed in paragraphs 6 and 7 above or the cluding findings of unlawful discrimination term vocational education center in referring under paragraph 2, immediately above, to to any or all institutions described above. the Office for Civil Rights. State agencies are not required to termi- II. RESPONSIBILITIES ASSIGNED ONLY TO nate or defer assistance to any subrecipient. STATE AGENCY RECIPIENTS Nor are they required to conduct hearings. The responsibilities of the Office for Civil A. RESPONSIBILITIES OF ALL STATE AGENCY Rights to collect and analyze data, to con- RECIPIENTS duct compliance reviews, to investigate com- State agency recipients, in addition to plaints and to provide technical assistance complying with all other provisions of the are not diminished or attenuated by the re- Guidelines relevant to them, may not requirements of Section II of the Guidelines. quire, approve of, or engage in any discrimi- C. STATEMENT OF PROCEDURES AND PRACTICES nation or denial of services on the basis of race, color, national origin, sex, or handicap Within one year from the publication of in performing any of the following activities: these Guidelines in final form, each State 1. Establishment of criteria or formulas for agency recipient performing oversight redistribution of Federal or State funds to vo- sponsibilities must submit to the Office for cational education programs in the State; Civil Rights the methods of administration 2. Establishment of requirements for ad- and related procedures it will follow to commission to or requirements for the adminis- ply with the requirements described in para- tration of vocational education programs; graphs A and B immediately above. The De- 3. Approval of action by local entities pro- partment will review each submission and viding vocational education. (For example, a will promptly either approve it, or return it State agency must ensure compliance with to State officials for revision. section IV of these Guidelines if and when it reviews a vocational education agency deci- III. DISTRIBUTION OF FEDERAL FINANCIAL AS- sion to create or change a geographic service SISTANCE AND OTHER FUNDS FOR VOCA- area.); TIONAL EDUCATION 4. Conducting its own programs. (For ex- A. AGENCY RESPONSIBILITIES ample, in employing its staff it may not discriminate on the basis of sex or handicap.) Recipients that administer grants for vocational education must distribute Federal, B. STATE AGENCIES PERFORMING OVERSIGHT State, or local vocational education funds so RESPONSIBILITIES that no student or group of students is un- The State agency responsible for the ad- lawfully denied an equal opportunity to ben- ministration of vocational education pro- efit from vocational education on the basis grams must adopt a compliance program to of race, color, national origin, sex, or handi- prevent, identify and remedy discrimination cap. on the basis of race, color, national origin, B. DISTRIBUTION OF FUNDS sex or handicap by its subrecipients. (A subrecipient, in this context, is a local agency or Recipients may not adopt a formula or vocational education center that receives fi- other method for the allocation of Federal, nancial assistance through a State agency.) State, or local vocational education funds This compliance program must include: that has the effect of discriminating on the 1. Collecting and analyzing civil rights re- basis of race, color, national origin, sex, or lated data and information that subrecipi- handicap. However, a recipient may adopt a ents compile for their own purposes or that formula or other method of allocation that

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uses as a factor race, color, national origin, IV. ACCESS AND ADMISSION OF STUDENTS TO sex, or handicap [or an index or proxy for VOCATIONAL EDUCATION PROGRAMS race, color, national origin, sex, or handicap e.g., number of persons receiving Aid to A. RECIPIENT RESPONSIBILITIES Families with Dependent Children or with Criteria controlling student eligibility for limited English speaking ability] if the fac- admission to vocational education schools, tor is included to compensate for past dis- facilities and programs may not unlawfully crimination or to comply with those provi- discriminate on the basis of race, color, na- sions of the Vocational Education Amend- tional origin, sex, or handicap. A recipient ments of 1976 designed to assist specified pro- may not develop, impose, maintain, approve, tected groups. or implement such discriminatory admissions criteria. C. EXAMPLE OF A PATTERN SUGGESTING UNLAWFUL DISCRIMINATION B. SITE SELECTION FOR VOCATIONAL SCHOOLS In each State it is likely that some local State and local recipients may not select recipients will enroll greater proportions of or approve a site for a vocational education minority students in vocational education facility for the purpose or with the effect of than the State-wide proportion of minority excluding, segregating, or otherwise dis- students in vocational education. A funding criminating against students on the basis of formula or other method of allocation that race, color, or national origin. Recipients results in such local recipients receiving per- must locate vocational education facilities pupil allocations of Federal or State voca- at sites that are readily accessible to both tional education funds lower than the State- nonminority and minority communities, and that do not tend to identify the facility or wide average per-pupil allocation will be pre- program as intended for nonminority or mi- sumed unlawfully discriminatory. nority students. D. DISTRIBUTION THROUGH COMPETITIVE C. ELIGIBILITY FOR ADMISSION TO VOCATIONAL GRANTS OR CONTRACTS EDUCATION CENTERS BASED ON RESIDENCE Each State agency that establishes criteria Recipients may not establish, approve or for awarding competitive vocational edu- maintain geographic boundaries for a voca- cation grants or contracts must establish tional education center service area or at- and apply the criteria without regard to the tendance zone, (hereinafter service area), that race, color, national origin, sex, or handicap unlawfully exclude students on the basis of of any or all of a recipient’s students, except race, color, or national origin. The Office for to compensate for past discrimination. Civil Rights will presume, subject to rebuttal, that any one or combination of the fol- E. APPLICATION PROCESSES FOR COMPETITIVE lowing circumstances indicates that the OR DISCRETIONARY GRANTS boundaries of a given service area are unlaw- State agencies must disseminate informa- fully constituted: tion needed to satisfy the requirements of 1. A school system or service area contig- any application process for competitive or uous to the given service area, contains mi- discretionary grants so that all recipients, nority or nonminority students in substan- including those having a high percentage of tially greater proportion than the given minority or handicapped students, are inservice area; formed of and able to seek funds. State agen- 2. A substantial number of minority stu- cies that provide technical assistance for the dents who reside outside the given voca- completion of the application process must tional education center service area, and provide such assistance without discrimina- who are not eligible for the center reside, tion against any one recipient or class of re- nonetheless, as close to the center as a substantial number of non-minority students cipients. who are eligible for the center; F. ALTERATION OF FUND DISTRIBUTION TO 3. The over-all vocational education pro- PROVIDE EQUAL OPPORTUNITY gram of the given service area in comparison to the over-all vocational education program If the Office for Civil Rights finds that a of a contiguous school system or service area recipient’s system for distributing voca- enrolling a substantially greater proportion tional education funds unlawfully discrimi- of minority students: (a) Provides its stu- nates on the basis of race, color, national or- dents with a broader range of curricular of- igin, sex, or handicap, it will require the re- ferings, facilities and equipment; or (b) pro- cipient to adopt an alternative nondiscrim- vides its graduates greater opportunity for inatory method of distribution. The Office employment in jobs: (i) For which there is a for Civil Rights may also require the recipi- demonstrated need in the community or re- ent to compensate for the effects of its past gion; (ii) that pay higher entry level salaries unlawful discrimination in the distribution or wages; or (iii) that are generally acknowl- of funds. edged to offer greater prestige or status.

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D. ADDITIONS AND RENOVATIONS TO EXISTING exclude students on the basis of race, color, VOCATIONAL EDUCATION FACILITIES national origin, sex, or handicap.

A recipient may not add to, modify, or ren- H. ELIGIBILITY FOR ADMISSION TO VOCATIONAL ovate the physical plant of a vocational edu- EDUCATION CENTERS, BRANCHES OR ANNEXES cation facility in a manner that creates, BASED UPON STUDENT OPTION maintains, or increases student segregation on the basis of race, color, national origin, A vocational education center, branch or sex, or handicap. annex, open to all students in a service area and predominantly enrolling minority stu- E. REMEDIES FOR VIOLATIONS OF SITE SELEC- dents or students of one race, national origin TION AND GEOGRAPHIC SERVICE AREA RE- or sex, will be presumed unlawfully seg- QUIREMENTS regated if: (1) It was established by a recipi- If the conditions specified in paragraphs ent for members of one race, national origin IV, A, B, C, or D, immediately above, are or sex; or (2) it has since its construction found and not rebutted by proof of non- been attended primarily by members of one discrimination, the Office for Civil rights race, national origin or sex; or (3) most of its will require the recipient(s) to submit a plan program offerings have traditionally been se- to remedy the discrimination. The following lected predominantely by members of one are examples of steps that may be included race, national origin or sex. in the plan, where necessary to overcome the I. REMEDIES FOR FACILITY SEGREGATION UNDER discrimination: (1) Redrawing of the bound- STUDENT OPTION PLANS aries of the vocational education center’s service area to include areas unlawfully ex- If the conditions specified in paragraph IV- cluded and/or to exclude areas unlawfully in- H are found and not rebutted by proof of non- cluded; (2) provision of transportation to stu- discrimination, the Office for Civil Rights dents residing in areas unlawfully excluded; will require the recipient(s) to submit a plan (3) provision of additional programs and to remedy the segregation. The following are services to students who would have been eli- examples of steps that may be included in gible for attendance at the vocational edu- the plan, where necessary to overcome the cation center but for the discriminatory discrimination: service area or site selection; (4) reassign- (1) elimination of program duplication in ment of students; and (5) construction of new the segregated facility and other proximate facilities or expansion of existing facilities. vocational facilities; (2) relocation or ‘‘clus- tering’’ of programs or courses; (3) adding F. ELIGIBILITY FOR ADMISSION TO SECONDARY programs and courses that traditionally VOCATIONAL EDUCATION CENTERS BASED ON have been identified as intended for members NUMERICAL LIMITS IMPOSED ON SENDING of a particular race, national origin or sex to SCHOOLS schools that have traditionally served mem- A recipient may not adopt or maintain a bers of the other sex or traditionally served system for admission to a secondary voca- persons of a different race or national origin; tional education center or program that lim- (4) merger of programs into one facility its admission to a fixed number of students through school closings or new construction; from each sending school included in the (5) intensive outreach recruitment and coun- center’s service area if such a system dis- seling; (6) providing free transportation to proportionately excludes students from the students whose enrollment would promote center on the basis of race, sex, national ori- desegregation. gin or handicap. (Example: Assume 25 per- [Paragraph J omitted] cent of a school district’s high school students are black and that most of those black K. ELIGIBILITY BASED ON EVALUATION OF EACH students are enrolled in one high school; the APPLICANT UNDER ADMISSIONS CRITERIA white students, 75 percent of the district’s Recipients may not judge candidates for total enrollment, are generally enrolled in admission to vocational education programs the five remaining high schools. This para- on the basis of criteria that have the effect graph prohibits a system of admission to the of disproportionately excluding persons of a secondary vocational education center that particular race, color, national origin, sex, limits eligibility to a fixed and equal number or handicap. However, if a recipient can dem- of students from each of the district’s six onstrate that such criteria have been vali- high schools.) dated as essential to participation in a given program and that alternative equally valid G. REMEDIES FOR VIOLATION OF ELIGIBILITY criteria that do not have such a dispropor- BASED ON NUMERICAL LIMITS REQUIREMENTS tionate adverse effect are unavailable, the If the Office for Civil Rights finds a viola- criteria will be judged nondiscriminatory. tion of paragraph F, above, the recipient Examples of admissions criteria that must must implement an alternative system of ad- meet this test are past academic perform- missions that does not disproportionately ance, record of disciplinary infractions,

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counselors’ approval, teachers’ recommenda- grams or courses because of architectural or tions, interest inventories, high school diplo- equipment barriers, or because of the need mas and standardized tests, such as the Test for related aids and services or auxiliary of Adult Basic Education (TABE). aids. If necessary, recipients must: (1) Modify An introductory, preliminary, or explor- instructional equipment; (2) modify or adapt atory course may not be established as a pre- the manner in which the courses are offered; requisite for admission to a program unless (3) house the program in facilities that are the course has been and is available without readily accessible to mobility impaired stu- regard to race, color, national origin, sex, dents or alter facilities to make them read- and handicap. However, a course that was formerly only available on a discriminatory ily accessible to mobility impaired students; basis may be made a prerequisite for admis- and (4) provide auxiliary aids that effectively sion to a program if the recipient can dem- make lectures and necessary materials avail- onstrate that: (a) the course is essential to able to postsecondary handicapped students; participation in the program; and (b) the (5) provide related aids or services that as- course is presently available to those seek- sure secondary students an appropriate edu- ing enrollment for the first time and to cation. those formerly excluded. Academic requirements that the recipient can demonstrate are essential to a program L. ELIGIBILITY OF NATIONAL ORIGIN MINORITY of instruction or to any directly related li- PERSONS WITH LIMITED ENGLISH LANGUAGE censing requirement will not be regarded as SKILLS discriminatory. However, where possible, a Recipients may not restrict an applicant’s recipient must adjust those requirements to admission to vocational education programs the needs of individual handicapped stu- because the applicant, as a member of a na- dents. tional origin minority with limited English Access to vocational programs or courses language skills, cannot participate in and may not be denied handicapped students on benefit from vocational instruction to the the ground that employment opportunities same extent as a student whose primary lan- in any occupation or profession may be more guage is English. It is the responsibility of limited for handicapped persons than for the recipient to identify such applicants and non-handicapped persons. assess their ability to participate in vocational instruction. O. PUBLIC NOTIFICATION Acceptable methods of identification include: (1) Identification by administrative Prior to the beginning of each school year, staff, teachers, or parents of secondary level recipients must advise students, parents, em- students; (2) identification by the student in ployees and the general public that all voca- postsecondary or adult programs; and (3) ap- tional opportunities will be offered without propriate diagnostic procedures, if nec- regard to race, color, national origin, sex, or essary. handicap. Announcement of this policy of Recipients must take steps to open all vo- non-discrimination may be made, for exam- cational programs to these national origin ple, in local newspapers, recipient publica- minority students. A recipient must dem- tions and/or other media that reach the gen- onstrate that a concentration of students eral public, program beneficiaries, minori- with limited English language skills in one ties (including national origin minorities or a few programs is not the result of discriminatory limitations upon the opportuni- with limited English language skills), ties available to such students. women, and handicapped persons. A brief summary of program offerings and admission M. REMEDIAL ACTION IN BEHALF OF PERSONS criteria should be included in the announce- WITH LIMITED ENGLISH LANGUAGE SKILLS ment; also the name, address and telephone If the Office for Civil Rights finds that a number of the person designated to coordi- recipient has denied national origin minor- nate Title IX and Section 504 compliance ac- ity persons admission to a vocational school tivity. or program because of their limited English If a recipient’s service area contains a language skills or has assigned students to community of national origin minority per- vocational programs solely on the basis of sons with limited English language skills, their limited English language skills, the republic notification materials must be dis- cipient will be required to submit a remedial seminated to that community in its lan- plan that insures national origin minority guage and must state that recipients will students equal access to vocational edu- take steps to assure that the lack of English cation programs. language skills will not be a barrier to admission and participation in vocational edu- N. EQUAL ACCESS FOR HANDICAPPED STUDENTS cation programs. Recipients may not deny handicapped students access to vocational education pro-

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V. COUNSELING AND PREVOCATIONAL tional origin, sex or handicap. Examples of PROGRAMS promotional efforts are career days, parents’ night, shop demonstrations, visitations by A. RECIPIENT RESPONSIBILITIES groups of prospective students and by rep- Recipients must insure that their coun- resentatives from business and industry. Ma- seling materials and activities (including terials that are part of promotional efforts student program selection and career/em- may not create or perpetuate stereotypes ployment selection), promotional, and re- through text or illustration. To the extent cruitment efforts do not discriminate on the possible they should portray males or fe- basis of race, color, national origin, sex, or males, minorities or handicapped persons in handicap. programs and occupations in which these B. COUNSELING AND PROSPECTS FOR SUCCESS groups traditionally have not been represented. If a recipient’s service area con- Recipients that operate vocational edu- tains a community of national origin minor- cation programs must insure that counselors ity persons with limited English language do not direct or urge any student to enroll in skills, promotional literature must be dis- a particular career or program, or measure tributed to that community in its language. or predict a student’s prospects for success in any career or program based upon the stu- VI. EQUAL OPPORTUNITY IN THE VOCATIONAL dent’s race, color, national origin, sex, or EDUCATION INSTRUCTIONAL SETTING handicap. Recipients may not counsel handicapped students toward more restrictive ca- A. ACCOMMODATIONS FOR HANDICAPPED reer objectives than nonhandicapped stu- STUDENTS dents with similar abilities and interests. If a vocational program disproportionately en- Recipients must place secondary level rolls male or female students, minority or handicapped students in the regular edu- nonminority students, or handicapped stu- cational environment of any vocational edu- dents, recipients must take steps to insure cation program to the maximum extent ap- that the disproportion does not result from propriate to the needs of the student unless unlawful discrimination in counseling activi- it can be demonstrated that the education of ties. the handicapped person in the regular envi- C. STUDENT RECRUITMENT ACTIVITIES ronment with the use of supplementary aids and services cannot be achieved satisfac- Recipients must conduct their student re- torily. Handicapped students may be placed cruitment activities so as not to exclude or in a program only after the recipient satis- limit opportunities on the basis of race, fies the provisions of the Department’s Regu- color, national origin, sex, or handicap. lation, 45 CFR Part 84, relating to evalua- Where recruitment activities involve the presentation or portrayal of vocational and tion, placement, and procedural safeguards. career opportunities, the curricula and pro- If a separate class or facility is identifiable grams described should cover a broad range as being for handicapped persons, the facil- of occupational opportunities and not be ity, the programs, and the services must be limited on the basis of the race, color, na- comparable to the facilities, programs, and tional origin, sex, or handicap of the stu- services offered to nonhandicapped students. dents or potential students to whom the presentation is made. Also, to the extent B. STUDENT FINANCIAL ASSISTANCE possible, recruiting teams should include Recipients may not award financial assist- persons of different races, national origins, ance in the form of loans, grants, scholar- sexes, and handicaps. ships, special funds, subsidies, compensation D. COUNSELING OF STUDENTS WITH LIMITED for work, or prizes to vocational education ENGLISH-SPEAKING ABILITY OR HEARING IM- students on the basis of race, color, national PAIRMENTS origin, sex, or handicap, except to overcome Recipients must insure that counselors can the effects of past discrimination. Recipients effectively communicate with national ori- may administer sex restricted financial as- gin minority students with limited English sistance where the assistance and restriction language skills and with students who have are established by will, trust, bequest, or any hearing impairments. This requirement may similar legal instrument, if the overall effect be satisfied by having interpreters available. of all financial assistance awarded does not discriminate on the basis of sex. Materials E. PROMOTIONAL ACTIVITIES and information used to notify students of Recipients may not undertake promotional opportunities for financial assistance may efforts (including activities of school offi- not contain language or examples that would cials, counselors, and vocational staff) in a lead applicants to believe the assistance is manner that creates or perpetuates stereo- provided on a discriminatory basis. If a re- types or limitations based on race, color, na- cipient’s service area contains a community

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of national origin minority persons with lim- employer or prospective employer is or has ited English language skills, such informa- been subject to court action involving dis- tion must be disseminated to that commu- crimination in employment, school officials nity in its language. should rely on the court’s findings if the decision resolves the issue of whether the em- C. HOUSING IN RESIDENTIAL POSTSECONDARY ployer has engaged in unlawful discrimina- VOCATIONAL EDUCATION CENTERS tion. Recipients must extend housing opportunities without discrimination based on race, B. APPRENTICE TRAINING PROGRAMS color, national origin, sex, or handicap. This A recipient may not enter into any agree- obligation extends to recipients that provide ment for the provision or support of appren- on-campus housing and/or that have agree- tice training for students or union members ments with providers of off-campus housing. with any labor union or other sponsor that In particular, a recipient postsecondary vo- discriminates against its members or appli- cational education program that provides cants for membership on the basis of race, on-campus or off-campus housing to its non- color, national origin, sex, or handicap. If a handicapped students must provide, at the recipient enters into a written agreement same cost and under the same conditions, with a labor union or other sponsor pro- comparable convenient and accessible hous- viding for apprentice training, the agreeing to handicapped students. ment must contain an assurance from the union or other sponsor: (1) That it does not D. COMPARABLE FACILITIES engage in such discrimination against its Recipients must provide changing rooms, membership or applicants for membership; showers, and other facilities for students of and (2) that apprentice training will be of- one sex that are comparable to those pro- fered and conducted for its membership free vided to students of the other sex. This may of such discrimination. be accomplished by alternating use of the same facilities or by providing separate, VIII. EMPLOYMENT OF FACULTY AND STAFF comparable facilities. Such facilities must be adapted or modi- A. EMPLOYMENT GENERALLY fied to the extent necessary to make the vo- Recipients may not engage in any employ- cational education program readily acces- ment practice that discriminates against sible to handicapped persons. any employee or applicant for employment on the basis of sex or handicap. Recipients VII. WORK STUDY, COOPERATIVE VOCATIONAL may not engage in any employment practice EDUCATION, JOB PLACEMENT, AND APPREN- that discriminates on the basis of race, TICE TRAINING color, or national origin if such discrimina- A. RESPONSIBILITIES IN COOPERATIVE VOCA- tion tends to result in segregation, exclusion TIONAL EDUCATION PROGRAMS, WORK-STUDY or other discrimination against students. PROGRAMS, AND JOB PLACEMENT PROGRAMS B. RECRUITMENT A recipient must insure that: (a) It does not discriminate against its students on the Recipients may not limit their recruit- basis of race, color, national origin, sex, or ment for employees to schools, communities, handicap in making available opportunities or companies disproportionately composed of in cooperative education, work study and job persons of a particular race, color, national placement programs; and (b) students par- origin, sex, or handicap except for the pur- ticipating in cooperative education, work pose of overcoming the effects of past dis- study and job placement programs are not crimination. Every source of faculty must be discriminated against by employers or pro- notified that the recipient does not discrimi- spective employers on the basis of race, nate in employment on the basis of race, color, national origin, sex, or handicap in re- color, national origin, sex, or handicap. cruitment, hiring, placement, assignment to C. PATTERNS OF DISCRIMINATION work tasks, hours of employment, levels of responsibility, and in pay. Whenever the Office for Civil Rights finds If a recipient enters into a written agree- that in light of the representation of pro- ment for the referral or assignment of stu- tected groups in the relevant labor market dents to an employer, the agreement must there is a significant underrepresentation or contain an assurance from the employer that overrepresentation of protected group per- students will be accepted and assigned to sons on the staff of a vocational education jobs and otherwise treated without regard to school or program, it will presume that the race, color, national origin, sex, or handicap. disproportion results from unlawful dis- Recipients may not honor any employer’s crimination. This presumption can be over- request for students who are free of handi- come by proof that qualified persons of the caps or for students of a particular race, particular race, color, national origin, or color, national origin, or sex. In the event an sex, or that qualified handicapped persons

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are not in fact available in the relevant labor B. ENFORCEMENT AUTHORITY market. Enforcement of the provisions of Title IX of the Education Amendments of 1972 and D. SALARY POLICIES section 504 of the Rehabilitation Act of 1973 Recipients must establish and maintain is the responsibility of the Department of faculty salary scales and policy based upon Health and Human Services. However, au- the conditions and responsibilities of em- thority to enforce Title VI of the Civil ployment, without regard to race, color, na- Rights Act of 1964 for proprietary vocational tional origin, sex or handicap. education schools has been delegated to the Veterans Administration. E. EMPLOYMENT OPPORTUNITIES FOR When the Office for Civil Rights receives a HANDICAPPED APPLICANTS Title VI complaint alleging discrimination by a proprietary vocational education school Recipients must provide equal employment it will forward the complaint to the Veterans opportunities for teaching and administra- Administration and cite the applicable re- tive positions to handicapped applicants who quirements of the Department’s regulations can perform the essential functions of the and these Guidelines. The complainant will position in question. Recipients must make be notified of such action. reasonable accommodation for the physical [44 FR 17164, Mar. 21, 1979] or mental limitations of handicapped applicants who are otherwise qualified unless recipients can demonstrate that the accommo- PART 81—PRACTICE AND PROCE- dation would impose an undue hardship. DURE FOR HEARINGS UNDER PART 80 OF THIS TITLE F. THE EFFECTS OF PAST DISCRIMINATION Recipients must take steps to overcome Subpart A—General Information the effects of past discrimination in the recruitment, hiring, and assignment of faculty. Sec. Such steps may include the recruitment or 81.1 Scope of rules. 81.2 Records to be public. reassignment of qualified persons of a par- 81.3 Use of gender and number. ticular race, national origin, or sex, or who 81.4 Suspension of rules. are handicapped. Subpart B—Appearance and Practice G. STAFF OF STATE ADVISORY COUNCILS OF VOCATIONAL EDUCATION 81.11 Appearance. State Advisory Councils of Vocational 81.12 Authority for representation. 81.13 Exclusion from hearing for mis- Education are recipients of Federal financial conduct. assistance and therefore must comply with Section VIII of the Guidelines. Subpart C—Parties H. EMPLOYMENT AT STATE OPERATED VOCA- 81.21 Parties; General Counsel deemed a TIONAL EDUCATION CENTERS THROUGH STATE party. CIVIL-SERVICE AUTHORITIES 81.22 Amici curiae. Where recruitment and hiring of staff for 81.23 Complainants not parties. State operated vocational education centers is conducted by a State civil service employ- Subpart D—Form, Execution, Service and ment authority, the State education agency Filing of Documents operating the program must insure that re- 81.31 Form of documents to be filed. cruitment and hiring of staff for the voca- 81.32 Signature of documents. tional education center is conducted in ac- 81.33 Filing and service. cordance with the requirements of these 81.34 Service—how made. Guidelines. 81.35 Date of service. 81.36 Certificate of service. IX. PROPRIETARY VOCATIONAL EDUCATION SCHOOLS Subpart E—Time

A. RECIPIENT RESPONSIBILITIES 81.41 Computation. 81.42 Extension of time or postponement. Proprietary vocational education schools 81.43 Reduction of time to file documents. that are recipients of Federal financial assistance through Federal student assistance Subpart F—Proceedings Prior to Hearing programs or otherwise are subject to all of the requirements of the Department’s regu- 81.51 Notice of hearing or opportunity for lations and these Guidelines. hearing.

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81.52 Answer to notice. Subpart M—Definitions 81.53 Amendment of notice or answer. 81.54 Request for hearing. 81.131 Definitions. 81.55 Consolidation. AUTHORITY: 5 U.S.C. 301 and 45 CFR 80.9(d). 81.56 Motions. 81.57 Responses to motions and petitions. SOURCE: 32 FR 15156, Nov. 2, 1967, unless 81.58 Disposition of motions and petitions. otherwise noted.

Subpart G—Responsibilities and Duties of Subpart A—General Information Presiding Officer 81.61 Who presides. § 81.1 Scope of rules. 81.62 Designation of hearing examiner. The rules of procedure in this part 81.63 Authority of presiding officer. supplement §§ 80.9 and 80.10 of this subtitle and govern the practice for hear- Subpart H—Hearing Procedures ings, decisions, and administrative re- 81.71 Statement of position and trial briefs. view conducted by the Department of 81.72 Evidentiary purpose. Health and Human Services, pursuant 81.73 Testimony. to Title VI of the Civil Rights Act of 81.74 Exhibits. 1964 (section 602, 78 Stat. 252) and Part 81.75 Affidavits. 80 of this subtitle. 81.76 Depositions. 81.77 Admissions as to facts and documents. § 81.2 Records to be public. 81.78 Evidence. 81.79 Cross-examination. All pleadings, correspondence, exhib- 81.80 Unsponsored written material. its, transcripts, of testimony, excep- 81.81 Objections. tions, briefs, decisions, and other docu- 81.82 Exceptions to rulings of presiding offi- ments filed in the docket in any pro- cer unnecessary. ceeding may be inspected and copied in 81.83 Official notice. the office of the Civil Rights hearing 81.84 Public document items. 81.85 Offer of proof. clerk. Inquiries may be made at the 81.86 Appeals from ruling of presiding offi- Central Information Center, Depart- cer. ment of Health and Human Services, 330 Independence Avenue SW., Wash- Subpart I—The Record ington, DC 20201.

81.91 Official transcript. § 81.3 Use of gender and number. 81.92 Record for decision. As used in this part, words importing Subpart J—Posthearing Procedures, the singular number may extend and be Decisions applied to several persons or things, and vice versa. Words importing the 81.101 Posthearing briefs: Proposed findings and conclusions. masculine gender may be applied to fe- 81.102 Decisions following hearing. males or organizations. 81.103 Exceptions to initial or recommended decisions. § 81.4 Suspension of rules. 81.104 Final decisions. Upon notice to all parties, the re- 81.105 Oral argument to the reviewing au- viewing authority or the presiding offi- thority. cer, with respect to matters pending 81.106 Review by the Secretary. 81.107 Service on amici curiae. before them, may modify or waive any rule in this part upon determination Subpart K—Judicial Standards of Practice that no party will be unduly prejudiced and the ends of justice will thereby be 81.111 Conduct. served. 81.112 Improper conduct. 81.113 Ex parte communications. 81.114 Expeditious treatment. Subpart B—Appearance and 81.115 Matters not prohibited. Practice 81.116 Filing of ex parte communications. § 81.11 Appearance. Subpart L—Posttermination Proceedings A party may appear in person or by 81.121 Posttermination proceedings. counsel and participate fully in any

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proceeding. A State agency or a cor- riae is not a party and may not intro- poration may appear by any of its offi- duce evidence at a hearing. cers or by any employee it authorizes (b) An amicus curiae may submit a to appear on its behalf. Counsel must statement of position to the presiding be members in good standing of the bar officer prior to the beginning of a hear- of a State, Territory, or possession of ing, and shall serve a copy on each the United States or of the District of party. The amicus curiae may submit a Columbia or the Commonwealth of brief on each occasion a decision is to Puerto Rico. be made or a prior decision is subject to review. His brief shall be filed and § 81.12 Authority for representation. served on each party within the time Any individual acting in a represent- limits applicable to the party whose ative capacity in any proceeding may position he deems himself to support; be required to show his authority to or if he does not deem himself to sup- act in such capacity. port the position of any party, within the longest time limit applicable to § 81.13 Exclusion from hearing for mis- any party at that particular stage of conduct. the proceedings. (c) When all parties have completed Disrespectful, disorderly, or con- their initial examination of a witness, tumacious language or contemptuous any amicus curiae may request the pre- conduct, refusal to comply with direc- siding officer to propound specific tions, or continued use of dilatory tac- questions to the witness. The presiding tics by any person at any hearing be- officer, in his discretion, may grant fore a presiding officer shall constitute any such request if he believes the pro- grounds for immediate exclusion of posed additional testimony may assist such person from the hearing by the materially in elucidating factual mat- presiding officer. ters at issue between the parties and will not expand the issues. Subpart C—Parties § 81.23 Complainants not parties. § 81.21 Parties; General Counsel A person submitting a complaint pur- deemed a party. suant to § 80.7(b) of this title is not a (a) The term party shall include an party to the proceedings governed by applicant or recipient or other person this part, but may petition, after pro- to whom a notice of hearing or oppor- ceedings are initiated, to become an tunity for hearing has been mailed amicus curiae. naming him a respondent. (b) The General Counsel of the De- Subpart D—Form, Execution, partment of Health and Human Serv- Service and Filing of Documents ices shall be deemed a party to all proceedings. § 81.31 Form of documents to be filed. Documents to be filed under the rules § 81.22 Amici curiae. in this part shall be dated, the original (a) Any interested person or organi- signed in ink, shall show the docket de- zation may file a petition to partici- scription and title of the proceeding, pate in a proceeding as an amicus cu- and shall show the title, if any, and ad- riae. Such petition shall be filed prior dress of the signatory. Copies need not to the prehearing conference, or if none be signed but the name of the person is held, before the commencement of signing the original shall be repro- the hearing, unless the petitioner duced. Documents shall be legible and shows good cause for filing the petition shall not be more than 81⁄2 inches wide later. The presiding officer may grant and 12 inches long. the petition if he finds that the petitioner has a legitimate interest in the § 81.32 Signature of documents. proceedings, that such participation The signature of a party, authorized will not unduly delay the outcome, and officer, employee or attorney con- may contribute materially to the prop- stitutes a certificate that he has read er disposition thereof. An amicus cu- the document, that to the best of his

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knowledge, information, and belief U.S. mail or is delivered in person, ex- there is good ground to support it, and cept that the date of service of the ini- that it is not interposed for delay. If a tial notice of hearing or opportunity document is not signed or is signed for hearing shall be the date of its de- with intent to defeat the purpose of livery, or of its attempted delivery if this section, it may be stricken as refused. sham and false and the proceeding may proceed as though the document had § 81.36 Certificate of service. not been filed. Similar action may be The original of every document filed taken if scandalous or indecent matter and required to be served upon parties is inserted. to a proceeding shall be endorsed with a certificate of service signed by the § 81.33 Filing and service. party making service or by his attor- All notices by a Department official, ney or representative, stating that and all written motions, requests, peti- such service has been made, the date of tions, memoranda, pleadings, excep- service, and the manner of service, tions, briefs, decisions, and correspond- whether by mail or personal delivery. ence to a Department official from a party, or vice versa, relating to a proceeding after its commencement shall Subpart E—Time be filed and served on all parties. Par- ties shall supply the original and two § 81.41 Computation. copies of documents submitted for fil- In computing any period of time ing. Filings shall be made with the under the rules in this part or in an Civil Rights hearing clerk at the ad- order issued hereunder, the time begins dress stated in the notice of hearing or with the day following the act, event, notice of opportunity for hearing, dur- or default, and includes the last day of ing regular business hours. Regular the period, unless it is a Saturday, business hours are every Monday Sunday, or legal holiday observed in through Friday (legal holidays in the the District of Columbia, in which District of Columbia excepted) from 9 event it includes the next following a.m. to 5:30 p.m., eastern standard or business day. When the period of time daylight saving time, whichever is ef- prescribed or allowed is less than 7 fective in the District of Columbia at days, intermediate Saturdays, Sun- the time. Originals only on exhibits days, and legal holidays shall be ex- and transcripts of testimony need be cluded from the computation. filed. For requirements of service on amici curiae, see § 81.107. § 81.42 Extension of time or postponement. § 81.34 Service—how made. Requests for extension of time should Service shall be made by personal de- be served on all parties and should set livery of one copy to each person to be forth the reasons for the application. served or by mailing by first-class Applications may be granted upon a mail, properly addressed with postage showing of good cause by the applicant. prepaid. When a party or amicus has From the designation of a presiding of- appeared by attorney or other rep- ficer until the issuance of his decision resentative, service upon such attorney such requests should be addressed to or representative will be deemed serv- him. Answers to such requests are per- ice upon the party or amicus. Docu- mitted, if made promptly. ments served by mail preferably should be mailed in sufficient time to reach § 81.43 Reduction of time to file docu- the addressee by the date on which the ments. original is due to be filed, and should For good cause, the reviewing au- be air mailed if the addressee is more thority or the presiding officer, with than 300 miles distant. respect to matters pending before them, may reduce any time limit pre- § 81.35 Date of service. scribed by the rules in this part, except The date of service shall be the day as provided by law or in Part 80 of this when the matter is deposited in the title.

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Subpart F—Proceedings Prior to separate document, may request a Hearing hearing. Failure of the respondent to request a hearing shall be deemed a § 81.51 Notice of hearing or oppor- waiver of the right to a hearing and to tunity for hearing. constitute his consent to the making of Proceedings are commenced by mail- a decision on the basis of such informa- ing a notice of hearing or opportunity tion as is available. for hearing to an affected applicant or recipient, pursuant to § 80.9 of this § 81.55 Consolidation. title. The responsible Department official may provide for proceedings in the De- § 81.52 Answer to notice. partment to be joined or consolidated The respondent, applicant or recipi- for hearing with proceedings in other ent may file an answer to the notice Federal departments or agencies, by within 20 days after service thereof. agreement with such other depart- Answers shall admit or deny specifi- ments or agencies. All parties to any cally and in detail each allegation of proceeding consolidated subsequently the notice, unless the respondent party to service of the notice of hearing or is without knowledge, in which case his opportunity for hearing shall be answer should so state, and the state- promptly served with notice of such ment will be deemed a denial. Allega- consolidation. tions of fact in the notice not denied or controverted by answer shall be § 81.56 Motions. deemed admitted. Matters alleged as Motions and petitions shall state the affirmative defenses shall be separately relief sought, the authority relied stated and numbered. Failure of the re- upon, and the facts alleged. If made be- spondent to file an answer within the fore or after the hearing, these matters 20-day period following service of the shall be in writing. If made at the hear- notice may be deemed an admission of ing, they may be stated orally; but the all matters of fact recited in the no- presiding officer may require that they tice. be reduced to writing and filed and § 81.53 Amendment of notice or an- served on all parties in the same man- swer. ner as a formal motion. Motions, an- The General Counsel may amend the swers, and replies shall be addressed to notice of hearing or opportunity for the presiding officer, if the case is hearing once as a matter of course be- pending before him. A repetitious mo- fore an answer thereto is served, and tion will not be entertained. each respondent may amend his answer once as a matter of course not later § 81.57 Responses to motions and petitions. than 10 days before the date fixed for hearing but in no event later than 20 Within 8 days after a written motion days from the date of service of his or petition is served, or such other pe- original answer. Otherwise a notice or riod as the reviewing authority or the answer may be amended only by leave presiding officer may fix, any party of the presiding officer. A respondent may file a response thereto. An imme- shall file his answer to an amended no- diate oral response may be made to an tice within the time remaining for fil- oral motion. ing the answer to the original notice or within 10 days after service of the § 81.58 Disposition of motions and peti- amended notice, whichever period may tions. be the longer, unless the presiding offi- The reviewing authority or the pre- cer otherwise orders. siding officer may not sustain or grant a written motion or petition prior to § 81.54 Request for hearing. expiration of the time for filing re- Within 20 days after service of a no- sponses thereto, but may overrule or tice of opportunity for hearing which deny such motion or petition without does not fix a date for hearing the re- awaiting response: Provided, however, spondent, either in his answer or in a That prehearing conferences, hearings

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and decisions need not be delayed pend- (b) Hold conferences to settle, sim- ing disposition of motions or petitions. plify, or fix the issues in a proceeding, Oral motions and petitions may be or to consider other matters that may ruled on immediately. Motions and pe- aid in the expeditious disposition of the titions submitted to the reviewing au- proceeding. thority or the presiding officer, respec- (c) Require parties and amici curiae tively, and not disposed of in separate to state their position with respect to rulings or in their respective decisions the various issues in the proceeding. will be deemed denied. Oral arguments (d) Administer oaths and affirma- shall not be held or written motions or tions. petitions unless the presiding officer in (e) Rule on motions, and other proce- his discretion expressly so orders. dural items on matters pending before him. Subpart G—Responsibilities and (f) Regulate the course of the hearing and conduct of counsel therein. Duties of Presiding Officer (g) Examine witnesses and direct wit- § 81.61 Who presides. nesses to testify. (h) Receive, rule on, exclude or limit A hearing examiner assigned under 5 evidence. U.S.C. 3105 or 3344 (formerly section 11 (i) Fix the time for filing motions, of the Administrative Procedure Act) petitions, briefs, or other items in mat- shall preside over the taking of evi- ters pending before him. dence in any hearing to which these (j) Issue initial or recommended deci- rules of procedure apply. sions. (k) Take any action authorized by § 81.62 Designation of hearing exam- the rules in this part or in conformance iner. with the provisions of 5 U.S.C. 551–559 The designation of the hearing exam- (the Administrative Procedure Act). iner as presiding officer shall be in writing, and shall specify whether the Subpart H—Hearing Procedures examiner is to make an initial decision or to certify the entire record includ- § 81.71 Statement of position and trial ing his recommended findings and pro- briefs. posed decision to the reviewing author- The presiding officer may require ity, and may also fix the time and parties and amici curiae to file written place of hearing. A copy of such order statements of position prior to the be- shall be served on all parties. After ginning of a hearing. The presiding of- service of an order designating a hear- ficer may also require the parties to ing examiner to preside, and until such submit trial briefs. examiner makes his decision, motions and petitions shall be submitted to § 81.72 Evidentiary purpose. him. In the case of the death, illness, (a) The hearing is directed to receiv- disqualification or unavailability of ing factual evidence and expert opinion the designated hearing examiner, an- testimony related to the issues in the other hearing examiner may be des- proceeding. Argument will not be re- ignated to take his place. ceived in evidence; rather it should be presented in statements, memoranda, § 81.63 Authority of presiding officer. or briefs, as determined by the pre- The presiding officer shall have the siding officer. Brief opening state- duty to conduct a fair hearing, to take ments, which shall be limited to state- all necessary action to avoid delay, and ment of the party’s position and what to maintain order. He shall have all he intends to prove, may be made at powers necessary to these ends, includ- hearings. ing (but not limited to) the power to: (b) Hearings for the reception of evi- (a) Arrange and issue notice of the dence will be held only in cases where date, time, and place of hearings, or, issues of fact must be resolved in order upon due notice to the parties, to to determine whether the respondent change the date, time, and place of has failed to comply with one or more hearings previously set. applicable requirements of Part 80 of

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this title. In any case where it appears tion to any affidavit on the ground from the respondent’s answer to the that he believes it necessary to test the notice of hearing or opportunity for truth of assertions therein at hearing. hearing, from his failure timely to an- In such event the assertions objected swer, or from his admissions or stipula- to will not be received in evidence un- tions in the record, that there are no less the affiant is made available for matters of material fact in dispute, the cross-examination, or the presiding of- reviewing authority or presiding officer ficer determines that cross-examina- may enter an order so finding, vacating tion is not necessary for the full and the hearing date if one has been set, true disclosure of facts referred to in and fixing the time for filing briefs such assertions. Notwithstanding any under § 81.101. Thereafter the pro- objection, however, affidavits may be ceedings shall go to conclusion in ac- considered in the case of any respond- cordance with Subpart J of this part. ent who waives a hearing. The presiding officer may allow an appeal from such order in accordance § 81.76 Depositions. with § 81.86. Upon such terms as may be just, for the convenience of the parties or of the § 81.73 Testimony. Department, the presiding officer may Testimony shall be given orally authorize or direct the testimony of under oath or affirmation by witnesses any witness to be taken by deposition. at the hearing; but the presiding officer, in his discretion, may require or § 81.77 Admissions as to facts and doc- permit that the direct testimony of uments. any witness be prepared in writing and Not later than 15 days prior to the served on all parties in advance of the scheduled date of the hearing except hearing. Such testimony may be adopt- for good cause shown, or prior to such ed by the witness at the hearing, and earlier date as the presiding officer filed as part of the record thereof. Un- may order, any party may serve upon less authorized by the presiding officer, an opposing party a written request for witnesses will not be permitted to read the admission of the genuineness and prepared testimony into the record. authenticity of any relevant docu- Except as provided in §§ 81.75 and 81.76, ments described in and exhibited with witnesses shall be available at the the request, or for the admission of the hearing for cross-examination. truth of any relevant matters of fact stated in the request. Each of the mat- § 81.74 Exhibits. ters of which an admission is requested Proposed exhibits shall be exchanged shall be deemed admitted, unless with- at the prehearing conference, or other- in a period designated in the request wise prior to the hearing if the pre- (not less than 10 days after service siding officer so requires. Proposed ex- thereof, or within such further time as hibits not so exchanged may be denied the presiding officer or the reviewing admission as evidence. The authen- authority if no presiding officer has yet ticity of all proposed exhibits ex- been designated may allow upon mo- changed prior to hearing will be tion and notice) the party to whom the deemed admitted unless written objec- request is directed serves upon the re- tion thereto is filed prior to the hear- questing party a sworn statement ei- ing or unless good cause is shown at ther denying specifically the matters the hearing for failure to file such writ- of which an admission is requested or ten objection. setting forth in detail the reasons why he cannot truthfully either admit or § 81.75 Affidavits. deny such matters. Copies of requests An affidavit is; not inadmissible as for admission and answers thereto such. Unless the presiding officer fixes shall be served on all parties. Any ad- other time periods affidavits shall be mission made by a party to such re- filed and served on the parties not later quest is only for the purposes of the than 15 days prior to the hearing; and pending proceeding, or any proceeding not less than 7 days prior to hearing a or action instituted for the enforce- party may file and serve written objec- ment of any order entered therein, and

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shall not constitute and admission by Federal Government (including Gov- him for any other purpose or be used ernment-owned corporations), or a against him in any other proceeding or similar document issued by a State or action. its agencies, and such document (or part thereof) has been shown by the of- § 81.78 Evidence. feror to be reasonably available to the Irrelevant, immaterial, unreliable, public, such document need not be pro- and unduly repetitious evidence will be duced or marked for identification, but excluded. may be offered for official notice, as a § 81.79 Cross-examination. public document item by specifying the document or relevant part thereof. A witness may be cross-examined on any matter material to the proceeding § 81.85 Offer of proof. without regard to the scope of his direct examination. An offer of proof made in connection with an objection taken to any ruling § 81.80 Unsponsored written material. of the presiding officer rejecting or ex- Letters expressing views or urging cluding proffered oral testimony shall action and other unsponsored written consist of a statement of the substance material regarding matters in issue in of the evidence which counsel contends a hearing will be placed in the cor- would be adduced by such testimony; respondence section of the docket of and, if the excluded evidence consists the proceeding. These data are not of evidence in documentary or written deemed part of the evidence or record form or of reference to documents or in the hearing. records, a copy of such evidence shall be marked for identification and shall § 81.81 Objections. accompany the record as the offer of Objections to evidence shall be time- proof. ly and briefly state the ground relied upon. § 81.86 Appeals from ruling of presiding officer. § 81.82 Exceptions to rulings of presiding officer unnecessary. Rulings of the presiding officer may not be appealed to the reviewing au- Exceptions to rulings of the presiding officer are unnecessary. It is sufficient thority prior to his consideration of that a party, at the time the ruling of the entire proceeding except with the the presiding officer is sought, makes consent of the presiding officer and known the action which he desires the where he certifies on the record or in presiding officer to take, or his objec- writing that the allowance of an inter- tion to an action taken, and his locutory appeal is clearly necessary to grounds therefor. prevent exceptional delay, expense, or prejudice to any party, or substantial § 81.83 Official notice. detriment to the public interest. If an Where official notice is taken or is to appeal is allowed, any party may file a be taken of a material fact not appear- brief with the reviewing authority ing in the evidence of record, any within such period as the presiding of- party, on timely request, shall be af- ficer directs. No oral argument will be forded an opportunity to show the con- heard unless the reviewing authority trary. directs otherwise. At any time prior to submission of the proceeding to it for § 81.84 Public document items. decisions, the reviewing authority may Whenever there is offered (in whole direct the presiding officer to certify or in part) a public document, such as any question or the entire record to it an official report, decision, opinion, or for decision. Where the entire record is published scientific or economic statis- so certified, the presiding officer shall tical data issued by any of the execu- recommend a decision. tive departments (or their subdivisions), legislative agencies or committees, or administrative agencies of the

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Subpart I—The Record § 81.103 Exceptions to initial or recommended decisions. § 81.91 Official transcript. Within 20 days after the mailing of The Department will designate the an initial or recommended decision, official reporter for all hearings. The any party may file exceptions to the official transcripts of testimony taken, decision, stating reasons therefor, with together with any exhibits, briefs, or the reviewing authority. Any other memoranda of law filed therewith shall party may file a response thereto within 30 days after the mailing of the deci- be filed with the Department. Tran- sion. Upon the filing of such excep- scripts of testimony in hearings may tions, the reviewing authority shall re- be obtained from the official reporter view the decision and issue its own de- by the parties and the public at rates cision thereon. not to exceed the maximum rates fixed by the contract between the Depart- § 81.104 Final decisions. ment and the reporter. Upon notice to (a) Where the hearing is conducted by all parties, the presiding officer may a hearing examiner who makes an ini- authorize corrections to the transcript tial decision, if no exceptions thereto which involve matters of substance. are filed within the 20-day period specified in § 81.103, such decision shall be- § 81.92 Record for decision. come the final decision of the Depart- The transcript of testimony, exhib- ment, and shall constitute ‘‘final agen- its, and all papers and requests filed in cy action’’ within the meaning of 5 the proceedings, except the correspond- U.S.C. 704 (formerly section 10(c) of the ence section of the docket, including Administrative Procedure Act), subject rulings and any recommended or initial to the provisions of § 81.106. decision shall constitute the exclusive (b) Where the hearing is conducted by record for decision. a hearing examiner who makes a recommended decision, or upon the filing of exceptions to a hearing examiner’s Subpart J—Posthearing initial decision, the reviewing author- Procedures, Decisions ity shall review the recommended or initial decision and shall issue its own § 81.101 Posthearing briefs: Proposed decision thereon, which shall become findings and conclusions. the final decision of the Department, (a) The presiding officer shall fix the and shall constitute ‘‘final agency ac- time for filing posthearing briefs, tion’’ within the meaning of 5 U.S.C. which may contain proposed findings of 704 (formerly section 10(c) of the Ad- fact and conclusions of law, and, if per- ministrative Procedure Act), subject to mitted, reply briefs. the provisions of § 81.106. (b) Briefs should include a summary (c) All final decisions shall be of the evidence relied upon together promptly served on all parties, and with references to exhibit numbers and amici, if any. pages of the transcript, with citations § 81.105 Oral argument to the review- of the authorities relied upon. ing authority. § 81.102 Decisions following hearing. (a) If any party desires to argue a case orally on exceptions or replies to When the time for submission of exceptions to an initial or rec- posthearing briefs has expired, the pre- ommended decision, he shall make siding officer shall certify the entire such request in writing. The reviewing record, including his recommended authority may grant or deny such re- findings and proposed decision, to the quests in its discretion. If granted, it responsible Department official; or if will serve notice of oral argument on so authorized he shall make an initial all parties. The notice will set forth decision. A copy of the recommended the order of presentation, the amount findings and proposed decision, or of of time allotted, and the time and the initial decision, shall be served place for argument. The names of per- upon all parties, and amici, if any. sons who will argue should be filed

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with the Department hearing clerk not parties under § 81.71 shall be served on later than 7 days before the date set for amici. oral argument. (b) The purpose of oral argument is Subpart K—Judicial Standards of to emphasize and clarify the written argument in the briefs. Reading at Practice length from the brief or other texts is § 81.111 Conduct. not favored. Participants should con- fine their arguments to points of con- Parties and their representatives are trolling importance and to points upon expected to conduct themselves with which exceptions have been filed. Con- honor and dignity and observe judicial solidations of appearances at oral argu- standards of practice and ethics in all ment by parties taking the same side proceedings. They should not indulge will permit the parties’ interests to be in offensive personalities, unseemly presented more effectively in the time wrangling, or intemperate accusations allotted. or characterizations. A representative (c) Pamphlets, charts, and other of any party whether or not a lawyer written material may be presented at shall observe the traditional respon- oral argument only if such material is sibilities of lawyers as officers of the limited to facts already in the record court and use his best efforts to re- and is served on all parties and filed strain his client from improprieties in with the Department hearing clerk at connection with a proceeding. least 7 days before the argument.

§ 81.106 Review by the Secretary. § 81.112 Improper conduct. Within 20 days after an initial deci- With respect to any proceeding it is sion becomes a final decision pursuant improper for any interested person to to § 81.104(a) or within 20 days of the attempt to sway the judgment of the mailing of a final decision referred to reviewing authority by undertaking to in § 81.104(b), as the case may be, a bring pressure or influence to bear party may request the Secretary to re- upon any officer having a responsi- view the final decision. The Secretary bility for a decision in the proceeding, may grant or deny such request, in or his decisional staff. It is improper whole or in part, or serve notice of his that such interested persons or any intent to review the decision in whole members of the Department’s staff or or in part upon his own motion. If the the presiding officer give statements to Secretary grants the requested review, communications media, by paid adver- or if he serves notice of intent to re- tisement or otherwise, designed to in- view upon his own motion, each party fluence the judgment of any officer to the decision shall have 20 days fol- having a responsibility for a decision in lowing notice of the Secretary’s pro- the proceeding, or his decisional staff. posed action within which to file ex- It is improper for any person to solicit ceptions to the decision and supporting communications to any such officer, or briefs and memoranda, or briefs and his decisional staff, other than proper memoranda in support of the decision. communications by parties or amici Failure of a party to request review curiae. under this paragraph shall not be deemed a failure to exhaust adminis- § 81.113 Ex parte communications. trative remedies for the purpose of obtaining judicial review. Only persons employed by or assigned to work with the reviewing au- § 81.107 Service on amici curiae. thority who perform no investigative All briefs, exceptions, memoranda, or prosecuting function in connection requests, and decisions referred to in with a proceeding shall communicate this Subpart J shall be served upon ex parte with the reviewing authority, amici curiae at the same times and in or the presiding officer, or any em- the same manner required for service ployee or person involved in the on parties. Any written statements of decisional process in such proceedings position and trial briefs required of with respect to the merits of that or a

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factually related proceeding. The referred to in such memorandum may file viewing authority, the presiding offi- a comment for inclusion in the docket cer, or any employee or person in- if he considers the memorandum to be volved in the decisional process of a incorrect. proceeding shall communicate ex parte with respect to the merits of that or a Subpart L—Posttermination factually related proceeding only with Proceedings persons employed by or assigned to work with them and who perform no § 81.121 Posttermination proceedings. investigative or prosecuting function in connection with the proceeding. (a) An applicant or recipient adversely affected by the order termi- § 81.114 Expeditious treatment. nating, discontinuing, or refusing Fed- Requests for expeditious treatment eral financial assistance in con- of matters pending before the respon- sequence of proceedings pursuant to sible Department official or the pre- this title may request the responsible siding officer are deemed communica- Department official for an order au- tions on the merits, and are improper thorizing payment, or permitting re- except when forwarded from parties to sumption, of Federal financial assist- a proceeding and served upon all other ance. Such request shall be in writing parties thereto. Such communications and shall affirmatively show that since should be in the form of a motion. entry of the order, it has brought its program or activity into compliance § 81.115 Matters not prohibited. with the requirements of the Act, and with the Regulation thereunder, and A request for information which shall set forth specifically, and in de- merely inquires about the status of a tail, the steps which it has taken to proceeding without discussing issues or achieve such compliance. If the respon- expressing points of view is not deemed sible Department official denies such an ex parte communication. Such re- request the applicant or recipient shall quests should be directed to the Civil be given an expeditious hearing if it so Rights hearing clerk. Communications requests in writing and specifies why it with respect to minor procedural mat- believes the responsible Department of- ters or inquiries or emergency requests ficial to have been in error. The re- for extensions of time are not deemed quest for such a hearing shall be ad- ex parte communications prohibited by dressed to the responsible Department § 81.113. Where feasible, however, such official and shall be made within 30 communications should be by letter days after the applicant or recipient is with copies to all parties. Ex parte informed that the responsible Depart- communications between a respondent ment official has refused to authorize and the responsible Department offi- payment or permit resumption of Fed- cial or the Secretary with respect to eral financial assistance. securing such respondent’s voluntary (b) In the event that a hearing shall compliance with any requirement of be requested pursuant to paragraph (a) part 80 of this title are not prohibited. of this section, the hearing procedures § 81.116 Filing of ex parte communica- established by this part shall be appli- tions. cable to the proceedings, except as oth- A prohibited communication in writ- erwise provided in this section. ing received by the Secretary, the reviewing authority, or by the presiding Subpart M—Definitions officer, shall be made public by placing it in the correspondence file of the § 81.131 Definitions. docket in the case and will not be con- The definitions contained in § 80.13 of sidered as part of the record for deci- this subtitle apply to this part, unless sion. If the prohibited communication the context otherwise requires, and the is received orally a memorandum set- term reviewing authority as used herein ting forth its substance shall be made includes the Secretary of Health and and filed in the correspondence section Human Services, with respect to action of the docket in the case. A person re- by that official under § 81.106.

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Transition provisions: (a) The amend- Subpart E—Violations of This Part and ments herein shall become effective Consequences upon publication in the FEDERAL REG- ISTER. 82.500 How are violations of this part deter- (b) These rules shall apply to any mined for recipients other than individ- proceeding or part thereof to which uals? Part 80 of this title as amended effec- 82.505 How are violations of this part determined for recipients who are individuals? tive October 19, 1967 (published in the 82.510 What actions will the Federal Gov- FEDERAL REGISTER for October 19, 1967), ernment take against a recipient deter- and as the same may be hereafter mined to have violated this part? amended, applies. In the case of any 82.515 Are there any exceptions to those ac- proceeding or part thereof governed by tions? the provisions of part 80 as that part existed prior to such amendment, and Subpart F—Definitions rules in this part 81 shall apply as if these amendments were not in effect. 82.605 Award. 82.610 Controlled substance. PART 82—GOVERNMENTWIDE RE- 82.615 Conviction. QUIREMENTS FOR DRUG-FREE 82.620 Cooperative agreement. 82.625 Criminal drug statute. WORKPLACE (FINANCIAL ASSIST- 82.630 Debarment. ANCE) 82.635 Drug-free workplace. 82.640 Employee. Subpart A—Purpose and Coverage 82.645 Federal agency or agency. Sec. 82.650 Grant. 82.100 What does this part do? 82.655 Individual. 82.105 Does this part apply to me? 82.660 Recipient. 82.110 Are any of my Federal assistance 82.665 State. awards exempt from this part? 82.670 Suspension. 82.115 Does this part affect the Federal contracts that I receive? AUTHORITY: 41 U.S.C. 701 et seq. SOURCE: 68 FR 66557, 66632, Nov. 26, 2003, un- Subpart B—Requirements for Recipients less otherwise noted. Other Than Individuals 82.200 What must I do to comply with this Subpart A—Purpose and part? 82.205 What must I include in my drug-free Coverage workplace statement? 82.210 To whom must I distribute my drug- § 82.100 What does this part do? free workplace statement? This part carries out the portion of 82.215 What must I include in my drug-free the Drug-Free Workplace Act of 1988 awareness program? 82.220 By when must I publish my drug-free (41 U.S.C. 701 et seq., as amended) that workplace statement and establish my applies to grants. It also applies the drug-free awareness program? provisions of the Act to cooperative 82.225 What actions must I take concerning agreements and other financial assist- employees who are convicted of drug vio- ance awards, as a matter of Federal lations in the workplace? 82.230 How and when must I identify work- Government policy. places? § 82.105 Does this part apply to me? Subpart C—Requirements for Recipients (a) Portions of this part apply to you Who Are Individuals if you are either— 82.300 What must I do to comply with this (1) A recipient of an assistance award part if I am an individual recipient? from the HHS; or 82.301 [Reserved] (2) A(n) HHS awarding official. (See Subpart D—Responsibilities of HHS definitions of award and recipient in Awarding Officials §§ 82.605 and 82.660, respectively.) (b) The following table shows the 82.400 What are my responsibilities as an subparts that apply to you: HHS awarding official?

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If you are . . . see subparts . . .

(1) A recipient who is not an individual ...... A, B and E. (2) A recipient who is an individual ...... A, C and E. (3) A(n) HHS awarding official ...... A, D and E.

§ 82.110 Are any of my Federal assist- (b) Second, you must identify all ance awards exempt from this part? known workplaces under your Federal This part does not apply to any awards (see § 82.230). award that the HHS Official or designee determines that the application § 82.205 What must I include in my of this part would be inconsistent with drug-free workplace statement? the international obligations of the You must publish a statement that— United States or the laws or regula- (a) Tells your employees that the un- tions of a foreign government. lawful manufacture, distribution, dispensing, possession, or use of a con- § 82.115 Does this part affect the Fed- trolled substance is prohibited in your eral contracts that I receive? workplace; It will affect future contract awards (b) Specifies the actions that you will indirectly if you are debarred or sus- take against employees for violating pended for a violation of the require- that prohibition; and ments of this part, as described in (c) Lets each employee know that, as § 82.510(c). However, this part does not apply directly to procurement con- a condition of employment under any tracts. The portion of the Drug-Free award, he or she: Workplace Act of 1988 that applies to (1) Will abide by the terms of the Federal procurement contracts is car- statement; and ried out through the Federal Acquisi- (2) Must notify you in writing if he or tion Regulation in chapter 1 of Title 48 she is convicted for a violation of a of the Code of Federal Regulations (the criminal drug statute occurring in the drug-free workplace coverage currently workplace and must do so no more is in 48 CFR part 23, subpart 23.5). than five calendar days after the conviction. Subpart B—Requirements for Recipients Other Than Individuals § 82.210 To whom must I distribute my drug-free workplace statement? § 82.200 What must I do to comply with You must require that a copy of the this part? statement described in § 82.205 be given There are two general requirements to each employee who will be engaged if you are a recipient other than an in- in the performance of any Federal dividual. award. (a) First, you must make a good faith effort, on a continuing basis, to main- § 82.215 What must I include in my tain a drug-free workplace. You must drug-free awareness program? agree to do so as a condition for receiv- You must establish an ongoing drug- ing any award covered by this part. free awareness program to inform em- The specific measures that you must ployees about— take in this regard are described in (a) The dangers of drug abuse in the more detail in subsequent sections of workplace; this subpart. Briefly, those measures are to— (b) Your policy of maintaining a (1) Publish a drug-free workplace drug-free workplace; statement and establish a drug-free (c) Any available drug counseling, re- awareness program for your employees habilitation, and employee assistance (see §§ 82.205 through 82.220); and programs; and (2) Take actions concerning employ- (d) The penalties that you may im- ees who are convicted of violating drug pose upon them for drug abuse viola- statutes in the workplace (see § 82.225). tions occurring in the workplace.

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§ 82.220 By when must I publish my described in § 82.205 and an ongoing drug-free workplace statement and awareness program as described in establish my drug-free awareness § 82.215, you must publish the state- program? ment and establish the program by the If you are a new recipient that does time given in the following table: not already have a policy statement as

If . . . then you . . .

(a) The performance period of the award is less than 30 days must have the policy statement and program in place as soon as possible, but before the date on which performance is expected to be completed. (b) The performance period of the award is 30 days or more ... must have the policy statement and program in place within 30 days after award. (c) You believe there are extraordinary circumstances that will may ask the HHS awarding official to give you more time to do require more than 30 days for you to publish the policy state- so. The amount of additional time, if any, to be given is at ment and establish the awareness program. the discretion of the awarding official.

§ 82.225 What actions must I take con- § 82.230 How and when must I identify cerning employees who are con- workplaces? victed of drug violations in the workplace? (a) You must identify all known workplaces under each HHS award. A There are two actions you must take failure to do so is a violation of your if an employee is convicted of a drug drug-free workplace requirements. You violation in the workplace: may identify the workplaces (a) First, you must notify Federal l agencies if an employee who is engaged (1) To the HHS official that is mak- in the performance of an award informs ing the award, either at the time of ap- you about a conviction, as required by plication or upon award; or § 82.205(c)(2), or you otherwise learn of (2) In documents that you keep on the conviction. Your notification to file in your offices during the perform- the Federal agencies mustl ance of the award, in which case you (1) Be in writing; must make the information available (2) Include the employee’s position for inspection upon request by HHS of- title; ficials or their designated representa- (3) Include the identification num- tives. ber(s) of each affected award; (b) Your workplace identification for (4) Be sent within ten calendar days an award must include the actual ad- after you learn of the conviction; and dress of buildings (or parts of build- (5) Be sent to every Federal agency ings) or other sites where work under on whose award the convicted em- the award takes place. Categorical de- ployee was working. It must be sent to scriptions may be used (e.g., all vehi- every awarding official or his or her of- cles of a mass transit authority or ficial designee, unless the Federal State highway department while in op- agency has specified a central point for the receipt of the notices. eration, State employees in each local (b) Second, within 30 calendar days of unemployment office, performers in learning about an employee’s convic- concert halls or radio studios). tion, you must eitherl (c) If you identified workplaces to (1) Take appropriate personnel action the HHS awarding official at the time against the employee, up to and includ- of application or award, as described in ing termination, consistent with the paragraph (a)(1) of this section, and requirements of the Rehabilitation Act any workplace that you identified of 1973 (29 U.S.C. 794), as amended; or changes during the performance of the (2) Require the employee to partici- award, you must inform the HHS pate satisfactorily in a drug abuse as- awarding official. sistance or rehabilitation program approved for these purposes by a Federal, State or local health, law enforcement, or other appropriate agency.

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Subpart C—Requirements for (b) The number of convictions of the Recipients Who Are Individuals recipient’s employees for violating criminal drug statutes in the work- § 82.300 What must I do to comply with place is large enough to indicate that this part if I am an individual re- the recipient has failed to make a good cipient? faith effort to provide a drug-free As a condition of receiving a(n) HHS workplace. award, if you are an individual recipient, you must agree that— § 82.505 How are violations of this part determined for recipients who are (a) You will not engage in the unlaw- individuals? ful manufacture, distribution, dispensing, possession, or use of a con- An individual recipient is in viola- trolled substance in conducting any action of the requirements of this part if tivity related to the award; and the HHS Official or designee deter- (b) If you are convicted of a criminal mines, in writing, that— drug offense resulting from a violation (a) The recipient has violated the re- occurring during the conduct of any quirements of subpart C of this part; or award activity, you will report the con- (b) The recipient is convicted of a viction: criminal drug offense resulting from a (1) In writing. violation occurring during the conduct (2) Within 10 calendar days of the of any award activity. conviction. (3) To the HHS awarding official or § 82.510 What actions will the Federal Government take against a recipi- other designee for each award that you ent determined to have violated currently have, unless § 82.301 or the this part? award document designates a central If a recipient is determined to have point for the receipt of the notices. violated this part, as described in When notice is made to a central point, § 82.500 or § 82.505, the HHS may take it must include the identification num- one or more of the following actions— ber(s) of each affected award. (a) Suspension of payments under the § 82.301 [Reserved] award; (b) Suspension or termination of the Subpart D—Responsibilities of HHS award; and (c) Suspension or debarment of the Awarding Officials recipient under 45 CFR Part 76, for a § 82.400 What are my responsibilities period not to exceed five years. as a(n) HHS awarding official? [68 FR 66557, 66633, Nov. 26, 2003] As a(n) HHS awarding official, you must obtain each recipient’s agree- § 82.515 Are there any exceptions to ment, as a condition of the award, to those actions? comply with the requirements in— The the Secretary of HHS may waive (a) Subpart B of this part, if the re- with respect to a particular award, in cipient is not an individual; or writing, a suspension of payments (b) Subpart C of this part, if the re- under an award, suspension or termi- cipient is an individual. nation of an award, or suspension or debarment of a recipient if the Sec- Subpart E—Violations of this Part retary of HHS determines that such a and Consequences waiver would be in the public interest. This exception authority cannot be del- § 82.500 How are violations of this part egated to any other official. determined for recipients other than individuals? Subpart F—Definitions A recipient other than an individual is in violation of the requirements of § 82.605 Award. this part if the HHS Official or des- Award means an award of financial ignee determines, in writing, that— assistance by the HHS or other Federal (a) The recipient has violated the re- agency directly to a recipient. quirements of subpart B of this part; or (a) The term award includes:

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(1) A Federal grant or cooperative § 82.625 Criminal drug statute. agreement, in the form of money or Criminal drug statute means a Federal property in lieu of money. or non-Federal criminal statute involv- (2) A block grant or a grant in an en- ing the manufacture, distribution, dis- titlement program, whether or not the grant is exempted from coverage under pensing, use, or possession of any con- the Governmentwide rule 45 CFR Part trolled substance. 92 that implements OMB Circular A–102 § 82.630 Debarment. (for availability, see 5 CFR 1310.3) and specifies uniform administrative re- Debarment means an action taken by quirements. a Federal agency to prohibit a recipi- (b) The term award does not include: ent from participating in Federal Gov- (1) Technical assistance that provides ernment procurement contracts and services instead of money. covered nonprocurement transactions. (2) Loans. A recipient so prohibited is debarred, (3) Loan guarantees. in accordance with the Federal Acqui- (4) Interest subsidies. sition Regulation for procurement con- (5) Insurance. tracts (48 CFR part 9, subpart 9.4) and (6) Direct appropriations. the common rule, Government-wide (7) Veterans’ benefits to individuals Debarment and Suspension (Non- (i.e., any benefit to veterans, their fam- procurement), that implements Execu- ilies, or survivors by virtue of the serv- tive Order 12549 and Executive Order ice of a veteran in the Armed Forces of 12689. the United States). § 82.635 Drug-free workplace. [68 FR 66557, 66633, Nov. 26, 2003] Drug-free workplace means a site for § 82.610 Controlled substance. the performance of work done in connection with a specific award at which Controlled substance means a con- employees of the recipient are prohib- trolled substance in schedules I ited from engaging in the unlawful through V of the Controlled Substances manufacture, distribution, dispensing, Act (21 U.S.C. 812), and as further de- possession, or use of a controlled sub- fined by regulation at 21 CFR 1308.11 stance. through 1308.15. § 82.640 Employee. § 82.615 Conviction. (a) Employee means the employee of a Conviction means a finding of guilt recipient directly engaged in the per- (including a plea of nolo contendere) or formance of work under the award, in- imposition of sentence, or both, by any cluding— judicial body charged with the responsibility to determine violations of the (1) All direct charge employees; Federal or State criminal drug stat- (2) All indirect charge employees, un- utes. less their impact or involvement in the performance of work under the award § 82.620 Cooperative agreement. is insignificant to the performance of Cooperative agreement means an award the award; and of financial assistance that, consistent (3) Temporary personnel and consult- with 31 U.S.C. 6305, is used to enter into ants who are directly engaged in the the same kind of relationship as a performance of work under the award grant (see definition of grant in and who are on the recipient’s payroll. § 82.650), except that substantial in- (b) This definition does not include volvement is expected between the workers not on the payroll of the re- Federal agency and the recipient when cipient (e.g., volunteers, even if used to carrying out the activity contemplated meet a matching requirement; consult- by the award. The term does not in- ants or independent contractors not on clude cooperative research and devel- the payroll; or employees of subrecipi- opment agreements as defined in 15 ents or subcontractors in covered U.S.C. 3710a. workplaces).

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§ 82.645 Federal agency or agency. pended, in accordance with the Federal Acquisition Regulation for procure- Federal agency or agency means any United States executive department, ment contracts (48 CFR part 9, subpart military department, government cor- 9.4) and the common rule, Government- poration, government controlled cor- wide Debarment and Suspension (Non- poration, any other establishment in procurement), that implements Execu- the executive branch (including the Ex- tive Order 12549 and Executive Order ecutive Office of the President), or any 12689. Suspension of a recipient is a dis- independent regulatory agency. tinct and separate action from suspension of an award or suspension of pay- § 82.650 Grant. ments under an award. Grant means an award of financial assistance that, consistent with 31 U.S.C. PART 83—REGULATION FOR THE 6304, is used to enter into a relation- ADMINISTRATION AND EN- ship— FORCEMENT OF SECTIONS 799A (a) The principal purpose of which is AND 845 OF THE PUBLIC HEALTH to transfer a thing of value to the re- SERVICE ACT cipient to carry out a public purpose of support or stimulation authorized by a Subpart A—Purposes; Definitions; law of the United States, rather than Coverage to acquire property or services for the Federal Government’s direct benefit or Sec. use; and 83.1 Purposes. 83.2 Definitions. (b) In which substantial involvement 83.3 Remedial and affirmative actions. is not expected between the Federal 83.4 Coverage. agency and the recipient when carrying 83.5 Effect of title IX of the Education out the activity contemplated by the Amendments of 1972. award. 83.6–83.9 [Reserved]

§ 82.655 Individual. Subpart B—Discrimination in Admissions Individual means a natural person. Prohibited 83.10 General obligations. § 82.660 Recipient. 83.11 Discriminatory acts prohibited. Recipient means any individual, cor- 83.12 Recruitment. poration, partnership, association, unit 83.13 State law and licensure requirements. of government (except a Federal agen- 83.14 Development and dissemination of nondiscrimination policy. cy) or legal entity, however organized, 83.15 Designation by entity of responsible that receives an award directly from a employee and adoption of grievance pro- Federal agency. cedures. 83.16–83.19 [Reserved] § 82.665 State. State means any of the States of the Subpart C—Procedures [Interim] United States, the District of Colum- 83.20 Interim procedures. bia, the Commonwealth of Puerto Rico, or any territory or possession of the AUTHORITY: Sec. 215(b), Public Health Serv- ice Act (42 U.S.C. 216(b)). United States. SOURCE: 40 FR 28573, July 7, 1975, unless § 82.670 Suspension. otherwise noted. Suspension means an action taken by a Federal agency that immediately Subpart A—Purposes; Definitions; prohibits a recipient from partici- Coverage pating in Federal Government procurement contracts and covered non- § 83.1 Purposes. procurement transactions for a tem- (a) The purposes of this part are (1) porary period, pending completion of to effectuate the provisions of sections an investigation and any judicial or ad- 799A and 845 of the Public Health Serv- ministrative proceedings that may ice Act, which forbid the extension of ensue. A recipient so prohibited is sus- Federal support under title VII or VIII

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of that Act to any entity of the types (3) A school or college of a training described in those sections unless that center for an allied health profession, entity submits to the Secretary of as defined by section 795 of the Act, or Health and Human Services an assur- of another institution of undergraduate ance satisfactory to the Secretary that education which school or college can it will not discriminate on the basis of provide a training program; sex in the admission of individuals to (4) An affiliated hospital, as defined its training programs, and (2) to imple- by section 724 or 795 of the Act; and ment the policy of the Secretary that (5) Any other institution, organiza- no Federal support will be extended tion, consortium, or agency which is under those titles to any other entity eligible to receive Federal support. unless that entity submits to the Sec- (g) Federal support means assistance retary an assurance satisfactory to the extended after November 18, 1971, under Secretary that it will not discriminate title VII or VIII of the Act to an entity on the basis of sex in the admission of by means of a grant to, a contract individuals to its training programs. with, or a loan guarantee or interest (b) The objective of this part is to subsidy payment made on behalf of, abolish use of sex as a criterion in the such entity. admission of individuals to all training (h) Federally supported entity means programs operated by an entity which an entity which receives Federal sup- receives support under title VII or VIII port. of the Act, and thereby to foster max- (i) Reviewing authority means that imum use of all available human re- component of the Department to which sources in meeting the Nation’s needs the Secretary delegates authority to for qualified health personnel. review the decision of an administrative law judge in a proceeding arising § 83.2 Definitions. under this part. As used in this part the term— (j) Secretary means the Secretary of (a) Act means the Public Health Serv- Health and Human Services. ice Act. (k) Training program means a pro- (b) Administrative law judge means a gram of training described by section person appointed by the Reviewing Au- 724(4) of the Act, a program of edu- thority to preside over a hearing held cation described by, or specified by reg- under this part. ulations pursuant to, section 795(1) of (c) Assurance commitment clause the Act, a program of education de- means a clause in an invitation for a scribed by section 843(c), 843(d), or contract offer extended by the Federal 843(e) of the Act, and a program leading Government under title VII or VIII of to any license or certification requisite the Act which, when executed by an en- to the practice of a health profession tity as part of such offer, becomes, for which a degree specified in any such upon acceptance of such offer by the section is granted. Federal Government, a contractual obligation of such entity to comply with § 83.3 Remedial and affirmative ac- its assurance submitted to the Director tions. under this part. (a) Remedial action. If the Director (d) Department means the Department finds that an entity has discriminated of Health and Human Services. against persons on the basis of sex in (e) Director means the Director of the any of its training programs, such enti- Office for Civil Rights of the Depart- ty shall take such remedial action as ment. the Director deems necessary to over- (f) Entity means (1) a school of medi- come the effects of such discrimina- cine, school of dentistry, school of os- tion. teopathy, school of pharmacy, school (b) Affirmative action. In the absence of optometry, school of podiatry, of a finding of discrimination on the school of veterinary medicine, or basis of sex in a training program, an school of public health, as defined by entity may take affirmative action to section 724 of the Act; overcome the effects of conditions (2) A school of nursing, as defined by which resulted in limited participation section 843 of the Act; therein by persons of a particular sex.

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§ 83.4 Coverage. satisfactory, an assurance of compli- (a) If an entity receives Federal sup- ance with this part. The preceding sen- port for any of its training programs, tence shall not apply with respect to all of its training programs thereby be- any real or personal property for which come subject to this part. payments have been recaptured by the (b) The obligation imposed by this United States under title VII or VIII of part on a federally supported entity the Act, with respect to any other not to discriminate on the basis of sex property for which the transferring en- in the admission of individuals to a tity has refunded to the Federal Gov- training program includes not only the ernment the Federal share of the fair obligation not to discriminate on such market value of such property, or with basis in the selection of individuals for respect to any personal property which such program, but also the obligation has only scrap value to both the entity not to discriminate on such basis and the agency, organization or indi- against individuals after their selec- vidual to which the property is to be tion for such program. transferred. (c) The obligation imposed by this § 83.5 Effect of title IX of the Edu- part on a federally supported entity cation Amendments of 1972. not to discriminate on the basis of sex against an individual who is an appli- The obligations imposed by this part cant for, or is enrolled in, a training are independent of obligations imposed program is applicable to the same ex- by or pursuant to title IX of the Edu- tent to the actions of such entity with cation Amendments of 1972. respect to an applicant for, or a stu- §§ 83.6–83.9 [Reserved] dent enrolled in, an undergraduate program of education of such entity if individuals enrolled in such program Subpart B—Discrimination in must complete all or a part of such Admissions Prohibited programs to be eligible for admission to an undergraduate training program § 83.10 General obligations. of such entity. (a) Eligibility for support. No entity (d) An entity shall not discriminate will be provided Federal support unless on the basis of sex in violation of this such entity has furnished the Director part for as long as such entity receives assurances satisfactory to him or her or benefits from Federal support. For that it will not discriminate on the purposes of the preceding sentence, an basis of sex, in violation of this part, in entity shall be deemed to continue to the admission of individuals to each of receive or benefit from Federal support its training programs. for as long as it retains ownership, pos- (b) Eliminating the effects of discrimi- session, or use of either real or per- nation. An assurance of compliance sonal property and which was acquired with this part will not be satisfactory in whole or in part with Federal sup- to the Director if the entity submitting port. If an entity receives value for such assurance fails to take whatever property which was acquired in whole remedial action in accordance with or in part with Federal support and § 83.3(a) that is necessary for such enti- such value is applied toward the acqui- ty to eliminate the effects of any dis- sition of other property, such entity crimination on the basis of sex in the shall be deemed to continue to receive admission of individuals to its training or benefit from such support for as long programs that such entity practiced as such entity retains ownership, use, prior to the submission to the Director or possession of such other property. of such assurance, or practices at the (e) An entity shall not transfer prop- time of or subsequent to such submis- erty which was acquired, constructed, sion. The Director may require such altered, repaired, expanded, or ren- entity, as a condition to determining ovated in whole or in part with Federal that its assurance is, or remains, satis- support unless the agency, organiza- factory, to take specific actions, or to tion, or individual to whom such prop- submit to him or her specific informa- erty is to be transferred has submitted tion, bearing upon compliance with to the Director, and he or she has found this part.

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§ 83.11 Discriminatory acts prohibited. nation of pregnancy or recovery there- (a) General. No person shall, on the from in the same manner and under the basis of sex, be excluded from partici- same policies as any other temporary pation in, be denied the benefits of, or disability or physical condition; and be subjected to discrimination under (4) Shall not make pre-admission in- any academic, extracurricular, re- quiry as to the marital status of an ap- search, occupational training, or other plicant for admission, including wheth- training program or activity operated er such applicant is ‘‘Miss,’’ or ‘‘Mrs.’’ by an entity. A recipient may make pre-admission (b) Discrimination in selection. In de- inquiry as to the sex of an applicant for termining whether an individual satis- admission, but only if such inquiry is fies any enrollment, eligibility, or made equally of such applicants of both other condition for selection for a sexes and if the results of such inquiry training program, a federally supported are not used in connection with dis- entity shall not: crimination prohibited by this part. (1) On the basis of sex, given pref- (e) Preference to students from other in- erence to one individual over another stitutions in admission. An entity shall by ranking applicants on such basis, or not give preference to applicants for otherwise give such preference; or admission, on the basis of attendance (2) Apply numerical limitations upon at any educational institution or other the number or proportion of persons of school or entity which admits as stu- either sex who may be admitted; or dents only or predominantly members (3) Otherwise treat one individual dif- of one sex, if the giving of such pref- ferently from another on the basis of erence has the effect of discriminating sex. on the basis of sex in violation of this (c) Testing. A federally supported en- part. tity shall not administer or operate (f) Discrimination in the provision of any test or use any criterion for admis- benefits and services—(1) General. Except sion which has a disproportionately ad- as otherwise provided in this part in verse effect on persons on the basis of providing financial aid or any other sex unless the use of such test or cri- benefit, or in providing any service, to terion is shown validly to predict suc- an applicant for a training program or cess in the training program or activ- to a student enrolled in such program, ity in question and alternative tests or no federally supported entity shall on criteria which do not have such a dis- the basis of sex: proportionately adverse effect are (i) Treat one individual differently shown to be unavailable. from another in determining whether (d) Prohibitions relating to marital or such individual satisfies any require- parental status. In determining whether ment or condition for the provision of a person satisfies any policy or cri- such benefit of service; terion for admission, or in making any (ii) Provide a different benefit or offer of admission, in providing finan- service or provide a benefit or a service cial aid or any other benefit, an entity in a different manner; to which this subpart applies: (iii) Deny an individual any such ben- (1) Shall not apply any rule con- efit or service; cerning the actual or potential paren- (iv) Subject an individual to separate tal, family, or marital status of a stu- treatment or rules of behavior; dent or applicant which treats persons (v) Discriminate against any indi- differently on the basis of sex; vidual by assisting an agency, organi- (2) Shall not discriminate against or zation, or individual in providing, in a exclude any person on the basis of manner which discriminates on the pregnancy, childbirth, termination of basis of sex, a benefit or service to ap- pregnancy or recovery therefrom, or plicants for or students enrolled in a establish or follow any rule or practice training program; or which so discriminates or excludes; (vi) Otherwise limit any individual in (3) Shall treat pregnancy, childbirth, the enjoyment of any right, privilege, termination of pregnancy and any tem- advantage, or opportunity. porary disabilities related to or result- (2) Financial aid established by certain ing from pregnancy, childbirth, termi- legal instruments. (i) A recipient may

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administer or assist in the administra- (5) An entity which, through solicitation of scholarships, fellowships, or tion, listing, approval of housing, or other forms of financial assistance es- otherwise, assists any agency, organi- tablished pursuant to domestic or for- zation, or person in making housing eign wills, trusts, bequests, or similar available to any of its students, shall legal instruments or by acts of a for- take reasonable action to ensure that eign government which requires that such housing is provided to students of awards be made to members of a par- one sex, when compared to that pro- ticular sex specified therein: Provided, vided to students of the other sex, is as That the overall effect of the award of a whole: (i) Proportionate in quantity such sex-restricted scholarships, fel- and (ii) comparable in quality and cost lowships, and other forms of financial to the student. An entity may render assistance does not discriminate on the such assistance to any agency, organi- basis of sex. zation, or person which provides all or (ii) To ensure nondiscriminatory part of such housing to students only awards of assistance as required in of one sex. paragraph (f)(2)(i) of this section, re- (h) Inter-institutional programs. If a cipients shall develop and use proce- federally supported entity aids partici- dures under which: pation, by any applicant for or student (A) Students are selected for award of enrolled in any of its training pro- financial assistance on the basis of grams, in any program or activity of non-discriminatory criteria and not on another organization or agency, such the basis of availability of funds re- entity shall: stricted to members of a particular sex; (1) Develop and implement a proce- (B) An appropriate sex-restricted dure to assure itself that such organi- scholarship, fellowship, or other form zation or agency takes no action with of financial assistance is allocated to respect to such applicants or students each student selected under paragraph which this part would prohibit such en- (f)(2)(ii) (A) of this section; and tity from taking; and (C) No student is denied the award (2) Not aid such participation if such for which he or she was selected under organization or agency takes such ac- paragraph (f)(2)(ii)(A) of this section tion. because of the absence of a scholarship, (i) Discrimination in employment pro- fellowship, or other form of financial hibited. A federally supported entity assistance designated for a member of shall not discriminate on the basis of that student’s sex. sex in employment practices relating (g) Housing. (1) An entity shall not, to its professional and other staff who on the basis of sex, apply different work directly with applicants for or rules or regulations, impose different students enrolled in any of its training fees or requirements, or offer different programs. The provisions of this sub- services or benefits related to housing, part apply to: except as provided in this subsection (1) Recruitment, advertising, and the (including housing provided only to process of application for employment; married students). (2) Hiring, upgrading, promotion, (2) An entity may provide separate consideration for and award of tenure, housing on the basis of sex. demotion, transfer, layoff, termi- (3) Housing provided by an entity to nation, right of return from layoff, and students of one sex, when compared to rehiring; that provided to students of the other (3) Rates of pay or any other form of sex, shall be as a whole: (i) Propor- compensation, and changes in com- tionate in quantity to the number of pensation; students of that sex applying for such (4) Job assignments, classifications housing; and (ii) comparable in quality and structure, including position de- and cost to the student. scriptions, lines of progression, and se- (4) An entity shall not on the basis of niority lists; sex, administer different policies or (5) The terms of any collective bar- practices concerning occupancy by its gaining agreement; students of housing other than that (6) Granting and return from leaves provided by such recipient. of absence, pregnancy leave, leave for

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persons of either sex to care for chil- discrimination on the basis of sex, and dren or dependents, or any other leave; require such representatives to adhere (7) Fringe benefits available by vir- to such policy. tue of employment, whether or not administered by the recipient; § 83.13 State law and licensure re- (8) Selection and financial support quirements. for training, including apprenticeship, The obligation of an entity to comply professional meetings, conferences, and with this part is not obviated or allevi- other related activities, selection for ated by any State or local law which tuition assistance, selection for would render an applicant for or stu- sabbaticals and leaves of absence to dent enrolled in a training program in- pursue training; eligible on the basis of sex for any li- (9) Employer-sponsored activities, in- cense or certificate requisite to the cluding social or recreational pro- practice of the health profession for grams; and which such applicant seeks, or student (10) Any other term, condition, or pursues, training. privilege of employment. § 83.14 Development and dissemina- § 83.12 Recruitment. tion of nondiscrimination policy. (a) Comparable recruitment. A feder- (a) A federally supported entity shall ally supported entity shall, with re- develop a written policy statement of spect to each of its training programs, nondiscrimination on the basis of sex, make comparable efforts to recruit in accordance with this part, and shall members of each sex in the geographic implement specific and continuing area from which such entity attracts steps to publicize such statement to its students. A federally supported en- applicants for admission or employ- tity shall not recruit for any of its ment, students, employees, and sources training programs exclusively or pri- of referral of applicants for admission marily at organizations or agencies or employment. which admit as members or students, (b) Each federally supported entity or which provide a service for, only shall prominently include a statement members of one sex unless such entity of the policy described in paragraph (a) can demonstrate that such action is of this section in each announcement, part of a recruitment program which bulletin, catalogue, and application does not have the effect of discrimi- form which it makes available to any nating on the basis of sex in selection person of a type described in paragraph for a training program. (a) of this section, or which is other- (b) Recruitment practices. A federally wise used in connection with the re- supported entity shall: cruitment of students or employees (1) Prominently include a statement who work directly with students and of its policy of nondiscrimination on applicants for admission. the basis of sex in each announcement, (c) A federally supported entity shall bulletin, catalogue, or application form not use or distribute a publication of which describes the training program the type described in this section of such entity or is used in connection which suggests, by text or illustration, with the recruitment of employees who that such recipient treats applicants, will work directly with applicants for students, or employees differently on or students enrolled in a training pro- the basis of sex except as such treat- gram; ment is permitted by this part. (2) Distribute without discrimination on the basis of sex any announcements, § 83.15 Designation by entity of re- bulletins, catalogues, or other mate- sponsible employee and adoption of rials used in connection with the re- grievance procedures. cruitment of students for a training (a) Designation of responsible employee. program or employees who will work A federally supported entity shall des- directly with applicants for such pro- ignate at least one employee to coordi- gram or such students; and nate its efforts to comply with and (3) Apprise each of its recruitment carry out its responsibilities under this representatives of its policy of non- part, including any investigation of

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any complaint communicated to such 84.8 Notice. entity alleging its noncompliance with 84.9 Administrative requirements for small this part or alleging any action which recipients. 84.10 Effect of State or local law or other would be prohibited by this part. The requirements and effect of employment entity shall notify all of its students opportunities. and employees who work directly with students and applicants for admission Subpart B—Employment Practices of the name, office address and telephone number of the employee or em- 84.11 Discrimination prohibited. 84.12 Reasonable accommodation. ployees appointed pursuant to this 84.13 Employment criteria. paragraph. 84.14 Preemployment inquiries. (b) Complaint procedure of entity. A 84.15–84.20 [Reserved] federally supported entity shall adopt and publish grievance procedures pro- Subpart C—Accessibility viding for prompt and equitable resolu- 84.21 Discrimination prohibited. tion of student and employee com- 84.22 Existing facilities. plaints alleging any action which 84.23 New construction. would be prohibited by this part. Such 84.24–84.30 [Reserved] procedures shall be in writing and available to all present and prospective Subpart D—Preschool, Elementary, and students and employees. Secondary Education

§§ 83.16–83.19 [Reserved] 84.31 Application of this subpart. 84.32 Location and notification. 84.33 Free appropriate public education. Subpart C—Procedures [Interim] 84.34 Educational setting. 84.35 Evaluation and placement. § 83.20 Interim procedures. 84.36 Procedural safeguards. For the purposes of implementing 84.37 Nonacademic services. 84.38 Preschool and adult education. this part during the period between its 84.39 Private education. effective date and the final issuance by 84.40 [Reserved] the Department of a consolidated procedural regulation applicable to sec- Subpart E—Postsecondary Education tions 704 and 845 of the Act and other civil rights authorities administered by 84.41 Application of this subpart. 84.42 Admissions and recruitment. the Department, the procedural provi- 84.43 Treatment of students; general. sions applicable to title VI of the Civil 84.44 Academic adjustments. Rights Act of 1964 are hereby adopted 84.45 Housing. and incorporated herein by reference. 84.46 Financial and employment assistance These procedures may be found at 45 to students. CFR 80.6 through 80.11 and 45 CFR Part 84.47 Nonacademic services. 81. 84.48–84.50 [Reserved] Subpart F—Health, Welfare, and Social PART 84—NONDISCRIMINATION Services ON THE BASIS OF HANDICAP IN 84.51 Application of this subpart. PROGRAMS OR ACTIVITIES RE- 84.52 Health, welfare, and other social serv- CEIVING FEDERAL FINANCIAL ices. ASSISTANCE 84.53 Drug and alcohol addicts. 84.54 Education of institutionalized persons. Subpart A—General Provisions 84.55 Procedures relating to health care for handicapped infants. Sec. 84.56–84.60 [Reserved] 84.1 Purpose. 84.2 Application. Subpart G—Procedures 84.3 Definitions. 84.4 Discrimination prohibited. 84.61 Procedures. 84.5 Assurances required. APPENDIX A TO PART 84—ANALYSIS OF FINAL 84.6 Remedial action, voluntary action, and REGULATION self-evaluation. APPENDIX B TO PART 84—GUIDELINES FOR 84.7 Designation of responsible employee ELIMINATING DISCRIMINATION AND DENIAL and adoption of grievance procedures. OF SERVICES ON THE BASIS OF RACE,

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COLOR, NATIONAL ORIGIN, SEX, AND HAND- (g) Applicant for assistance means one ICAP IN VOCATIONAL EDUCATION PROGRAMS who submits an application, request, or [NOTE] plan required to be approved by a De- APPENDIX C TO PART 84—GUIDELINES RELAT- partment official or by a recipient as a ING TO HEALTH CARE FOR HANDICAPPED INFANTS condition to becoming a recipient. (h) Federal financial assistance means AUTHORITY: 20 U.S.C. 1405; 29 U.S.C. 794; 42 U.S.C. 290dd–2; 21 U.S.C. 1174. any grant, loan, contract (other than a procurement contract or a contract of SOURCE: 42 FR 22677, May 4, 1977, unless insurance or guaranty), or any other otherwise noted. arrangement by which the Department provides or otherwise makes available Subpart A—General Provisions assistance in the form of: (1) Funds; § 84.1 Purpose. (2) Services of Federal personnel; or The purpose of this part is to effec- (3) Real and personal property or any tuate section 504 of the Rehabilitation interest in or use of such property, in- Act of 1973, which is designed to elimi- cluding: nate discrimination on the basis of handicap in any program or activity (i) Transfers or leases of such prop- receiving Federal financial assistance. erty for less than fair market value or for reduced consideration; and § 84.2 Application. (ii) Proceeds from a subsequent This part applies to each recipient of transfer or lease of such property if the Federal financial assistance from the Federal share of its fair market value Department of Health and Human is not returned to the Federal Govern- Services and to the program or activity ment. that receives such assistance. (i) Facility means all or any portion of buildings, structures, equipment, [42 FR 22677, May 4, 1977, as amended at 70 roads, walks, parking lots, or other FR 24319, May 9, 2005] real or personal property or interest in § 84.3 Definitions. such property. (j) Handicapped person. (1) Handi- As used in this part, the term: capped persons means any person who (a) The Act means the Rehabilitation (i) has a physical or mental impair- Act of 1973, Pub. L. 93–112, as amended ment which substantially limits one or by the Rehabilitation Act Amendments more major life activities, (ii) has a of 1974, Pub. L. 93–516, 29 U.S.C. 794. (b) Section 504 means section 504 of record of such an impairment, or (iii) is the Act. regarded as having such an impair- (c) Education of the Handicapped Act ment. means that statute as amended by the (2) As used in paragraph (j)(1) of this Education for all Handicapped Children section, the phrase: Act of 1975, Pub. L. 94–142, 20 U.S.C. (i) Physical or mental impairment 1401 et seq. means (A) any physiological disorder (d) Department means the Department or condition, cosmetic disfigurement, of Health and Human Services. or anatomical loss affecting one or (e) Director means the Director of the more of the following body systems: Office for Civil Rights of the Depart- neurological; musculoskeletal; special ment. sense organs; respiratory, including (f) Recipient means any state or its speech organs; cardiovascular; repro- political subdivision, any instrumen- ductive, digestive, genito-urinary; tality of a state or its political subdivi- hemic and lymphatic; skin; and endo- sion, any public or private agency, in- crine; or (B) any mental or psycho- stitution, organization, or other enti- logical disorder, such as mental retar- ty, or any person to which Federal fi- dation, organic brain syndrome, emo- nancial assistance is extended directly tional or mental illness, and specific or through another recipient, including learning disabilities. any successor, assignee, or transferee (ii) Major life activities means func- of a recipient, but excluding the ulti- tions such as caring for one’s self, per- mate beneficiary of the assistance. forming manual tasks, walking, seeing,

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hearing, speaking, breathing, learning, other corporation, partnership, private and working. organization, or sole proprietorship; or (iii) Has a record of such an impairment (4) Any other entity which is estab- means has a history of, or has been lished by two or more of the entities misclassified as having, a mental or described in paragraph (k)(1), (2), or (3) physical impairment that substantially of this section; any part of which is ex- limits one or more major life activi- tended Federal financial assistance. ties. (l) Qualified handicapped person (iv) Is regarded as having an impair- means: ment means (A) has a physical or men- (1) With respect to employment, a tal impairment that does not substan- handicapped person who, with reason- tially limit major life activities but able accommodation, can perform the that is treated by a recipient as consti- essential functions of the job in ques- tuting such a limitation; (B) has a tion; physical or mental impairment that (2) With respect to public preschool substantially limits major life activi- elementary, secondary, or adult edu- ties only as a result of the attitudes of cational services, a handicappped per- others toward such impairment; or (C) son (i) of an age during which non- has none of the impairments defined in handicapped persons are provided such paragraph (j)(2)(i) of this section but is services, (ii) of any age during which it treated by a recipient as having such is mandatory under state law to pro- an impairment. vide such services to handicapped per- (k) Program or activity means all of sons, or (iii) to whom a state is re- the operations of— quired to provide a free appropriate (1)(i) A department, agency, special public education under section 612 of purpose district, or other instrumen- the Education of the Handicapped Act; tality of a State or of a local govern- and ment; or (3) With respect to postsecondary and (ii) The entity of such State or local vocational education services, a handi- government that distributes Federal fi- capped person who meets the academic nancial assistance and each such de- and technical standards requisite to partment or agency (and each other admission or participation in the re- State or local government entity) to cipient’s education program or activ- which the assistance is extended, in the ity; case of assistance to a State or local (4) With respect to other services, a government; handicapped person who meets the es- (2)(i) A college, university, or other sential eligibility requirements for the postsecondary institution, or a public receipt of such services. system of higher education; or (m) Handicap means any condition or characteristic that renders a person a (ii) A local educational agency (as de- handicapped person as defined in para- fined in 20 U.S.C. 7801), system of voca- graph (j) of this section. tional education, or other school system; (29 U.S.C. 794(b)) (3)(i) An entire corporation, partner- [42 FR 22677, May 4, 1977, as amended at 70 ship, or other private organization, or FR 24319, May 9, 2005] an entire sole proprietorship— (A) If assistance is extended to such § 84.4 Discrimination prohibited. corporation, partnership, private orga- (a) General. No qualified handicapped nization, or sole proprietorship as a person shall, on the basis of handicap, whole; or be excluded from participation in, be (B) Which is principally engaged in denied the benefits of, or otherwise be the business of providing education, subjected to discrimination under any health care, housing, social services, or program or activity which receives parks and recreation; or Federal financial assistance. (ii) The entire plant or other com- (b) Discriminatory actions prohibited. parable, geographically separate facil- (1) A recipient, in providing any aid, ity to which Federal financial assist- benefit, or service, may not, directly or ance is extended, in the case of any through contractual, licensing, or

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other arrangements, on the basis of services that are not separate or dif- handicap: ferent. (i) Deny a qualified handicapped per- (4) A recipient may not, directly or son the opportunity to participate in through contractual or other arrange- or benefit from the aid, benefit, or ments, utilize criteria or methods of service; administration (i) that have the effect (ii) Afford a qualified handicapped of subjecting qualified handicapped person an opportunity to participate in persons to discrimination on the basis or benefit from the aid, benefit, or of handicap, (ii) that have the purpose service that is not equal to that af- or effect of defeating or substantially forded others; impairing accomplishment of the objectives of the recipient’s program or (iii) Provide a qualified handicapped activity with respect to handicapped person with an aid, benefit, or service persons, or (iii) that perpetuate the dis- that is not as effective as that provided crimination of another recipient if to others; both recipients are subject to common (iv) Provide different or separate aid, administrative control or are agencies benefits, or services to handicapped of the same State. persons or to any class of handicapped (5) In determining the site or loca- persons unless such action is necessary tion of a facility, an applicant for as- to provide qualified handicapped per- sistance or a recipient may not make sons with aid, benefits, or services that selections (i) that have the effect of ex- are as effective as those provided to cluding handicapped persons from, de- others; nying them the benefits of, or other- (v) Aid or perpetuate discrimination wise subjecting them to discrimination against a qualified handicapped person under any program or activity that re- by providing significant assistance to ceives Federal financial assistance or an agency, organization, or person that (ii) that have the purpose or effect of discriminates on the basis of handicap defeating or substantially impairing in providing any aid, benefit, or service the accomplishment of the objectives to beneficiaries of the recipients proof the program or activity with respect gram or activity; to handicapped persons. (vi) Deny a qualified handicapped (6) As used in this section, the aid, person the opportunity to participate benefit, or service provided under a as a member of planning or advisory program or activity receiving Federal boards; or financial assistance includes any aid, (vii) Otherwise limit a qualified benefit, or service provided in or handicapped person in the enjoyment through a facility that has been con- of any right, privilege, advantage, or structed, expanded, altered, leased or opportunity enjoyed by others receiv- rented, or otherwise acquired, in whole ing an aid, benefit, or service. or in part, with Federal financial as- (2) For purposes of this part, aids, sistance. benefits, and services, to be equally ef- (c) Aids, benefits, or services limited by fective, are not required to produce the Federal law. The exclusion of nonhandi- identical result or level of achievement capped persons from aids, benefits, or for handicapped and nonhandicapped services limited by Federal statute or persons, but must afford handicapped executive order to handicapped persons persons equal opportunity to obtain or the exclusion of a specific class of the same result, to gain the same ben- handicapped persons from aids, bene- efit, or to reach the same level of fits, or services limited by Federal achievement, in the most integrated statute or executive order to a dif- setting appropriate to the person’s ferent class of handicapped persons is needs. not prohibited by this part. (3) Despite the existence of separate [42 FR 22677, May 4, 1977, as amended at 70 or different aids, benefits, or services FR 24319, May 9, 2005] provided in accordance with this part, a recipient may not deny a qualified § 84.5 Assurances required. handicapped person the opportunity to (a) Assurances. An applicant for Fed- participate in such aids, benefits, or eral financial assistance to which this

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part applies shall submit an assurance, enant. If a transferee of real property on a form specified by the Director, proposes to mortgage or otherwise en- that the program or activity will be op- cumber the real property as security erated in compliance with this part. An for financing construction of new, or applicant may incorporate these assur- improvement of existing, facilities on ances by reference in subsequent appli- the property for the purposes for which cations to the Department. the property was transferred, the Di- (b) Duration of obligation. (1) In the rector may, upon request of the trans- case of Federal financial assistance ex- feree and if necessary to accomplish tended in the form of real property or such financing and upon such condi- to provide real property or structures tions as he or she deems appropriate, on the property, the assurance will ob- agree to forbear the exercise of such ligate the recipient or, in the case of a right to revert title for so long as the subsequent transfer, the transferee, for lien of such mortgage or other encum- the period during which the real prop- brance remains effective. erty or structures are used for the purpose for which Federal financial assist- [42 FR 22677, May 4, 1977, as amended at 70 ance is extended or for another purpose FR 24319, May 9, 2005] involving the provision of similar serv- § 84.6 Remedial action, voluntary ac- ices or benefits. tion, and self-evaluation. (2) In the case of Federal financial assistance extended to provide personal (a) Remedial action. (1) If the Director property, the assurance will obligate finds that a recipient has discriminated the recipient for the period during against persons on the basis of handi- which it retains ownership or posses- cap in violation of section 504 or this sion of the property. part, the recipient shall take such re- (3) In all other cases the assurance medial action as the Director deems will obligate the recipient for the pe- necessary to overcome the effects of riod during which Federal financial as- the discrimination. sistance is extended. (2) Where a recipient is found to have (c) Covenants. (1) Where Federal fi- discriminated against persons on the nancial assistance is provided in the basis of handicap in violation of sec- form of real property or interest in the tion 504 or this part and where another property from the Department, the in- recipient exercises control over the re- strument effecting or recording this cipient that has discriminated, the Di- transfer shall contain a covenant run- rector, where appropriate, may require ning with the land to assure non- either or both recipients to take reme- discrimination for the period during dial action. which the real property is used for a (3) The Director may, where nec- purpose for which the Federal financial essary to overcome the effects of dis- assistance is extended or for another crimination in violation of section 504 purpose involving the provision of or this part, require a recipient to take similar services or benefits. remedial action (i) with respect to (2) Where no transfer of property is handicapped persons who are no longer involved but property is purchased or participants in the recipient’s program improved with Federal financial assist- or activity but who were participants ance, the recipient shall agree to in- in the program or activity when such clude the covenant described in para- discrimination occurred or (ii) with re- graph (b)(2) of this section in the inspect to handicapped persons who strument effecting or recording any would have been participants in the subsequent transfer of the property. program or activity had the discrimi- (3) Where Federal financial assist- nation not occurred. ance is provided in the form of real (b) Voluntary action. A recipient may property or interest in the property take steps, in addition to any action from the Department, the covenant that is required by this part, to over- shall also include a condition coupled come the effects of conditions that re- with a right to be reserved by the De- sulted in limited participation in the partment to revert title to the prop- recipient’s program or activity by erty in the event of a breach of the cov- qualified handicapped persons.

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(c) Self-evaluation. (1) A recipient to postsecondary educational institu- shall, within one year of the effective tions. date of this part: (i) Evaluate, with the assistance of § 84.8 Notice. interested persons, including handi- (a) A recipient that employs fifteen capped persons or organizations rep- or more persons shall take appropriate resenting handicapped persons, its cur- initial and continuing steps to notify rent policies and practices and the ef- participants, beneficiaries, applica- fects thereof that do not or may not tions, and employees, including those meet the requirements of this part; with impaired vision or hearing, and (ii) Modify, after consultation with unions or professional organizations interested persons, including handi- holding collective bargaining or profes- capped persons or organizations rep- sional agreements with the recipient resenting handicapped persons, any that it does not discriminate on the policies and practices that do not meet basis of handicap in violation of sec- the requirements of this part; and tion 504 and this part. The notification (iii) Take, after consultation with in- shall state, where appropriate, that the terested persons, including handi- recipient does not discriminate in ad- capped persons or organizations rep- mission or access to, or treatment or resenting handicapped persons, appro- employment in, its programs or activi- priate remedial steps to eliminate the ties. The notification shall also include effects of any discrimination that re- an identification of the responsible em- sulted from adherence to these policies ployee designated pursuant to § 84.7(a). and practices. A recipient shall make the initial noti- (2) A recipient that employs fifteen fication required by this paragraph or more persons shall, for at least three within 90 days of the effective date of years following completion of the eval- this part. Methods of initial and con- uation required under paragraph (c)(1) tinuing notification may include the of this section, maintain on file, make posting of notices, publication in news- available for public inspection, and papers and magazines, placement of no- provide to the Director upon request: tices in recipients’ publication, and (i) A list of the interested persons con- distribution of memoranda or other sulted (ii) a description of areas exam- written communications. ined and any problems identified, and (b) If a recipient publishes or uses re- (iii) a description of any modifications cruitment materials or publications made and of any remedial steps taken. containing general information that it makes available to participants, bene- [42 FR 22677, May 4, 1977, as amended at 70 ficiaries, applicants, or employees, it FR 24319, May 9, 2005] shall include in those materials or pub- § 84.7 Designation of responsible em- lications a statement of the policy de- ployee and adoption of grievance scribed in paragraph (a) of this section. procedures. A recipient may meet the requirement of this paragraph either by including (a) Designation of responsible employee. appropriate inserts in existing mate- A recipient that employs fifteen or rials and publications or by revising more persons shall designate at least and reprinting the materials and publi- one person to coordinate its efforts to cations. comply with this part. (b) Adoption of grievance procedures. A [42 FR 22677, May 4, 1977, as amended at 70 recipient that employs fifteen or more FR 24319, May 9, 2005] persons shall adopt grievance procedures that incorporate appropriate due § 84.9 Administrative requirements for process standards and that provide for small recipients. the prompt and equitable resolution of The Director may require any recipi- complaints alleging any action prohib- ent with fewer than fifteen employees, ited by this part. Such procedures need or any class of such recipients, to com- not be established with respect to comply with §§ 84.7 and 84.8, in whole or in plaints from applicants for employ- part, when the Director finds a viola- ment or from applicants for admission tion of this part or finds that such

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compliance will not significantly im- nizations providing or administering pair the ability of the recipient or class fringe benefits to employees of the re- of recipients to provide benefits or cipient, and with organizations pro- services. viding training and apprenticeships. (b) Specific activities. The provisions § 84.10 Effect of State or local law or of this subpart apply to: other requirements and effect of (1) Recruitment, advertising, and the employment opportunities. processing of applications for employ- (a) The obligation to comply with ment; this part is not obviated or alleviated (2) Hiring, upgrading, promotion, by the existence of any state or local award of tenure, demotion, transfer, law or other requirement that, on the layoff, termination, right of return basis of handicap, imposes prohibitions from layoff and rehiring; or limits upon the eligibility of quali- (3) Rates of pay or any other form of fied handicapped persons to receive compensation and changes in com- services or to practice any occupation pensation; or profession. (4) Job assignments, job classifica- (b) The obligation to comply with tions, organizational structures, posi- this part is not obviated or alleviated tion descriptions, lines of progression, because employment opportunities in and seniority lists; any occupation or profession are or (5) Leaves of absense, sick leave, or may be more limited for handicapped any other leave; persons than for nonhandicapped per- (6) Fringe benefits available by vir- sons. tue of employment, whether or not administered by the recipient; Subpart B—Employment Practices (7) Selection and financial support for training, including apprenticeship, § 84.11 Discrimination prohibited. professional meetings, conferences, and (a) General. (1) No qualified handi- other related activities, and selection capped person shall, on the basis of for leaves of absence to pursue train- handicap, be subjected to discrimina- ing; tion in employment under any program (8) Employer sponsored activities, in- or activity to which this part applies. cluding those that are social or rec- (2) A recipient that receives assist- reational; and ance under the Education of the Handi- (9) Any other term, condition, or capped Act shall take positive steps to privilege of employment. employ and advance in employment (c) A recipient’s obligation to comply qualified handicapped persons in pro- with this subpart is not affected by any grams or activities assisted under that inconsistent term of any collective Act. bargaining agreement to which it is a (3) A recipient shall make all deci- party. sions concerning employment under [42 FR 22677, May 4, 1977, as amended at 70 any program or activity to which this FR 24319, May 9, 2005] part applies in a manner which ensures that discrimination on the basis of § 84.12 Reasonable accommodation. handicap does not occur and may not (a) A recipient shall make reasonable limit, segregate, or classify applicants accommodation to the known physical or employees in any way that ad- or mental limitations of an otherwise versely affects their opportunities or qualified handicapped applicant or em- status because of handicap. ployee unless the recipient can dem- (4) A recipient may not participate in onstrate that the accommodation a contractual or other relationship would impose an undue hardship on the that has the effect of subjecting quali- operation of its program or activity. fied handicapped applicants or employ- (b) Reasonable accommodation may ees to discrimination prohibited by include: (1) Making facilities used by this subpart. The relationships referred employees readily accessible to and us- to in this paragraph include relation- able by handicapped persons, and (2) ships with employment and referral job restructuring, part-time or modi- agencies, with labor unions, with orga- fied work schedules, acquisition or

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modification of equipment or devices, § 84.14 Preemployment inquiries. the provision of readers or interpreters, (a) Except as provided in paragraphs and other similar actions. (b) and (c) of this section, a recipient (c) In determining pursuant to para- may not conduct a preemployment graph (a) of this section whether an ac- medical examination or may not make commodation would impose an undue preemployment inquiry of an applicant hardship on the operation of a recipi- as to whether the applicant is a handi- ent’s program or activity, factors to be capped person or as to the nature or se- considered include: verity of a handicap. A recipient may, (1) The overall size of the recipient’s however, make preemployment inquiry program or activity with respect to into an applicant’s ability to perform number of employees, number and type job-related functions. of facilities, and size of budget; (b) When a recipient is taking reme- (2) The type of the recipient’s oper- dial action to correct the effects of ation, including the composition and past discrimination pursuant to § 84.6 structure of the recipient’s workforce; (a), when a recipient is taking vol- and untary action to overcome the effects (3) The nature and cost of the accom- of conditions that resulted in limited modation needed. participation in its federally assisted (d) A recipient may not deny any em- program or activity pursuant to ployment opportunity to a qualified § 84.6(b), or when a recipient is taking handicapped employee or applicant if affirmative action pursuant to section the basis for the denial is the need to 503 of the Act, the recipient may invite make reasonable accommodation to applicants for employment to indicate the physical or mental limitations of whether and to what extent they are the employee or applicant. handicapped, Provided, That: [42 FR 22677, May 4, 1977, as amended at 70 (1) The recipient states clearly on FR 24319, May 9, 2005] any written questionnaire used for this purpose or makes clear orally if no § 84.13 Employment criteria. written questionnaire is used that the (a) A recipient may not make use of information requested is intended for any employment test or other selection use solely in connection with its reme- criterion that screens out or tends to dial action obligations or its voluntary screen out handicapped persons or any or affirmative action efforts; and class of handicapped persons unless: (1) (2) The recipient states clearly that The test score or other selection cri- the information is being requested on a terion, as used by the recipient, is voluntary basis, that it will be kept shown to be job-related for the position confidential as provided in paragraph in question, and (2) alternative job-re- (d) of this section, that refusal to pro- lated tests or criteria that do not vide it will not subject the applicant or screen out or tend to screen out as employee to any adverse treatment, many handicapped persons are not and that it will be used only in accord- shown by the Director to be available. ance with this part. (b) A recipient shall select and ad- (c) Nothing in this section shall pro- minister tests concerning employment hibit a recipient from conditioning an so as best to ensure that, when admin- offer of employment on the results of a istered to an applicant or employee medical examination conducted prior who has a handicap that impairs sen- to the employee’s entrance on duty, sory, manual, or speaking skills, the Provided, That: (1) All entering employ- test results accurately reflect the ap- ees are subjected to such an examina- plicant’s or employee’s job skills, apti- tion regardless of handicap, and (2) the tude, or whatever other factor the test results of such an examination are used purports to measure, rather than re- only in accordance with the require- flecting the applicant’s or employee’s ments of this part. impaired sensory, manual, or speaking (d) Information obtained in accord- skills (except where those skills are ance with this section as to the med- the factors that the test purports to ical condition or history of the appli- measure). cant shall be collected and maintained

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on separate forms that shall be ac- with paragraph (a) of this section. In corded confidentiality as medical choosing among available methods for records, except that: meeting the requirement of paragraph (1) Supervisors and managers may be (a) of this section, a recipient shall informed regarding restrictions on the give priority to those methods that work or duties of handicapped persons serve handicapped persons in the most and regarding necessary accommoda- integrated setting appropriate. tions; (c) Small health, welfare, or other social (2) First aid and safety personnel service providers. If a recipient with may be informed, where appropriate, if fewer than fifteen employees that pro- the condition might require emergency vides health, welfare, or other social treatment; and services finds, after consultation with (3) Government officials inves- a handicapped person seeking its serv- tigating compliance with the Act shall ices, that there is no method of com- be provided relevant information upon plying with paragraph (a) of this sec- request. tion other than making a significant alteration in its existing facilities, the §§ 84.15–84.20 [Reserved] recipient may, as an alternative, refer the handicapped person to other pro- Subpart C—Accessibility viders of those services that are accessible. § 84.21 Discrimination prohibited. (d) Time period. A recipient shall com- No qualified handicapped person ply with the requirement of paragraph shall, because a recipient’s facilities (a) of this section within sixty days of are inaccessible to or unusable by the effective date of this part except handicapped persons, be denied the that where structural changes in facili- benefits of, be excluded from participa- ties are necessary, such changes shall tion in, or otherwise be subjected to be made within three years of the ef- discrimination under any program or fective date of this part, but in any activity to which this part applies. event as expeditiously as possible. (e) Transition plan. In the event that § 84.22 Existing facilities. structural changes to facilities are nec- (a) Accessibility. A recipient shall op- essary to meet the requirement of erate its program or activity so that paragraph (a) of this section, a recipi- when each part is viewed in its en- ent shall develop, within six months of tirety, it is readily accessible to handi- the effective date of this part, a transi- capped persons. This paragraph does tion plan setting forth the steps nec- not require a recipient to make each of essary to complete such changes. The its existing facilities or every part of a plan shall be developed with the assist- facility accessible to and usable by ance of interested persons, including handicapped persons. handicapped persons or organizations (b) Methods. A recipient may comply representing handicapped persons. A with the requirements of paragraph (a) copy of the transition plan shall be of this section through such means as made available for public inspection. redesign of equipment, reassignment of The plan shall, at a minimum: classes or other services to accessible (1) Identify physical obstacles in the buildings, assignment of aides to bene- recipient’s facilities that limit the ac- ficiaries, home visits, delivery of cessibility of its program or activity to health, welfare, or other social services handicapped persons; at alternate accessible sites, alteration (2) Describe in detail the methods of existing facilities and construction that will be used to make the facilities of new facilities in conformance with accessible; the requirements of § 84.23, or any other (3) Specify the schedule for taking methods that result in making its pro- the steps necessary to achieve full ac- gram or activity accessible to handi- cessibility under paragraph (a) and, if capped persons. A recipient is not re- the time period of the transition plan quired to make structural changes in is longer than one year, identify the existing facilities where other methods steps that will be taken during each are effective in achieving compliance year of the transition period; and

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(4) Indicate the person responsible for therein of persons with physical handi- implementation of the plan. caps. (f) Notice. The recipient shall adopt (3) This section does not require re- and implement procedures to ensure cipients to make building alterations that interested persons, including per- that have little likelihood of being ac- sons with impaired vision or hearing, complished without removing or alter- can obtain information as to the existing a load-bearing structural member. ence and location of services, activi- [42 FR 22677, May 4, 1977, as amended at 55 ties, and facilities that are accessible FR 52138, 52142, Dec. 19, 1990] to and usable by handicapped persons. [42 FR 22677, May 4, 1977, as amended at 70 §§ 84.24–84.30 [Reserved] FR 24319, May 9, 2005] Subpart D—Preschool, Elementary, § 84.23 New construction. and Secondary Education (a) Design and construction. Each facility or part of a facility constructed § 84.31 Application of this subpart. by, on behalf of, or for the use of a re- Subpart D applies to preschool, ele- cipient shall be designed and con- mentary, secondary, and adult edu- structed in such manner that the facil- cation programs or activities that re- ity or part of the facility is readily ac- ceive Federal financial assistance and cessible to and usable by handicapped to recipients that operate, or that re- persons, if the construction was com- ceive Federal financial assistance for menced after the effective date of this the operation of, such programs or ac- part. tivities. (b) Alteration. Each facility or part of a facility which is altered by, on behalf [42 FR 22677, May 4, 1977, as amended at 70 of, or for the use of a recipient after FR 24320, May 9, 2005] the effective date of this part in a man- § 84.32 Location and notification. ner that affects or could affect the usability of the facility or part of the A recipient that operates a public el- facility shall, to the maximum extent ementary or secondary education pro- feasible, be altered in such manner gram or activity shall annually: that the altered portion of the facility (a) Undertake to identify and locate is readily accessible to and usable by every qualified handicapped person re- handicapped persons. siding in the recipient’s jurisdiction (c) Conformance with Uniform Federal who is not receiving a public edu- Accessibility Standards. (1) Effective as cation; and of January 18, 1991, design, construc- (b) Take appropriate steps to notify tion, or alteration of buildings in con- handicapped persons and their parents formance with sections 3–8 of the Uni- or guardians of the recipient’s duty form Federal Accessibility Standards under this subpart. (UFSA) (appendix A to 41 CFR subpart [42 FR 22677, May 4, 1977, as amended at 70 101–19.6) shall be deemed to comply FR 24319, May 9, 2005] with the requirements of this section with respect to those buildings. Depar- § 84.33 Free appropriate public edu- tures from particular technical and cation. scoping requirements of UFAS by the (a) General. A recipient that operates use of other methods are permitted a public elementary or secondary edu- where substantial equivalent or greater cation program or activity shall pro- access to and usability of the building vide a free appropriate public edu- is provided. cation to each qualified handicapped (2) For purposes of this section, sec- person who is in the recipient’s juris- tion 4.1.6(1)(g) of UFAS shall be inter- diction, regardless of the nature or se- preted to exempt from the require- verity of the person’s handicap. ments of UFAS only mechanical rooms (b) Appropriate education. (1) For the and other spaces that, because of their purpose of this subpart, the provision intended use, will not require accessi- of an appropriate education is the pro- bility to the public or beneficiaries or vision of regular or special education result in the employment or residence and related aids and services that (i)

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are designed to meet individual edu- guardian if the person were placed in cational needs of handicapped persons the aids, benefits, or services operated as adequately as the needs of nonhandi- by the recipient. capped persons are met and (ii) are (3) Residential placement. If a public or based upon adherence to procedures private residential placement is nec- that satisfy the requirements of essary to provide a free appropriate §§ 84.34, 84.35, and 84.36. public education to a handicapped per- (2) Implementation of an Individual- son because of his or her handicap, the ized Education Program developed in placement, including non-medical care accordance with the Education of the and room and board, shall be provided Handicapped Act is one means of meet- at no cost to the person or his or her ing the standard established in para- parents or guardian. graph (b)(1)(i) of this section. (4) Placement of handicapped persons (3) A recipient may place a handi- by parents. If a recipient has made capped person or refer such a person for available, in conformance with the re- aids, benefits, or services other than quirements of this section and § 84.34, a those that it operates or provides as its free appropriate public education to a means of carrying out the require- handicapped person and the person’s ments of this subpart. If so, the recipi- parents or guardian choose to place the ent remains responsible for ensuring person in a private school, the recipi- that the requirements of this subpart ent is not required to pay for the per- are met with respect to any handi- son’s education in the private school. capped person so placed or referred. Disagreements between a parent or (c) Free education—(1) General. For guardian and a recipient regarding the purpose of this section, the provi- whether the recipient has made a free sion of a free education is the provision appropriate public education available of educational and related services or otherwise regarding the question of without cost to the handicapped person financial responsibility are subject to or to his or her parents or guardian, ex- the due process procedures of § 84.36. cept for those fees that are imposed on (d) Compliance. A recipient may not non-handicapped persons or their par- exclude any qualified handicapped per- ents or guardian. It may consist either son from a public elementary or sec- of the provision of free services or, if a ondary education after the effective recipient places a handicapped person date of this part. A recipient that is or refers such person for aids, benefits, not, on the effective date of this regu- or services not operated or provided by lation, in full compliance with the the recipient as its means of carrying other requirements of the preceding out the requirements of this subpart, of paragraphs of this section shall meet payment for the costs of the aids, bene- such requirements at the earliest prac- fits, or services. Funds available from ticable time and in no event later than any public or private agency may be September 1, 1978. used to meet the requirements of this subpart. Nothing in this section shall [42 FR 22677, May 4, 1977, as amended at 70 be construed to relieve an insurer or FR 24319, 24320, May 9, 2005] similar third party from an otherwise valid obligation to provide or pay for § 84.34 Educational setting. services provided to a handicapped per- (a) Academic setting. A recipient to son. which this subpart applies shall edu- (2) Transportation. If a recipient cate, or shall provide for the education places a handicapped person or refers of, each qualified handicapped person such person for aids, benefits, or serv- in its jurisdiction with persons who are ices not operated or provided by the re- not handicapped to the maximum ex- cipient as its means of carrying out the tent appropriate to the needs of the requirements of this subpart, the re- handicapped person. A recipient shall cipient shall ensure that adequate place a handicapped person in the reg- transportation to and from the aids, ular educational environment operated benefits, or services is provided at no by the recipient unless it is dem- greater cost than would be incurred by onstrated by the recipient that the the person or his or her parents or education of the person in the regular

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environment with the use of supple- (2) Tests and other evaluation mate- mentary aids and services cannot be rials include those tailored to assess achieved satisfactorily. Whenever a re- specific areas of educational need and cipient places a person in a setting not merely those which are designed to other than the regular educational en- provide a single general intelligence vironment pursuant to this paragraph, quotient; and it shall take into account the prox- (3) Tests are selected and adminis- imity of the alternate setting to the tered so as best to ensure that, when a person’s home. test is administered to a student with (b) Nonacademic settings. In providing impaired sensory, manual, or speaking or arranging for the provision of non- skills, the test results accurately re- academic and extracurricular services flect the student’s aptitude or achieve- and activities, including meals, recess ment level or whatever other factor the periods, and the services and activities test purports to measure, rather than set forth in § 84.37(a)(2), a recipient reflecting the student’s impaired sen- shall ensure that handicapped persons sory, manual, or speaking skills (ex- participate with nonhandicapped per- cept where those skills are the factors that the test purports to measure). sons in such activities and services to (c) Placement procedures. In inter- the maximum extent appropriate to preting evaluation data and in making the needs of the handicapped person in placement decisions, a recipient shall question. (1) draw upon information from a vari- (c) Comparable facilities. If a recipient, ety of sources, including aptitude and in compliance with paragraph (a) of achievement tests, teacher rec- this section, operates a facility that is ommendations, physical condition, so- identifiable as being for handicapped cial or cultural background, and adapt- persons, the recipient shall ensure that ive behavior, (2) establish procedures to the facility and the services and activi- ensure that information obtained from ties provided therein are comparable to all such sources is documented and the other facilities, services, and ac- carefully considered, (3) ensure that tivities of the recipient. the placement decision is made by a group of persons, including persons § 84.35 Evaluation and placement. knowledgeable about the child, the (a) Preplacement evaluation. A recipi- meaning of the evaluation data, and ent that operates a public elementary the placement options, and (4) ensure or secondary education program or ac- that the placement decision is made in tivity shall conduct an evaluation in conformity with § 84.34. accordance with the requirements of (d) Reevaluation. A recipient to which paragraph (b) of this section of any per- this section applies shall establish pro- son who, because of handicap, needs or cedures, in accordance with paragraph is believed to need special education or (b) of this section, for periodic reevalu- related services before taking any ac- ation of students who have been pro- tion with respect to the initial place- vided special education and related ment of the person in regular or special services. A reevaluation procedure con- education and any subsequent signifi- sistent with the Education for the cant change in placement. Handicapped Act is one means of meet- (b) Evaluation procedures. A recipient ing this requirement. to which this subpart applies shall es- [42 FR 22677, May 4, 1977, as amended at 70 tablish standards and procedures for FR 24320, May 9, 2005] the evaluation and placement of persons who, because of handicap, need or § 84.36 Procedural safeguards. are believed to need special education A recipient that operates a public el- or related services which ensure that: ementary or secondary education pro- (1) Tests and other evaluation mate- gram or activity shall establish and rials have been validated for the spe- implement, with respect to actions re- cific purpose for which they are used garding the identification, evaluation, and are administered by trained per- or educational placement of persons sonnel in conformance with the in- who, because of handicap, need or are structions provided by their producer; believed to need special instruction or

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related services, a system of procedural (2) A recipient may offer to handi- safeguards that includes notice, an op- capped students physical education and portunity for the parents or guardian athletic activities that are separate or of the person to examine relevant different from those offered to non- records, an impartial hearing with op- handicapped students only if separa- portunity for participation by the per- tion or differentiation is consistent son’s parents or guardian and represen- with the requirements of § 84.34 and tation by counsel, and a review proce- only if no qualified handicapped stu- dure. Compliance with the procedural dent is denied the opportunity to com- safeguards of section 615 of the Edu- pete for teams or to participate in cation of the Handicapped Act is one means of meeting this requirement. courses that are not separate or different. [42 FR 22677, May 4, 1977, as amended at 70 FR 24319, May 9, 2005] [42 FR 22677, May 4, 1977, as amended at 70 FR 24320, May 9, 2005] § 84.37 Nonacademic services. (a) General. (1) A recipient to which § 84.38 Preschool and adult education. this subpart applies shall provide non- A recipient to which this subpart ap- academic and extracurricular services plies that provides preschool education and activities in such manner as is nec- or day care or adult education may essary to afford handicapped students not, on the basis of handicap, exclude an equal opportunity for participation qualified handicapped persons and shall in such services and activities. take into account the needs of such (2) Nonacademic and extracurricular persons in determining the aids, bene- services and activities may include fits, or services to be provided. counseling services, physical recreational athletics, transportation, [42 FR 22677, May 4, 1977, as amended at 70 health services, recreational activities, FR 24320, May 9, 2005] special interest groups or clubs sponsored by the recipients, referrals to § 84.39 Private education. agencies which provide assistance to (a) A recipient that provides private handicapped persons, and employment elementary or secondary education of students, including both employ- may not, on the basis of handicap, ex- ment by the recipient and assistance in clude a qualified handicapped person if making available outside employment. the person can, with minor adjust- (b) Counseling services. A recipient to ments, be provided an appropriate edu- which this subpart applies that provides personal, academic, or vocational cation, as defined in § 84.33(b)(1), within counseling, guidance, or placement that recipient’s program or activity. services to its students shall provide (b) A recipient to which this section these services without discrimination applies may not charge more for the on the basis of handicap. The recipient provision of an appropriate education shall ensure that qualified handicapped to handicapped persons than to non- students are not counseled toward handicapped persons except to the ex- more restrictive career objectives than tent that any additional charge is jus- are nonhandicapped students with tified by a substantial increase in cost similar interests and abilities. to the recipient. (c) Physical education and athletics. (1) (c) A recipient to which this section In providing physical education courses applies that provides special education and athletics and similar aids, benefits, shall do so in accordance with the pro- or services to any of its students, a revisions of §§ 84.35 and 84.36. Each recipi- cipient to which this subpart applies ent to which this section applies is sub- may not discriminate on the basis of ject to the provisions of §§ 84.34, 84.37, handicap. A recipient that offers phys- and 84.38. ical education courses or that operates or sponsors interscholastic, club, or in- [42 FR 22677, May 4, 1977, as amended at 70 tramural athletics shall provide to FR 24320, May 9, 2005] qualified handicapped students an equal opportunity for participation.

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§ 84.40 [Reserved] persons with impaired sensory, manual, or speaking skills are offered as Subpart E—Postsecondary often and in as timely a manner as are Education other admissions tests; and (iii) admissions tests are administered in facili- § 84.41 Application of this subpart. ties that, on the whole, are accessible Subpart E applies to postsecondary to handicapped persons; and education programs or activities, in- (4) Except as provided in paragraph cluding postsecondary vocational edu- (c) of this section, may not make cation programs or activities, that re- preadmission inquiry as to whether an ceive Federal financial assistance and applicant for admission is a handi- to recipients that operate, or that re- capped person but, after admission, ceive Federal financial assistance for may make inquiries on a confidential the operation of, such programs or ac- basis as to handicaps that may require tivities. accommodation. [42 FR 22677, May 4, 1977, as amended at 70 (c) Preadmission inquiry exception. FR 24320, May 9, 2005] When a recipient is taking remedial action to correct the effects of past dis- § 84.42 Admissions and recruitment. crimination pursuant to § 84.6(a) or (a) General. Qualified handicapped when a recipient is taking voluntary persons may not, on the basis of handi- action to overcome the effects of cap, be denied admission or be sub- conditons that resulted in limited par- jected to discrimination in admission ticipation in its federally assisted pro- or recruitment by a recipient to which gram or activity pursuant to § 84.6(b), this subpart applies. the recipient may invite applicants for (b) Admissions. In administering its admission to indicate whether and to admission policies, a recipient to which what extent they are handicapped, Pro- this subpart applies: vided, That: (1) May not apply limitations upon (1) The recipient states clearly on the number or proportion of handi- any written questionnaire used for this capped persons who may be admitted; purpose or makes clear orally if no (2) May not make use of any test or written questionnaire is used that the criterion for admission that has a dis- information requested is intended for proportionate, adverse effect on handi- use solely in connection with its reme- capped persons or any class of handi- dial action obligations or its voluntary capped persons unless (i) the test or action efforts; and criterion, as used by the recipient, has (2) The recipient states clearly that been validated as a predictor of success the information is being requested on a in the education program or activity in voluntary basis, that it will be kept question and (ii) alternate tests or cri- confidential, that refusal to provide it teria that have a less disproportionate, will not subject the applicant to any adverse effect are not shown by the Di- adverse treatment, and that it will be rector to be available. used only in accordance with this part. (3) Shall assure itself that (i) admis- (d) Validity studies. For the purpose of sions tests are selected and adminis- paragraph (b)(2) of this section, a re- tered so as best to ensure that, when a cipient may base prediction equations test is administered to an applicant who has a handicap that impairs sen- on first year grades, but shall conduct sory, manual, or speaking skills, the periodic validity studies against the test results accurately reflect the ap- criterion of overall success in the edu- plicant’s aptitude or achievement level cation program or activity in question or whatever other factor the test pur- in order to monitor the general valid- ports to measure, rather than reflect- ity of the test scores. ing the applicant’s impaired sensory, manual, or speaking skills (except § 84.43 Treatment of students; general. where those skills are the factors that (a) No qualified handicapped student the test purports to measure); (ii) ad- shall, on the basis of handicap, be ex- missions tests that are designed for cluded from participation in, be denied

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the benefits of, or otherwise be sub- upon handicapped students other rules, jected to discrimination under any aca- such as the prohibition of tape record- demic, research, occupational training, ers in classrooms or of dog guides in housing, health insurance, counseling, campus buildings, that have the effect financial aid, physical education, ath- of limiting the participation of handi- letics, recreation, transportation, capped students in the recipient’s edu- other extracurricular, or other postsec- cation program or activity. ondary education aids, benefits, or (c) Course examinations. In its course services to which this subpart applies. examinations or other procedures for (b) A recipient to which this subpart evaluating students’ academic achieve- applies that considers participation by ment, a recipient to which this subpart students in education programs or ac- applies shall provide such methods for tivities not operated wholly by the re- evaluating the achievement of students cipient as part of, or equivalent to, and who have a handicap that impairs sen- education program or activity operated sory, manual, or speaking skills as will by the recipient shall assure itself that best ensure that the results of the eval- the other education program or activ- uation represents the student’s ity, as a whole, provides an equal op- achievement in the course, rather than portunity for the participation of reflecting the student’s impaired sen- qualified handicapped persons. sory, manual, or speaking skills (ex- (c) A recipient to which this subpart cept where such skills are the factors applies may not, on the basis of handi- that the test purports to measure). cap, exclude any qualified handicapped (d) Auxiliary aids. (1) A recipient to student from any course, course of which this subpart applies shall take study, or other part of its education such steps as are necessary to ensure program or activity. that no handicapped student is denied (d) A recipient to which this subpart the benefits of, excluded from partici- applies shall operate its program or ac- pation in, or otherwise subjected to tivity in the most integrated setting discrimination because of the absence appropriate. of educational auxiliary aids for students with impaired sensory, manual, [42 FR 22677, May 4, 1977, as amended at 70 FR 24320, May 9, 2005] or speaking skills. (2) Auxiliary aids may include taped § 84.44 Academic adjustments. texts, interpreters or other effective (a) Academic requirements. A recipient methods of making orally delivered to which this subpart applies shall materials available to students with make such modifications to its aca- hearing impairments, readers in librar- demic requirements as are necessary to ies for students with visual impair- ensure that such requirements do not ments, classroom equipment adapted discriminate or have the effect of dis- for use by students with manual im- criminating, on the basis of handicap, pairments, and other similar services against a qualified handicapped appli- and actions. Recipients need not pro- cant or student. Academic require- vide attendants, individually pre- ments that the recipient can dem- scribed devices, readers for personal onstrate are essential to the instruc- use or study, or other devices or serv- tion being pursued by such student or ices of a personal nature. to any directly related licensing re- [42 FR 22677, May 4, 1977, as amended at 70 quirement will not be regarded as dis- FR 24320, May 9, 2005] criminatory within the meaning of this section. Modifications may include § 84.45 Housing. changes in the length of time per- (a) Housing provided by the recipient. A mitted for the completion of degree re- recipient that provides housing to its quirements, substitution of specific nonhandicapped students shall provide courses required for the completion of comparable, convenient, and accessible degree requirements, and adaptation of housing to handicapped students at the the manner in which specific courses same cost as to others. At the end of are conducted. the transition period provided for in (b) Other rules. A recipient to which Subpart C, such housing shall be avail- this subpart applies may not impose able in sufficient quantity and variety

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so that the scope of handicapped stu- § 84.47 Nonacademic services. dents’ choice of living accommodations (a) Physical education and athletics. (1) is, as a whole, comparable to that of In providing physical education courses nonhandicapped students. and athletics and similar aids, benefits, (b) Other housing. A recipient that as- or services to any of its students, a re- sists any agency, organization, or per- cipient to which this subpart applies son in making housing available to any may not discriminate on the basis of of its students shall take such action handicap. A recipient that offers phys- as may be necessary to assure itself ical education courses or that operates that such housing is, as a whole, made or sponsors intercollegiate, club, or in- available in a manner that does not re- tramural athletics shall provide to sult in discrimination on the basis of qualified handicapped students an handicap. equal opportunity for participation in § 84.46 Financial and employment as- these activities. sistance to students. (2) A recipient may offer to handicapped students physical education and (a) Provision of financial assistance. (1) athletic activities that are separate or In providing financial assistance to different only if separation or differen- qualified handicapped persons, a recipient to which this subpart applies may tiation is consistent with the require- not (i), on the basis of handicap, pro- ments of § 84.43(d) and only if no quali- vide less assistance than is provided to fied handicapped student is denied the nonhandicapped persons, limit eligi- opportunity to compete for teams or to bility for assistance, or otherwise dis- participate in courses that are not sep- criminate or (ii) assist any entity or arate or different. person that provides assistance to any (b) Counseling and placement services. of the recipient’s students in a manner A recipient to which this subpart ap- that discriminates against qualified plies that provides personal, academic, handicapped persons on the basis of or vocational counseling, guidance, or handicap. placement services to its students shall (2) A recipient may administer or as- provide these services without dis- sist in the administration of scholar- crimination on the basis of handicap. ships, fellowships, or other forms of fi- The recipient shall ensure that quali- nancial assistance established under fied handicapped students are not wills, trusts, bequests, or similar legal counseled toward more restrictive ca- instruments that require awards to be reer objectives than are nonhandi- made on the basis of factors that dis- capped students with similar interests criminate or have the effect of dis- and abilities. This requirement does criminating on the basis of handicap not preclude a recipient from providing only if the overall effect of the award factual information about licensing of scholarships, fellowships, and other and certification requirements that forms of financial assistance is not dis- may present obstacles to handicapped criminatory on the basis of handicap. persons in their pursuit of particular (b) Assistance in making available out- careers. side employment. A recipient that as- (c) Social organizations. A recipient sists any agency, organization, or per- that provides significant assistance to son in providing employment opportu- fraternities, sororities, or similar orga- nities to any of its students shall as- nizations shall assure itself that the sure itself that such employment op- membership practices of such organiza- portunities, as a whole, are made avail- tions do not permit discrimination oth- able in a manner that would not vio- erwise prohibited by this subpart. late Subpart B if they were provided by [42 FR 22677, May 4, 1977, as amended at 70 the recipient. FR 24320, May 9, 2005] (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.

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§§ 84.48–84.50 [Reserved] hearing for the purpose of providing emergency health care. Subpart F—Health, Welfare, and (d) Auxiliary aids. (1) A recipient to which this subpart applies that em- Social Services ploys fifteen or more persons shall pro- § 84.51 Application of this subpart. vide appropriate auxiliary aids to persons with impaired sensory, manual, or Subpart F applies to health, welfare, speaking skills, where necessary to af- and other social service programs or ford such persons an equal opportunity activities that receive Federal finan- to benefit from the service in question. cial assistance and to recipients that (2) The Director may require recipi- operate, or that receive Federal finan- ents with fewer than fifteen employees cial assistance for the operation of, to provide auxiliary aids where the pro- such programs or activities. vision of aids would not significantly [42 FR 22677, May 4, 1977, as amended at 70 impair the ability of the recipient to FR 24320, May 9, 2005] provide its benefits or services. (3) For the purpose of this paragraph, § 84.52 Health, welfare, and other so- auxiliary aids may include brailled and cial services. taped material, interpreters, and other (a) General. In providing health, wel- aids for persons with impaired hearing fare, or other social services or bene- or vision. fits, a recipient may not, on the basis of handicap: § 84.53 Drug and alcohol addicts. (1) Deny a qualified handicapped per- A recipient to which this subpart ap- son these benefits or services; plies that operates a general hospital (2) Afford a qualified handicapped or outpatient facility may not dis- person an opportunity to receive bene- criminate in admission or treatment fits or services that is not equal to that against a drug or alcohol abuser or al- offered nonhandicapped persons; coholic who is suffering from a medical (3) Provide a qualified handicapped condition, because of the person’s drug person with benefits or services that or alcohol abuse or alcoholism. are not as effective (as defined in § 84.4(b)) as the benefits or services pro- § 84.54 Education of institutionalized persons. vided to others; (4) Provide benefits or services in a A recipient to which this subpart ap- manner that limits or has the effect of plies and that provides aids, benefits, limiting the participation of qualified or services for persons who are institu- handicapped persons; or tionalized because of handicap shall en- (5) Provide different or separate ben- sure that each qualified handicapped efits or services to handicapped persons person, as defined in § 84.3(l)(2), in its except where necessary to provide program or activity is provided an ap- qualified handicapped persons with propriate education, as defined in benefits and services that are as effec- § 84.33(b). Nothing in this section shall tive as those provided to others. be interpreted as altering in any way (b) Notice. A recipient that provides the obligations of recipients under Sub- notice concerning benefits or services part D. or written material concerning waivers [42 FR 22677, May 4, 1977, as amended at 70 of rights or consent to treatment shall FR 24320, May 9, 2005] take such steps as are necessary to ensure that qualified handicapped per- § 84.55 Procedures relating to health sons, including those with impaired care for handicapped infants. sensory or speaking skills, are not de- (a) Infant Care Review Committees. The nied effective notice because of their Department encourages each recipient handicap. health care provider that provides (c) Emergency treatment for the hearing health care services to infants in pro- impaired. A recipient hospital that programs or activities receiving Federal vides health services or benefits shall financial assistance to establish an In- establish a procedure for effective com- fant Care Review Committee (ICRC) to munication with persons with impaired assist the provider in delivering health

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care and related services to infants and medically beneficial treatment (as deter- in complying with this part. The pur- mined with respect for reasonable medical pose of the committee is to assist the judgments) should not be withheld from health care provider in the develop- handicapped infants solely on the basis of their present or anticipated mental or phys- ment of standards, policies and proce- ical impairments. dures for providing treatment to handi- This Federal law, section 504 of the Reha- capped infants and in making decisions bilitation Act of 1973, prohibits discrimina- concerning medically beneficial treat- tion on the basis of handicap in programs or ment in specific cases. While the De- activities receiving Federal financial assist- partment recognizes the value of ance. For further information, or to report ICRC’s in assuring appropriate medical suspected noncompliance, call: [Identify designated hospital contact point care to infants, such committees are and telephone number] or not required by this section. An ICRC [Identify appropriate child protective serv- should be composed of individuals rep- ices agency and telephone number] or resenting a broad range of perspectives, U.S. Department of Health and Human and should include a practicing physi- Services (HHS): 800–368–1019 (Toll-free; avail- cian, a representative of a disability able 24 hours a day; TDD capability). organization, a practicing nurse, and The identity of callers will be held confiden- other individuals. A suggested model tial. Retaliation by this hospital against any ICRC is set forth in paragraph (f) of person for providing information about possible noncompliance is prohibited by this this section. hospital and Federal regulations. (b) Posting of informational notice. (1) Each recipient health care provider (4) Health care providers other than that provides health care services to those described in paragraph (b)(3) of infants in programs or activities re- this section must post the following ceiving Federal financial assistance notice (identified as Notice B): shall post and keep posted in appro- Notice B: priate places an informational notice. (2) The notice must be posted at loca- PRINCIPLES OF TREATMENT OF tion(s) where nurses and other medical DISABLED INFANTS professionals who are engaged in pro- Federal law prohibits discrimination on viding health care and related services the basis of handicap. Under this law, nour- to infants will see it. To the extent it ishment and medically beneficial treatment does not impair accomplishment of the (as determined with respect for reasonable requirement that copies of the notice medical judgments) should not be withheld from handicapped infants solely on the basis be posted where such personnel will see of their present or anticipated mental or it, the notice need not be posted in physical impairments. area(s) where parents of infant patients This Federal law, section 504 of the Reha- will see it. bilitation Act of 1973, applies to programs or (3) Each health care provider for activities receiving Federal financial assist- which the content of the following no- ance. For further information, or to report tice (identified as Notice A) is truthful suspected noncompliance, call: [Identify appropriate child protective serv- may use Notice A. For the content of ices agency and telephone number] or the notice to be truthful: (i) The pro- U.S. Department of Health and Human vider must have a policy consistent Services (HHS): 800–368–1019 (Toll-free; avail- with that stated in the notice; (ii) the able 24 hours a day: TDD capability) provider must have a procedure for re- The identity of callers will be held confiden- view of treatment deliberations and de- tial. Federal regulations prohibit retaliation cisions to which the notice applies, by this hospital against any person who pro- such as (but not limited to) an Infant vides information about possible violations. Care Review Committee; and (iii) the (5) The notice may be no smaller statements concerning the identity of than 5 by 7 inches, and the type size no callers and retaliation are truthful. smaller than that generally used for Notice A: similar internal communications to staff. The recipient must insert the PRINCIPLES OF TREATMENT OF specified information on the notice it DISABLED INFANTS selects. Recipient hospitals in Wash- It is the policy of this hospital, consistent ington, DC, must list 863–0100 as the with Federal law, that, nourishment and telephone number for HHS. No other

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alterations may be made to the notice. (2) Whenever a hospital at which an Copies of the notices may be obtained infant who is the subject of a report of from the Department of Health and suspected unlawful medical neglect is Human Services upon request, or the being treated has an Infant Care Re- recipient may produce its own notices view Committee (ICRC) the Depart- in conformance with the specified ment encourages the state child pro- wording. tective services agency to consult with (c) Responsibilities of recipient state the ICRC in carrying out the state child protective services agencies. (1) agency’s authorities under its state Within 60 days of the effective date of law and methods of administration. In this section, each recipient state child developing its methods of administra- protective services agency shall estab- tion and procedures, the Department lish and maintain in written form encourages child protective services methods of administration and proce- agencies to adopt guidelines for inves- dures to assure that the agency utilizes tigations similar to those of the De- its full authority pursuant to state law partment regarding the involvement of to prevent instances of unlawful med- ICRC’s. ical neglect of handicapped infants. (d) Expedited access to records. Access These methods of administration and procedures shall include: to pertinent records and facilities of a recipient pursuant to 45 CFR 80.6(c) (i) A requirement that health care (made applicable to this part by 45 CFR providers report on a timely basis to the state agency circumstances which 84.61) shall not be limited to normal they determine to constitute known or business hours when, in the judgment suspected instances of unlawful med- of the responsible Department official, ical neglect of handicapped infants; immediate access is necessary to pro- (ii) A method by which the state tect the life or health of a handicapped agency can receive reports of suspected individual. unlawful medical neglect of handi- (e) Expedited action to effect compli- capped infants from health care pro- ance. The requirement of 45 CFR viders, other individuals, and the De- 80.8(d)(3) pertaining to notice to recipi- partment on a timely basis; ents prior to the initiation of action to (iii) Immediate review of reports of effect compliance (made applicable to suspected unlawful medical neglect of this part by 45 CFR 84.61) shall not handicapped infants and, where appro- apply when, in the judgment of the re- priate, on-site investigation of such responsible Department official, imme- ports; diate action to effect compliance is (iv) Provision of child protective necessary to protect the life or health services to such medically neglected of a handicapped individual. In such handicapped infants, including, where cases the recipient will, as soon as appropriate, seeking a timely court practicable, be given oral or written order to compel the provision of nec- notice of its failure to comply, of the essary nourishment and medical treat- action to be taken to effect compli- ment; and ance, and its continuing opportunity to (v) Timely notification to the respon- comply voluntarily. sible Department official of each report (f) Model Infant Care Review Com- of suspected unlawful medical neglect mittee. Recipient health care providers involving the withholding, solely on wishing to establish Infant Care Re- the basis of present or anticipated view Committees should consider adop- physical or mental impairments, of tion of the following model. This model treatment or nourishment from a is advisory. Recipient health care pro- handicapped infant who, in spite of viders are not required to establish a such impairments, will medically ben- review committee or, if one is estab- efit from the treatment or nourish- lished, to adhere to this model. In seek- ment, the steps taken by the state ing to determine compliance with this agency to investigate such report, and part, as it relates to health care for the state agency’s final disposition of such report. handicapped infants, by health care

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providers that have an ICRC estab- In cases where it is uncertain whether lished and operated substantially in ac- medical treatment will be beneficial, a per- cordance with this model, the Depart- son’s disability must not be the basis for a decision to withhold treatment. At all times ment will, to the extent possible, con- during the process when decisions are being sult with the ICRC. made about the benefit or futility of medical (1) Establishment and purpose. (i) The treatment, the person should be cared for in hospital establishes an Infant Care Re- the medically most appropriate ways. When view Committee (ICRC) or joins with doubt exists at any time about whether to one or more other hospitals to create a treat, a presumption always should be in favor of treatment. joint ICRC. The establishing document will state that the ICRC is for the pur- (C) As stated by the President’s Com- pose of facilitating the development mission for the Study of Ethical Prob- and implementation of standards, poli- lems in Medicine and Biomedical and cies and procedures designed to assure Behavioral Research: that, while respecting reasonable med- This [standard for providing medically ical judgments, treatment and nourish- beneficial treatment] is a very strict stand- ment not be withheld, solely on the ard in that it excludes consideration of the basis of present or anticipated physical negative effects of an impaired child’s life on or mental impairments, from handi- other persons, including parents, siblings, capped infants who, in spite of such im- and society. Although abiding by this standard may be difficult in specific cases, it is all pairments, will benefit medically from too easy to undervalue the lives of handi- the treatment or nourishment. capped infants; the Commission finds it im- (ii) The activities of the ICRC will be perative to counteract this by treating them guided by the following principles: no less vigorously than their healthy peers (A) The interpretative guidelines of or than older children with similar handicaps would be treated. the Department relating to the applicability of this part to health care for (iii) The ICRC will carry out its pur- handicapped infants. poses by: (B) As stated in the ‘‘Principles of (A) Recommending institutional poli- Treatment of Disabled Infants’’ of the cies concerning the withholding or coalition of major medical and dis- withdrawal of medical or surgical ability organizations, including the treatments to infants, including guide- American Academy of Pediatrics, Na- lines for ICRC action for specific cat- tional Association of Children’s Hos- egories of life-threatening conditions pitals and Related Institutions, Asso- affecting infants; ciation for Retarded Citizens, Down’s (B) Providing advice in specific cases Syndrome Congress, Spina Bifida Asso- when decisions are being considered to ciation, and others: withhold or withdraw from infant life- sustaining medical or surgical treat- When medical care is clearly beneficial, it ment; and should always be provided. When appropriate (C) Reviewing retrospectively on a medical care is not available, arrangements regular basis infant medical records in should be made to transfer the infant to an situations in which life-sustaining appropriate medical facility. Consideration medical or surgical treatment has been such as anticipated or actual limited potential of an individual and present or future withheld or withdrawn. lack of available community resources are (2) Organization and staffing. The irrelevant and must not determine the deci- ICRC will consist of at least 7 members sions concerning medical care. The individ- and include the following: ual’s medical condition should be the sole (i) A practicing physician (e.g., a pe- focus of the decision. These are very strict diatrician, a neonatologist, or a pedi- standards. atric surgeon), It is ethically and legally justified to with- (ii) A practicing nurse, hold medical or surgical procedures which (iii) A hospital administrator, are clearly futile and will only prolong the (iv) A representative of the legal pro- act of dying. However, supportive care should be provided, including sustenance as fession, medically indicated and relief of pain and (v) A representative of a disability suffering. The needs of the dying person group, or a developmental disability should be respected. The family also should expert, be supported in its grieving. (vi) A lay community member, and

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(vii) A member of a facility’s orga- pital staff on the policies and guide- nized medical staff, who shall serve as lines it develops. chairperson. (ii) Review of specific cases. In addi- In connection with review of specific tion to regularly scheduled meetings, cases, one member of the ICRC shall be interim ICRC meetings will take place designated to act as ‘‘special advocate’’ under specified circumstances to per- for the infant, as provided in paragraph mit review of individual cases. The (f)(3)(ii)(E) of the section. The hospital hospital will, to the extent possible, re- will provide staff support for the ICRC, quire in each case that life-sustaining including legal counsel. The ICRC will treatment be continued, until the ICRC meet on a regular basis, or as required can review the case and provide advice. below in connection with review of spe- (A) Interim ICRC meetings will be cific cases. It shall adopt or rec- convened within 24 hours (or less if in- ommend to the appropriate hospital of- dicated) when there is disagreement ficial or body such administrative poli- between the family of an infant and the cies as terms of office and quorum re- infant’s physician as to the with- quirements. The ICRC will recommend holding or withdrawal of treatment, procedures to ensure that both hospital when a preliminary decision to with- personnel and patient families are fully hold or withdraw life-sustaining treat- informed of the existence and functions ment has been made in certain cat- of the ICRC and its availability on a 24- egories of cases identified by the ICRC, hour basis. when there is disagreement between (3) Operation of ICRC—(i) Prospective members of the hospital’s medical and/ policy development. (A) The ICRC will or nursing staffs, or when otherwise ap- develop and recommend for adoption propriate. by the hospital institutional policies (B) Such interim ICRC meetings will concerning the withholding or with- take place upon the request of any drawal of medical treatment for in- member of the ICRC or hospital staff or fants with life-threatening conditions. parent or guardian of the infant. The These will include guidelines for man- ICRC will have procedures to preserve agement of specific types of cases or di- the confidentiality of the identity of agnoses, for example, Down’s syndrome persons making such requests, and and spina bifida, and procedures to be such persons shall be protected from followed in such recurring cir- reprisal. When appropriate, the ICRC cumstances as, for example, brain or a designated member will inform the death and parental refusal to consent requesting individual of the ICRC’s rec- to life-saving treatment. The hospital, ommendation. upon recommendation of the ICRC, (C) The ICRC may provide for tele- may require attending physicians to phone and other forms of review when notify the ICRC of the presence in the the timing and nature of the case, as facility of an infant with a diagnosis identified in policies developed by the specified by the ICRC, e.g., Down’s syn- ICRC, make the convening of an in- drome and spina bifida. terim meeting impracticable. (B) In recommending these policies (D) Interim meetings will be open to and guidelines, the ICRC will consult the affected parties. The ICRC will en- with medical and other authorities on sure that the interests of the parents, issues involving disabled individuals, the physician, and the child are fully e.g., neonatologists, pediatric surgeons, considered; that family members have county and city agencies which provide been fully informed of the patient’s services for the disabled, and disability condition and prognosis; that they advocacy organizations. It will also have been provided with a listing which consult with appropriate committees of describes the services furnished by par- the medical staff, to ensure that the ent support groups and public and pri- ICRC policies and guidelines build on vate agencies in the geographic vicin- existing staff by-laws, rules and regula- ity to infants with conditions such as tions concerning consultations and that before the ICRC; and that the staff membership requirements. The ICRC will facilitate their access to ICRC will also inform and educate hos- such services and groups.

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(E) To ensure a comprehensive eval- (4) Records. The ICRC will maintain uation of all options and factors perti- records of all of its deliberations and nent to the committee’s deliberations, summary descriptions of specific cases the chairperson will designate one considered and the disposition of those member of the ICRC to act, in connec- cases. Such records will be kept in action with that specific case, as special cordance with institutional policies on advocate for the infant. The special ad- confidentiality of medical information. vocate will seek to ensure that all con- They will be made available to appro- siderations in favor of the provision of priate government agencies, or upon life-sustaining treatment are fully court order, or as otherwise required evaluated and considered by the ICRC. by law. (F) In cases in which there is dis- NOTE: The mandatory provisions set forth agreement on treatment between a in paragraphs (b)—(e) inclusive of this section are subject to an injunction prohibiting physician and an infant’s family, and their enforcement. In Bowen v. American Hos- the family wishes to continue life-sus- pital Association, lll U.S. lll, 106 S. Ct. taining treatment, the family’s wishes 2101 (1986), the Supreme Court upheld the ac- will be carried out, for as long as the tion of a United States District Court, 585 F. family wishes, unless such treatment is Supp. 541 (S.D.N.Y. 1984), declaring invalid medically contraindicated. When there and enjoining enforcement of provisions is physician/family disagreement and under this section, promulgated January 12, 1984. the family refuses consent to life-sustaining treatment, and the ICRC, after (Information collection requirements con- due deliberation, agrees with the fam- tained in paragraph (c) have been approved ily, the ICRC will recommend that the by the Office of Management and Budget under control number 0990–0114) treatment be withheld. When there is physician/family disagreement and the [49 FR 1651, Jan. 12, 1984, as amended at 52 family refuses consent, but the ICRC FR 3012, Jan. 30, 1987; 70 FR 24320, May 9, 2005] disagrees with the family, the ICRC will recommend to the hospital board §§ 84.56–84.60 [Reserved] or appropriate official that the case be referred immediately to an appropriate court or child protective agency, and Subpart G—Procedures every effort shall be made to continue § 84.61 Procedures. treatment, preserve the status quo, and prevent worsening of the infant’s con- The procedural provisions applicable dition until such time as the court or to title VI of the Civil Rights Act of agency renders a decision or takes 1964 apply to this part. These proce- other appropriate action. The ICRC dures are found in §§ 80.6 through 80.10 will also follow this procedure in cases and Part 81 of this Title. in which the family and physician [42 FR 22677, May 4, 1977; 42 FR 22888, May 5, agree that life-sustaining treatment 1977] should be withheld or withdrawn, but the ICRC disagrees. APPENDIX A TO PART 84—ANALYSIS OF (iii) Retrospective record review. The FINAL REGULATION ICRC, at its regularly-scheduled meet- SUBPART A—GENERAL PROVISIONS ing, will review all records involving withholding or termination of medical Definitions—1. ‘‘Recipient’’. Section 84.23 contains definitions used throughout the or surgical treatment to infants con- regulation. Most of the comments consistent with hospital policies developed cerning § 84.3(f), which contains the defini- by the ICRC, unless the case was pre- tion of ‘‘recipient,’’ commended the inclu- viously before the ICRC pursuant to sion of recipient whose sole source of Federal paragraph (f)(3)(ii) of this section. If financial assistance is Medicaid. The Sec- the ICRC finds that a deviation was retary believes that such Medicaid providers made from the institutional policies in should be regarded as recipients under the statute and the regulation and should be a given case, it shall conduct a review held individually responsible for admin- and report the findings to appropriate istering services in a nondiscriminatory hospital personnel for appropriate ac- fashion. Accordingly, § 84.3(f) has not been tion. changed. Small Medicaid providers, however,

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are exempt from some of the regulation’s ad- pitals, and other facilities receive reimburse- ministrative provisions (those that apply to ment for providing services to beneficiaries recipients with fifteen or more employees). under Part B of title XVIII of the Social Se- And such recipients will be permitted to curity Act (Medicare) constitutes a contract refer patients to accessible facilities in cer- of insurance or guaranty and thus falls with- tain limited circumstances under revised in the exemption from the regulation. This § 84.22(b). The Secretary recognizes the dif- explanation oversimplified the Department’s ficulties involved in Federal enforcement of view of whether Medicare Part B constitutes this regulation with respect to thousands of Federal financial assistance. The Depart- individual Medicaid providers. As in the case ment’s position has consistently been that, of title VI of the Civil Rights Act of 1964, the whether or not Medicare Part B arrange- Office for Civil Rights will concentrate its ments involve a contract of insurance or compliance efforts on the state Medicaid guaranty, no Federal financial assistance agencies and will look primarily to them to flows from the Department to the doctor or ensure compliance by individual providers. other practitioner under the program, since One other comment requested that the reg- Medicare Part B—like other social security ulation specify that nonpublic elementary programs—is basically a program of pay- and secondary schools that are not otherwise ments to direct beneficiaries. recipients do not become recipients by virtue 3. ‘‘Handicapped person’’. Section 84.3(j), of the fact their students participate in cer- which defines the class of persons protected tain federally funded programs. The Sec- under the regulation, has not been substan- retary believes it unnecessary to amend the tially changed. The definition of handi- regulation in this regard, because almost capped person in paragraph (j)(1) conforms to identical language in the Department’s regu- the statutory definition of handicapped per- lations implementing title VI and Title IX of son that is applicable to section 504, as set the Education Amendments of 1972 has con- forth in section 111(a) of the Rehabilitation sistently been interpreted so as not to render Act Amendments of 1974, Pub. L. 93–516. such schools recipients. These schools, how- The first of the three parts of the statutory ever, are indirectly subject to the sub- and regulatory definition includes any per- stantive requirements of this regulation son who has a physical or mental impair- through the application of § 84.4(b)(iv), which ment that substantially limits one or more prohibits recipients from assisting agencies major life activities. Paragraph (j)(2)(i) fur- that discriminate on the basis of handicap in ther defines physical or mental impairments. providing services to beneficiairies of the re- The definition does not set forth a list of spe- cipients’ programs. cific diseases and conditions that constitute 2. ‘‘Federal financial assistance’’. In § 84.3(h), physical or mental impairments because of defining Federal financial assistance, a clari- the difficulty of ensuring the comprehensive- fying change has been made: procurement ness of any such list. The term includes, contracts are specifically excluded. They are however, such diseases and conditions as or- covered, however, by the Department of La- thopedic, visual, speech, and hearing impair- bor’s regulation under section 503. The De- ments, cerebral palsy, epilepsy, muscular partment has never considered such con- dystrophy, multiple sclerosis, cancer, heart tracts to be contracts of assistance; the ex- disease, diabetes, mental retardation, emo- plicit exemption has been added only to tional illness, and, as discussed below, drug avoid possible confusion. addiction and alcoholism. The proposed regulation’s exemption of It should be emphasized that a physical or contracts of insurance or guaranty has been mental impairment does not constitute a retained. A number of comments argued for handicap for purposes of section 504 unless its deletion on the ground that section 504, its severity is such that it results in a sub- unlike title VI and title IX, contains no stat- stantial limitation of one or more major life utory exemption for such contracts. There is activities. Several comments observed the no indication, however, in the legislative lack of any definition in the proposed regula- history of the Rehabilitation Act of 1973 or tion of the phrase ‘‘substantially limits.’’ of the amendments to that Act in 1974, that The Department does not believe that a defi- Congress intended section 504 to have a nition of this term is possible at this time. broader application, in terms of Federal fi- A related issue raised by several comments nancial assistance, than other civil rights is whether the definition of handicapped per- statutes. Indeed, Congress directed that sec- son is unreasonably broad. Comments sug- tion 504 be implemented in the same manner gested narrowing the definition in various as titles VI and IX. In view of the long estab- ways. the most common recommendation lished exemption of contracts of insurance or was that only ‘‘traditional’’ handicaps be guaranty under title VI, we think it unlikely covered. The Department continues to be- that Congress intended section 504 to apply lieve, however, that it has no flexibility to such contracts. within the statutory definition to limit the In its May 1976 Notice of Intent, the De- term to persons who have those severe, per- partment suggested that the arrangement manent, or progressive conditions that are under which individual practitioners, hos- most commonly regarded as handicaps. The

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Department intends, however, to give par- well as persons who have no physical or men- ticular attention in its enforcement of sec- tal impairment but are treated by a recipi- tion 504 to eliminating discrimination ent as if they were handicapped. against persons with the severe handicaps 4. Drug addicts and alcoholics. As was the that were the focus of concern in the Reha- case during the first comment period, the bilitation Act of 1973. issue of whether to include drug addicts and The definition of handicapped person also alcoholics within the definition of handi- includes specific limitations on what persons capped person was of major concern to many are classified as handicapped under the regu- commenters. The arguments presented on lation. The first of the three parts of the def- each side of the issue were similar during the inition specifies that only physical and men- two comment periods, as was the preference tal handicaps are included. Thus, environ- of commenters for exclusion of this group of mental, cultural, and economic disadvantage persons. While some comments reflected are not in themselves covered; nor are prison misconceptions about the implications of in- records, age, or homosexuality. Of course, if cluding alcoholics and drug addicts within a person who has any of these characteristics the scope of the regulation, the Secretary also has a physical or mental handicap, the understands the concerns that underlie the person is included within the definition of comments on this question and recognizes handicapped person. that application of section 504 to active alco- In paragraph (j)(2)(i), physical or mental holics and drug addicts presents sensitive impairment is defined to include, among and difficult questions that must be taken other impairments, specific learning disabil- into account in interpretation and enforce- ities. The Department will interpret the ment. term as it is used in section 602 of the Edu- cation of the Handicapped Act, as amended. The Secretary has carefully examined the Paragraph (15) of section 602 uses the term issue and has obtained a legal opinion from ‘‘specific learning disabilities’’ to describe the Attorney General. That opinion con- such conditions as perceptual handicaps, cludes that drug addiction and alcoholism brain injury, minimal brain dysfunction, are ‘‘physical or mental impairments’’ with- dyslexia, and developmental aphasia. in the meaning of section 7(6) of the Reha- Paragraph (j)(2)(i) has been shortened, but bilitation Act of 1973, as amended, and that not substantively changed, by the deletion of drug addicts and alcoholics are therefore clause (C), which made explicit the inclusion handicapped for purposes of section 504 if of any condition which is mental or physical their impairment substantially limits one of but whose precise nature is not at present their major life activities. The Secretary known. Clauses (A) and (B) clearly com- therefore believes that he is without author- prehend such conditions. ity to exclude these conditions from the defi- The second part of the statutory and regu- nition. There is a medical and legal con- latory definition of handicapped person in- sensus that alcoholism and drug addiction cludes any person who has a record of a phys- are diseases, although there is disagreement ical or mental impairment that substan- as to whether they are primarily mental or tially limits a major life activity. Under the physical. In addition, while Congress did not definition of ‘‘record’’ in paragraph (j)(2)(iii), focus specifically on the problems of drug ad- persons who have a history of a handicapping diction and alcoholism in enacting section condition but no longer have the condition, 504, the committees that considered the Re- as well as persons who have been incorrectly habilitation Act of 1973 were made aware of classified as having such a condition, are the Department’s long-standing practice of protected from discrimination under section treating addicts and alcoholics as handi- 504. Frequently occurring examples of the capped individuals eligible for rehabilitation first group are persons with histories of men- services under the Vocational Rehabilitation tal or emotional illness, heart disease, or Act. cancer; of the second group, persons who The Secretary wishes to reassure recipi- have been misclassified as mentally re- ents that inclusion of addicts and alcoholics tarded. within the scope of the regulation will not The third part of the statutory and regu- lead to the consequences feared by many latory definition of handicapped person in- commenters. It cannot be emphasized too cludes any person who is regarded as having strongly that the statute and the regulation a physical or mental impairment that sub- apply only to discrimination against quali- stantially limits one or more major life ac- fied handicapped persons solely by reason of tivities. It includes many persons who are their handicap. The fact that drug addiction ordinarily considered to be handicapped but and alcoholism may be handicaps does not who do not technically fall within the first mean that these conditions must be ignored two parts of the statutory definition, such as in determining whether an individual is persons with a limp. This part of the defini- qualified for services or employment oppor- tion also includes some persons who might tunities. On the contrary, a recipient may not ordinarily be considered handicapped, hold a drug addict or alcoholic to the same such as persons with disfiguring scars, as standard of performance and behavior to

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which it holds others, even if any unsatisfac- rules prohibiting the use or possession of tory performance or behavior is related to drugs or alcohol by students. Neither such the person’s drug addiction or alcoholism. In rules nor their application to drug addicts or other words, while an alcoholic or drug ad- alcoholics is prohibited by this regulation, dict may not be denied services or disquali- provided that the rules are enforced evenly fied from employment solely because of his with respect to all students. or her condition, the behavioral manifesta- 5. ‘‘Qualified handicapped person.’’ Para- tions of the condition may be taken into ac- graph (k) of § 84.3 defines the term ‘‘qualified count in determining whether he or she is handicapped person.’’ Throughout the regu- qualified. lation, this term is used instead of the statu- With respect to the employment of a drug tory term ‘‘otherwise qualified handicapped addict or alcoholic, if it can be shown that person.’’ The Department believes that the the addiction or alcoholism prevents suc- omission of the word ‘‘otherwise’’ is nec- cessful performance of the job, the person essary in order to comport with the intent of need not be provided the employment oppor- the statute because, read literally, ‘‘other- tunity in question. For example, in making wise’’ qualified handicapped persons include employment decisions, a recipient may judge persons who are qualified except for their addicts and alcoholics on the same basis it handicap, rather than in spite of their handi- judges all other applicants and employees. cap. Under such a literal reading, a blind per- Thus, a recipient may consider—for all appli- son possessing all the qualifications for driv- cants including drug addicts and alcoholics— ing a bus except sight could be said to be past personnel records, absenteeism, disrup- ‘‘otherwise qualified’’ for the job of driving. tive, abusive, or dangerous behavior, viola- Clearly, such a result was not intended by tions of rules and unsatisfactory work per- Congress. In all other respects, the terms formance. Moreover, employers may enforce ‘‘qualified’’ and ‘‘otherwise qualified’’ are in- rules prohibiting the possesion or use of al- tended to be interchangeable. cohol or drugs in the work-place, provided Section 84.3(k)(1) defines a qualified handi- that such rules are enforced against all em- capped person with respect to employment ployees. as a handicapped person who can, with rea- With respect to services, there is evidence sonable accommodation, perform the essen- that drug addicts and alcoholics are often de- tial functions of the job in question. The nied treatment at hospitals for conditions term ‘‘essential functions’’ does not appear unrelated to their addiction or alcoholism. in the corresponding provision of the Depart- In addition, some addicts and alcoholics ment of Labor’s section 503 regulation, and a have been denied emergency treatment. few commenters objected to its inclusion on These practices have been specifically pro- the ground that a handicapped person should hibited by section 407 of the Drug Abuse Of- be able to perform all job tasks. However, fice and Treatment Act of 1972 (21 U.S.C. the Department believes that inclusion of 1174) and section 321 of the Comprehensive the phrase is useful in emphasizing that Alcohol Abuse and Alcoholism Prevention, handicapped persons should not be disquali- Treatment and Rehabilitation Act of 1970 (42 fied simply because they may have difficulty U.S.C. 4581), as amended. These statutory in performing tasks that bear only a mar- provisions are also administered by the De- ginal relationship to a particular job. Fur- partment’s Office for Civil Rights and are ther, we are convinced that inclusion of the implemented in § 84.53 of this regulation. phrase is not inconsistent with the Depart- With respect to other services, the implica- ment of Labor’s application of its definition. tions of coverage, of alcoholics and drug ad- Certain commenters urged that the defini- dicts are two-fold: first, no person may be ex- tion of qualified handicapped person be cluded from services solely by reason of the amended so as explicitly to place upon the presence or history of these conditions; sec- employer the burden of showing that a par- ond, to the extent that the manifestations of ticular mental or physical characteristic is the condition prevent the person from meet- essential. Because the same result is ing the basic eligibility requirements of the achieved by the requirement contained in program or cause substantial interference paragraph (a) of § 84.13, which requires an with the operation of the program, the con- employer to establish that any selection cri- dition may be taken into consideration. terion that tends to screen out handicapped Thus, a college may not exclude an addict or persons is job-related, that recommendation alcoholic as a student, on the basis of addic- has not been followed. tion or alcoholism, if the person can success- Section 84.3(k)(2) (formerly § 84.3(k)(3)) de- fully participate in the education program fines qualified handicapped person, with re- and complies with the rules of the college spect to preschool, elementary, and sec- and if his or her behavior does not impede ondary programs, in terms of age. Several the performance of other students. commenters recommended that eligibility Of great concern to many commenters was for the services be based upon the standard the question of what effect the inclusion of of substantial benefit, rather than age, be- drug addicts and alcoholics as handicapped cause of the need of many handicapped chil- persons would have on school disciplinary dren for early or extended services if they

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are to have an equal opportunity to benefit lished under title VI of Civil Rights Act of from education programs. No change has 1964 with respect to the provision of edu- been made in this provision, again because of cational services to students whose primary the extreme difficulties in administration language is not English. See Lau v. Nichols, that would result from the choice of the 414 U.S. 563 (1974). To be equally effective, former standard. Under the remedial action however, an aid, benefit, or service need not provisions of § 84.6(a)(3), however, persons be- produce equal results; it merely must afford yond the age limits prescribed in § 84.3(k)(2) an equal opportunity to achieve equal re- may in appropriate cases be required to be sults. provided services that they were formerly It must be emphasized that, although sepa- denied because of a recipient’s violation of rate services must be required in some in- section 504. stances, the provision of unnecessarily sepa- Section 84.3(k)(2) states that a handicapped rate or different services is discriminatory. person is qualified for preschool, elementary, The addition to paragraph (b)(2) of the or secondary services if the person is of an phrase ‘‘in the most integrated setting ap- age at which nonhandicapped persons are eli- propriated to the person’s needs’’ is intended gible for such services or at which state law to reinforce this general concept. A new mandates the provision of educational serv- paragraph (b)(3) has also been added to § 84.4, ices to handicapped persons. In addition, the requiring recipients to give qualified handi- extended age ranges for which recipients capped persons the option of participating in must provide full educational opportunity to regular programs despite the existence of all handicapped persons in order to be eligi- permissibly separate or different programs. ble for assistance under the Education of the The requirement has been reiterated in Handicapped Act—generally, 3–18 as of Sep- §§ 84.38 and 84.47 in connection with physical tember 1978, and 3–21 as of September 1980 education and athletics programs. are incorporated by reference in this para- Section 84.4(b)(1)(v) prohibits a recipient graph. Section 84.3(k)(3) formerly § 84.3(k)(2)) de- from supporting another entity or person fines qualified handicapped person with re- that subjects participants or employees in spect to postsecondary educational pro- the recipient’s program to discrimination on grams. As revised, the paragraph means that the basis of handicap. This section would, for both academic and technical standards must example, prohibit financial support by a re- be met by applicants to these programs. The cipient to a community recreational group term ‘‘technical standards’’ refers to all non- or to a professional or social organization academic admissions criteria that are essen- that discriminates against handicapped per- tial to participation in the program in ques- sons. Among the criteria to be considered in tion. each case are the substantiality of the rela- 6. General prohibitions against discrimination. tionship between the recipient and the other Section 84.4 contains general prohibitions entity, including financial support by the re- against discrimination applicable to all recipient, and whether the other entity’s ac- cipients of assistance from this Department. tivities relate so closely to the recipient’s Paragraph (b)(1(i) prohibits the exclusion program or activity that they fairly should of qualified handicapped persons from aids, be considered activities of the recipient benefits, or services, and paragraph (ii) re- itself. Paragraph (b)(1)(vi) was added in requires that equal opportunity to participate sponse to comment in order to make explicit or benefit be provided. Paragraph (iii) re- the prohibition against denying qualified quires that services provided to handicapped handicapped persons the opportunity to persons be as effective as those provided to serve on planning and advisory boards re- the nonhandicapped. In paragraph (iv), dif- sponsible for guiding federally assisted pro- ferent or separate services are prohibited ex- grams or activities. cept when necessary to provide equally effec- Several comments appeared to interpret tive benefits. § 84.4(b)(5), which proscribes discriminatory In this context, the term ‘‘equally effec- site selection, to prohibit a recipient that is tive,’’ defined in paragraph (b)(2), is intended located on hilly terrain from erecting any to encompass the concept of equivalent, as new buildings at its present site. That, of opposed to identical, services and to ac- course, is not the case. This paragraph is not knowledge the fact that in order to meet the intended to apply to construction of addi- individual needs of handicapped persons to tional buildings at an existing site. Of the same extent that the corresponding course, any such facilities must be made ac- needs of nonhandicapped persons are met, cessible in accordance with the requirements adjustments to regular programs or the proof § 84.23. vision of different programs may sometimes 7. Assurances of compliance. Section 84.5(a) be necessary. For example, a welfare office requires a recipient to submit to the Direc- that uses the telephone for communicating tor an assurance that each of its programs with its clients must provide alternative and activities receiving or benefiting from modes of communicating with its deaf cli- Federal financial assistance from this De- ents. This standard parallels the one estab- partment will be conducted in compliance

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with this regulation. To facilitate the sub- overcome conditions that led to limited par- mission of assurances by thousands of Med- ticipation by handicapped persons, whether icaid providers, the Department will follow or not the limited participation was caused the title VI procedures of accepting, in lieu by any discriminatory actions on the part of of assurances, certification on Medicaid the recipient. Several commenters urged vouchers. Many commenters also sought re- that paragraphs (a) and (b) be revised to relief from the paperwork requirements im- quire remedial action to overcome effects of posed by the Department’s enforcement of prior discriminatory practices regardless of its various civil rights responsibilities by re- whether there has been an express finding of questing the Department to issue one form discrimination. The self-evaluation require- incorporating title VI, title IX, and section ment in paragraph (c) accomplishes much 504 assurances. The Secretary is sympathetic the same purpose. to this request. While it is not feasible to 11. Self-evaluation. Paragraph (c) requires adopt a single civil rights assurance form at recipients to conduct a self-evaluation in this time, the Office for Civil Rights will order to determine whether their policies or work toward that goal. practices may discriminate against handi- 8. Private rights of action. Several com- capped persons and to take steps to modify ments urged that the regulation incorporate any discriminatory policies and practices provision granting beneficiaries a private and their effects. The Department received right of action against recipients under sec- many comments approving of the addition to tion 504. To confer such a right is beyond the paragraph (c) of a requirement that recipi- authority of the executive branch of Govern- ents seek the assistance of handicapped per- ment. There is, however, case law holding sons in the self-evaluation process. This that such a right exists. Lloyd v. Regional paragraph has been further amended to re- Transportation Authority, 548 F. 2d 1277 (7th quire consultation with handicapped persons Cir. 1977); see Hairston v. Drosick, Civil No. 75– or organizations representing them before 0691 (S.D. W. Va., Jan. 14, 1976); Gurmankin v. recipients undertake the policy modifica- Castanzo, 411 F. Supp. 982 (E.D. Pa. 1976); cf. tions and remedial steps prescribed in para- Lau v. Nichols, supra. graphs (c)(1)(ii) and (iii). 9. Remedial action. Where there has been a Paragraph (c)(2), which sets forth the rec- finding of discrimination, § 84.6 requires a re- ordkeeping requirements concerning self- cipient to take remedial action to overcome evaluation, now applies only to recipients the effects of the discrimination. Actions with fifteen or more employees. This change that might be required under paragraph was made as part of an effort to reduce un- (a)(1) include provision of services to persons necessary or counterproductive administra- previously discriminated against, reinstate- tive obligations on small recipients. For ment of employees and development of a re- those recipients required to keep records, the medial action plan. Should a recipient fail to requirements have been made more specific; take required remedial action, the ultimate records must include a list of persons con- sanctions of court action or termination of sulted and a description of areas examined, Federal financial assistance may be imposed. problems identified, and corrective steps Paragraph (a)(2) extends the responsibility taken. Moreover, the records must be made for taking remedial action to a recipient available for public inspection. that exercises control over a noncomplying 12. Grievance procedure. Section 84.7 (for- recipient. Paragraph (a)(3) also makes clear merly § 84.8) requires recipients with fifteen that handicapped persons who are not in the or more employees to designate an indi- program at the time that remedial action is vidual responsible for coordinating its com- required to be taken may also be the subject pliance efforts and to adopt a grievance proof such remedial action. This paragraph has cedure. Two changes were made in the sec- been revised in response to comments in tion in response to comment. A general re- order to include persons who would have quirement that appropriate due process pro- been in the program if discriminatory prac- cedures be followed has been added. It was tices had not existed. Paragraphs (a) (1), (2), decided that the details of such procedures and (3) have also been amended in response could not at this time be specified because of to comments to make plain that, in appro- the varied nature of the persons and entities priate cases, remedial action might be re- who must establish the procedures and of the quired to redress clear violations of the stat- programs to which they apply. A sentence ute itself that occurred before the effective was also added to make clear that grievance date of this regulation. procedures are not required to be made avail- 10. Voluntary action. In § 84.6(b), the term able to unsuccessful applicants for employ- ‘‘voluntary action’’ has been substituted for ment or to applicants for admission to col- the term ‘‘affirmative action’’ because the leges and universities. use of the latter term led to some confusion. The regulation does not require that griev- We believe the term ‘‘voluntary action’’ ance procedures be exhausted before recourse more accurately reflects the purpose of the is sought from the Department. However, the paragraph. This provision allows action, be- Secretary believes that it is desirable and ef- yond that required by the regulation, to ficient in many cases for complainants to

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seek resolution of their complaints and dis- capped persons and ramps and other features putes at the local level and therefore encour- of accessible buildings. ages them to use available grievance proce- Under new § 84.9 the Director may, under dures. certain circumstances, require recipients A number of comments asked whether with fewer than fifteen employees to comply compliance with this section or the notice with one or more of these requirements. requirements of § 84.8 could be coordinated Thus, if experience shows a need for impos- with comparable action required by the title ing notice or other requirements on par- IX regulation. The Department encourages ticular recipients or classes of small recipi- such efforts. ents, the Department is prepared to expand 13. Notice. Section 84.8 (formerly § 84.9) sets the coverage of these sections. forth requirements for dissemination of 14. Inconsistent State laws. Section 84.10(a) statements of nondicrimination policy by restates that compliance with the regulation is cipients. not excused by state or local laws limiting It is important that both handicapped per- the eligibility of qualified handicapped persons and the public at large be aware of the sons to receive services or to practice an oc- obligations of recipients under section 504. cupation. The provision thus applies only Both the Department and recipients have re- with respect to state or local laws that sponsibilities in this regard. Indeed the De- unjustifiably differentiate on the basis of partment intends to undertake a major pub- handicap. lic information effort to inform persons of Paragraph (b) further points out that the their rights under section 504 and this regu- presence of limited employment opportuni- lation. In § 84.8 the Department has sought to ties in a particular profession, does not ex- impose a clear obligation on major recipi- cuse a recipient from complying with the ents to notify beneficiaries and employees of regulation. Thus, a law school could not the requirements of section 504, without dic- deny admission to a blind applicant because tating the precise way in which this notice blind laywers may find it more difficult to must be given. At the same time, we have find jobs that do nonhandicapped lawyers. avoided imposing requirements on small recipients (those with fewer than fifteen em- SUBPART B—EMPLOYMENT PRACTICES ployees) that would create unnecessary and Subpart B prescribes requirements for non- counterproductive paper work burdens on discrimination in the employment practices them and unduly stretch the enforcement re- of recipients of Federal financial assistance sources of the Department. administered by the Department. This sub- Section 84.8(a), as simplified, requires re- part is consistent with the employment pro- cipients with fifteen or more employees to visions of the Department’s regulation im- take appropriate steps to notify beneficiaries plementing title IX of the Education Amend- and employees of the recipient’s obligations ments of 1972 (45 CFR Part 86) and the regu- under section 504. The last sentence of lation of the Department of Labor under sec- § 84.8(a) has been revised to list possible, tion 503 of the Rehabilitation Act, which rather than required, means of notification. requries certain Federal contractors to take Section 84.8(b) requires recipients to include affirmative action in the employment and a notification of their policy of non- advancement of qualified handicapped per- discrimination in recruitment and other gen- sons. All recipients subject to title IX are eral information materials. also subject to this regulation. In addition, In response to a number of comments, § 84.8 many recipients subject to this regulation has been revised to delete the requirements receive Federal procurement contracts in ex- of publication in local newspapers, which has cess of $2,500 and are therefore also subject proved to be both troublesome and ineffec- to section 503. tive. Several commenters suggested that no- 15. Discriminatory practices. Section 84.11 tification on separate forms be allowed until sets forth general provisions with respect to present stocks of publications and forms are discrimination in employment. A new para- depleted. The final regulation explicitly al- graph (a)(2) has been added to clarify the em- lows this method of compliance. The sepa- ployment obligations of recipients that re- rate form should, however, be included with ceive Federal funds under Part B of the Edu- each significant publication or form that is cation of the Handicapped Act, as amended distributed. (EHA). Section 606 of the EHA obligates ele- Former § 84.9(b)(2), which prohibited the mentary or secondary school systems that use of materials that might give the impres- receive EHA funds to take positive steps to sion that a recipient excludes qualified employ and advance in employment qualified handicapped persons from its program, has handicapped persons. This obligation is simi- been deleted. The Department is convinced lar to the nondiscrimination requirement of by the comments that this provision is un- section 504 but requires recipients to take necessary and difficult to apply. The Depart- additional steps to hire and promote handi- ment encourages recipients, however, to in- capped persons. In enacting section 606 Con- clude in their recruitment and other general gress chose the words ‘‘positive steps’’ in- information materials photographs of handi- stead of ‘‘affirmative action’’ advisedly and

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did not intend section 606 to incorporate the not be required to expend more than a nomi- types of activities required under Executive nal sum, such as that necessary to equip a Order 11246 (affirmative action on the basis telephone for use by a secretary with im- of race, color, sex, or national origin) or paired hearing, but a large school district under sections 501 and 503 of the Rehabilita- might be required to make available a teach- tion Act of 1973. er’s aide to a blind applicant for a teaching Paragraph (b) of § 84.11 sets forth the spe- job. Further, it might be considered reason- cific aspects of employment covered by the able to require a state welfare agency to ac- regulation. Paragraph (c) provides that in- commodate a deaf employee by providing an consistent provisions of collective bar- interpreter, while it would constitute an gaining agreements do not excuse non- undue hardship to impose that requirement compliance. on a provider of foster home care services. 16. Reasonable accommodation. The reason- The reasonable accommodation standard in able accommodation requirement of § 84.12 § 84.12 is similar to the obligation imposed generated a substantial number of com- upon Federal contractors in the regulation ments. The Department remains convinced implementing section 503 of the Rehabilita- that its approach is both fair and effective. tion Act of 1973, administered by the Depart- Moreover, the Department of Labor reports ment of Labor. Although the wording of the that it has experienced little difficulty in ad- reasonable accommodation provisions of the ministering the requirements of reasonable two regulations is not identical, the obliga- accommodation. The provision therefore re- tion that the two regulations impose is the mains basically unchanged from the pro- same, and the Federal Government’s policy posed regulation. in implementing the two sections will be Section 84.12 requires a recipient to make uniform. The Department adopted the fac- reasonable accommodation to the known tors listed in paragraph (c) instead of the physical or mental limitations of a handi- ‘‘business necessity’’ standard of the Labor capped applicant or employee unless the re- regulation because that term seemed inap- cipient can demonstrate that the accommo- propriate to the nature of the programs oper- dation would impose an undue hardship on ated by the majority of institutions subject the operation of its program. Where a handi- to this regulation, e.g., public school sys- capped person is not qualified to perform a tems, hospitals, colleges and universities, particular job, where reasonable accommo- nursing homes, day-care centers, and welfare dation does not overcome the effects of a offices. The factors listed in paragraph (c) person’s handicap, or where reasonable ac- are intended to make the rationale under- commodation causes undue hardship to the lying the business necessity standard appli- employer, failure to hire or promote the cable to an understandable by recipients of handicapped person will not be considered HHS funds. discrimination. 17. Tests and selection criteria. Revised Section 84.12(b) lists some of the actions § 84.13(a) prohibits employers from using test that constitute reasonable accommodation. or other selection criteria that screen out or The list is neither all-inclusive nor meant to tend to screen out handicapped persons un- suggest that employers must follow all of less the test or criterion is shown to be job- the actions listed. related and alternative tests or criteria that Reasonable accommodation includes modi- do not screen out or tend to screen out as fication of work schedules, including part- many handicapped persons are not shown by time employment, and job restructuring. Job the Director to be available. This paragraph restructuring may entail shifting non- is an application of the principle established essential duties to other employees. In other under title VII of the Civil Rights Act of 1964 cases, reasonable accommodation may in- in Griggs v. Duke Power Company, 401 U.S. 424 clude physical modifications or relocation of (1971). particular offices or jobs so that they are in Under the proposed section, a statistical facilities or parts of facilities that are acces- showing of adverse impact on handicapped sible to and usable by handicapped persons. persons was required to trigger an employ- If such accommodations would cause undue er’s obligation to show that employment cri- hardship to the employer, they need not be teria and qualifications relating to handicap made. were necessary. This requirement was Paragraph (c) of this section sets forth the changed because the small number of handi- factors that the Office for Civil Rights will capped persons taking tests would make sta- consider in determining whether an accom- tistical showings of ‘‘disproportionate, ad- modation necessary to enable an applicant verse effect’’ difficult and burdensome. or employee to perform the duties of a job Under the altered, more workable provision, would impose an undue hardship. The weight once it is shown that an employment test given to each of these factors in making the substantially limits the opportunities of determination as to whether an accommoda- handicapped persons, the employer must tion constitutes undue hardship will vary de- show the test to be job-related. A recipient is pending on the facts of a particular situa- no longer limited to using predictive validity tion. Thus, a small day-care center might studies as the method for demonstrating

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that a test or other selection criterion is in overcome past conditions that have limited fact job-related. Nor, in all cases, are pre- the participation of handicapped persons, or dictive validity studies sufficient to dem- with obligations under section 503 of the Re- onstrate that a test or criterion is job-rehabilitation Act of 1973. In these instances, lated. In addition, § 84.13(a) has been revised paragraph (b) specifies certain safeguards to place the burden on the Director, rather that must be followed by the employer. than the recipient, to identify alternate Finally, the revised provision allows an tests. employer to condition offers of employment Section 84.13(b) requires that a recipient to handicapped persons on the results of take into account that some tests and cri- medical examinations, so long as the exami- teria depend upon sensory, manual, or speak- nations are administered to all employees in ing skills that may not themselves be nec- a nondiscriminatory manner and the results essary to the job in question but that may are treated on a confidential basis. make the handicapped person unable to pass 19. Specific acts of Discrimination. Sections the test. The recipient must select and ad- 84.15 (recruitment), 84.16 (compensation), minister tests so as best to ensure that the 84.17 (job classification and structure) and test will measure the handicapped person’s 84.18 (fringe benefits) have been deleted from ability to perform on the job rather than the the regulation as unnecessarily duplicative person’s ability to see, hear, speak, or per- of § 84.11 (discrimination prohibited). The de- form manual tasks, except, of course, where letion of these sections in no way changes such skills are the factors that the test pur- the substantive obligations of employers ports to measure. For example, a person with subject to this regulation from those set a speech impediment may be perfectly quali- forth in the July 16 proposed regulation. fied for jobs that do not or need not, with These deletions bring the regulation closer reasonable accommodation, require ability in form to the Department of Labor’s section to speak clearly. Yet, if given an oral test, 503 regulation. the person will be unable to perform in a sat- Proposed § 84.18, concerning fringe benefits, isfactory manner. The test results will not, had allowed for differences in benefits or therefore, predict job performance but in- contributions between handicapped and non- stead will reflect impaired speech. handicapped persons in situations only 18. Preemployment inquiries. Section 84.14, where such differences could be justified on concerning preemployment inquiries, gen- an actuarial basis. Section 84.11 simply bars erated a large number of comments. Com- discrimination in providing fringe benefits menters representing handicapped persons and does not address the issue of actuarial strongly favored a ban on preemployment in- differences. The Department believes that quiries on the ground that such inquiries are currently available data and experience do often used to discriminate against handicapped persons and are not necessary to not demonstrate a basis for promulgating a serve any legitimate interests of employers. regulation specifically allowing for dif- Some recipients, on the other hand, argued ferences in benefits or contributions. that preemployment inquiries are necessary SUBPART C—PROGRAM ACCESSIBILITY to determine qualifications of the applicant, safety hazards caused by a particular handi- In general, subpart C prohibits the exclu- capping condition, and accommodations that sion of qualified handicapped persons from might required. federally assisted programs or activities be- The Secretary has concluded that a gen- cause a recipient’s facilities are inaccessible eral prohibition of preemployment inquiries or unusable. is appropriate. However, a sentence has been 20. Existing facilities. Section 84.22 main- added to paragraph (a) to make clear that an tains the same standard for nondiscrimina- employer may inquire into an applicant’s tion in regard to existing facilities as was inability to perform job-related tasks but may cluded in the proposed regulation. The sec- not ask if the person has a handicap. For ex- tion states that a recipient’s program or ac- ample, an employer may not ask on an em- tivity, when viewed in its entirety, must be ployment form if an applicant is visually im- readily accessible to and usable by handi- paired but may ask if the person has a cur- capped persons. Paragraphs (a) and (b) make rent driver’s license (if that is a necessary clear that a recipient is not required to qualification for the position in question). make each of its existing facilities accessible Similarly, employers may make inquiries to handicapped persons if its program as a about an applicant’s ability to perform a job whole is accessible. Accessibility to the re- safely. Thus, an employer may not ask if an cipient’s program or activity may be applicant is an epileptic but may ask wheth- achieved by a number of means, including reer the person can perform a particular job design of equipment, reassignment of classes without endangering other employees. or other services to accessible buildings, and Section 84.14(B) allows preemployment in- making aides available to beneficiaries. In quiries only if they are made in conjunction choosing among methods of compliance, re- with required remedial action to correct past cipients are required to give priority consid- discrimination, with voluntary action to eration to methods that will be consistent

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with provision of services in the most appro- nate accessible sites or making home visits. priate integrated setting. Structural changes Thus, for example, a pharmacist might ar- in existing facilities are required only where range to make home deliveries of drugs. there is no other feasible way to make the Under revised § 84.22(c), small providers of recipient’s program accessible. health, welfare, and social services (those Under § 84.22, a university does not have to with fewer than fifteen employees) may refer make all of its existing classroom buildings a beneficiary to an accessible provider of the accessible to handicapped students if some of desired service, but only if no means of meet- its buildings are already accessible and if it ing the program accessibility requirement is possible to reschedule or relocate enough other than a significant alteration in exist- classes so as to offer all required courses and ing facilties is available. The referring re- a reasonable selection of elective courses in cipient has the responsibility of determining accessible facilities. If sufficient relocation that the other provider is in fact accessible of classes is not possible using existing fa- and willing to provide the service. The Sec- cilities, enough alterations to ensure pro- retary believes this ‘‘last resort’’ referral gram accessibility are required. A university provision is appropriate to avoid imposition may not exclude a handicapped student from of additional costs in the health care area, to a specifically requested course offering be- encourage providers to remain in the Med- cause it is not offered in an accessible loca- icaid program, and to avoid imposing signifi- tion, but it need not make every section of cant costs on small, low-budget providers that course accessible. such as day-care centers or foster homes. Commenters representing several institu- A recent change in the tax law may assist tions of higher education have suggested some recipients in meeting their obligations that it would be appropriate for one postsec- under this section. Under section 2122 of the ondary institution in a geographical area to Tax Reform Act of 1976, recipients that pay be made accessible to handicapped persons federal income tax are eligible to claim a tax and for other colleges and universities in deduction of up to $25,000 for architectural that area to participate in that school’s pro- and transportation modifications made to gram, thereby developing an educational improve accessibility for handicapped per- consortium for the postsecondary education sons. Many physicians and dentists, among of handicapped students. The Department be- others, may be eligible for this tax deduc- lieves that such a consortium, when devel- tion. See 42 FR 17870 (April 4, 1977), adopting oped and applied only to handicapped per- 26 CFR 7.190. sons, would not constitute compliance with Several commenters expressed concern § 84.22, but would discriminate against quali- about the feasibility of compliance with the fied handicapped persons by restricting their program accessibility standard. The Sec- choice in selecting institutions of higher retary believes that the standard is flexible education and would, therefore, be incon- enough to permit recipients to devise ways sistent with the basic objectives of the stat- to make their programs accessible short of ute. extremely expensive or impractical physical Nothing in this regulation, however, changes in facilities. Accordingly, the sec- should be read as prohibiting institutions tion does not allow for waivers. The Depart- from forming consortia for the benefit of all ment is ready at all times to provide tech- students. Thus, if three colleges decide that nical assistance to recipients in meeting it would be cost-efficient for one college to their program accessibility responsibilities. offer biology, the second physics, and the For this purpose, the Department is estab- third chemistry to all students at the three lishing a special technical assistance unit. colleges, the arrangement would not violate Recipients are encouraged to call upon the section 504. On the other hand, it would vio- unit staff for advice and guidance both on late the regulation if the same institutions structural modifications and on other ways set up a consortium under which one college of meeting the program accessibility re- undertook to make its biology lab acces- quirement. sible, another its physics lab, and a third its Paragraph (d) has been amended to require chemistry lab, and under which mobility-im- recipients to make all nonstructural adjust- paired handicapped students (but not other ments necessary for meeting the program ac- students) were required to attend the par- cessibility standard within sixty days. Only ticular college that is accessible for the de- where structural changes in facilities are sired courses. necessary will a recipient be permitted up to Similarly, while a public school district three years to accomplish program accessi- need not make each of its buildings com- bility. It should be emphasized that the pletely accessible, it may not make only one three-year time period is not a waiting pe- facility or part of a facility accessible if the riod and that all changes must be accom- result is to segregate handicapped students plished as expeditiously as possible. Further, in a single setting. it is the Department’s belief, after consulta- All recipients that proivde health, welfare, tion with experts in the field, that outside or other social services may also comply ramps to buildings can be constructed quick- with § 84.22 by delivering services at alter- ly and at relatively low cost. Therefore, it

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will be expected that such structural addi- proved by the manner in which the alter- tions will be made promptly to comply with ation is carried out, the alteration must be § 84.22(d). made in that manner. Thus, if a doorway or The regulation continues to provide, as did wall is being altered, the door or other wall the proposed version, that a recipient plan- opening must be made wide enough to ac- ning to achieve program accessibility by commodate wheelchairs. On the other hand, making structural changes must develop a if the alteration consists of altering ceilings, transition plan for such changes within six the provisions of this section are not applica- months of the effective date of the regula- ble because this alteration cannot be done in tion. A number of commenters suggested ex- a way that affects the accessibility of that tending that period to one year. The sec- portion of the building. The phrase ‘‘to the retary believes that such an extension is un- maximum extent feasible’’ has been added to necessary and unwise. Planning for any nec- allow for the occasional case in which the essary structural changes should be under- nature of an existing facility is such as to taken promptly to ensure that they can be make it impractical or prohibitively expen- completed within the three-year period. The sive to renovate the building in a manner elements of the transition plan as required that results in its being entirely barrier-free. by the regulation remain virtually un- In all such cases, however, the alteration changed from the proposal but § 84.22(d) now should provide the maximum amount of includes a requirement that the recipient physical accessibility feasible. make the plan available for public inspec- As proposed, § 84.23(c) required compliance tion. with the American National Standards Insti- Several commenters expressed concern tute (ANSI) standard on building accessi- that the program accessibility standard bility as the minimum necessary for compli- would result in the segregation of handi- ance with the accessibility requirement of capped persons in educational institutions. § 84.23 (a) and (b). The regerence to the ANSI The regulation will not be applied to permit standard created some ambiguity, since the such a result. See § 84.4(c)(2)(iv), prohibiting standard itself provides for waivers where unnecessarily separate treatment; § 84.35, re- other methods are equally effective in pro- quiring that students in elementary and sec- viding accessibility to the facility. More- ondary schools be educated in the most inte- over, the Secretary does not wish to discour- grated setting appropriate to their needs; age innovation in barrier-free construction and new § 84.43(d), applying the same standby requiring absolute adherence to a rigid ard to postsecondary education. design standard. Accordingly, § 84.23 (c) has We have received some comments from or- been revised to permit departures from par- ganizations of handicapped persons on the ticular requirements of the ANSI standard subject of requiring, over an extended period where the recipient can demonstrate that of time, a barrier-free environment—that is, equivalent access to the facility is provided. requiring the removal of all architectural Section 84.23(d) of the proposed regulation, barriers in existing facilities. The Depart- providing for a limited deferral of action ment has considered these comments but has concerning facilities that are subject to sec- decided to take no further action at this tion 502 as well as section 504 of the Act, has time concerning these suggestions, believing been deleted. The Secretary believes that the that such action should only be considered in provision is unnecessary and inappropriate light of experience in implementing the pro- to this regulation. The Department will, gram accessibility standard. however, seek to coordinate enforcement ac- 21. New construction. Section 84.23 requires tivities under this regulation with those of that all new facilities, as well as alterations the Architectural and Transportation Bar- that could affect access to and use of exist- riers Compliance Board. ing facilities, be designed and constructed in a manner so as to make the facility acces- SUBPART D—PRESCHOOL, ELEMENTARY, AND sible to and usable by handicapped persons. SECONDARY EDUCATION Section 84.23(a) has been amended so that it Subpart D sets forth requirements for non- applies to each newly constructed facility if discrimination in preschool, elementary, sec- the construction was commenced after the ondary, and adult education programs and effective date of the regulation. The words activities, including secondary vocational ‘‘if construction has commenced’’ will be education programs. In this context, the considered to mean ‘‘if groundbreaking has term ‘‘adult education’’ refers only to those takenplace.’’ Thus, a recipient will not be re- educational programs and activities for quired to alter the design of a facility that adults that are operated by elementary and has progressed beyond groundbreaking prior secondary schools. to the effective date of the regulation. The provisions of Subpart D apply to state Paragraph (b) requires certain alterations and local educational agencies. Although the to conform to the requirement of physical subpart applies, in general, to both public accessibility in paragraph (a). If an alter- and private education programs and activi- ation is undertaken to a portion of a build- ties that are federally assisted, §§ 84.32 and ing the accessibility of which could be im- 84.33 apply only to public programs and

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§ 84.39 applies only to private programs; lished by section 504 and this regulation. §§ 84.35 and 84.36 apply both to public pro- This section has been shortened without sub- grams and to those private programs that in- stantive change. clude special services for handicapped stu- 23. Free appropriate public education. dents. Former §§ 84.34 (‘‘Free education’’) and Subpart B generally conforms to the stand- 84.36(a) (‘‘Suitable education’’) have been ards established for the education of handi- consolidated and revised in new § 84.33. Under capped persons in Mills v. Board of Education § 84.34(a), a recipient is responsible for proof the District of Columbia, 348 F. Supp. 866 viding a free appropriate public education to (D.D.C. 1972), Pennsylvania Association for Re- each qualified handicapped person who is in tarded Children v. Commonwealth of Pennsyl- the recipient’s jurisdiction. The word ‘‘in’’ vania, 344 F. Supp. 1257 (E.D. 1971), 343 F. encompasses the concepts of both domicile Supp. 279 (E.D. Pa. 1972), and Lebanks v. and actual residence. If a recipient places a Spears, 60, F.R.D. 135 (E.D. La. 1973), as well child in a program other than its own, it re- as in the Education of the Handicapped Act, mains financially responsible for the child, as amended by Pub. L. 94–142 (the EHA). whether or not the other program is oper- The basic requirements common to those ated by another recipient or educational cases, to the EHA, and to this regulation are agency. Moreover, a recipient may not place (1) that handicapped persons, regardless of a child in a program that is inappropriate or the nature or severity of their handicap, be that otherwise violates the requirements of provided a free appropriate public education, Subpart D. And in no case may a recipient (2) that handicapped students be educated refuse to provide services to a handicapped with nonhandicapped students to the max- child in its jurisdiction because of another imum extent appropriate to their needs, (3) person’s or entity’s failure to assume finan- that educational agencies undertake to iden- cial responsibility. tify and locate all unserved handicapped children, (4) that evaluation procedures be Section 84.33(b) concerns the provision of improved in order to avoid the inappropriate appropriate educational services to handi- education that results from the capped children. To be appropriate, such misclassification of students, and (5) that services must be designed to meet handi- procedural safeguard be established to en- capped children’s individual educational able parents and guardians to influence deci- needs to the same extent that those of non- sions regarding the evaluation and place- handicapped children are met. An appro- ment of their children. These requirements priate education could consist of education are designed to ensure that no handicapped in regular classes, education in regular class- child is excluded from school on the basis of es with the use of supplementary services, or handicap and, if a recipient demonstrates special education and related services. Spe- that placement in a regular educational set- cial education may include specially de- ting cannot be achieved satisfactorily, that signed instruction in classrooms, at home, or the student is provided with adequate alter- in private or public institutions and may be native services suited to the student’s needs accompanied by such related services as de- without additional cost to the student’s par- velopmental, corrective, and other sup- ents or guardian. Thus, a recipient that oper- portive services (including psychological, ates a public school system must either edu- counseling, and medical diagnostic services). cate handicapped children in its regular pro- The placement of the child must however, be gram or provide such children with an appro- consistent with the requirements of § 84.34 priate alternative education at public ex- and be suited to his or her educational needs. pense. The quality of the educational services It is not the intention of the Department, provided to handicapped students must equal except in extraordinary circumstances, to re- that of the services provided to nonhandi- view the result of individual placement and capped students; thus, handicapped student’s other educational decisions, so long as the teachers must be trained in the instruction school district complies with the ‘‘process’’ of persons with the handicap in question and requirements of this subpart (concerning appropriate materials and equipment must identification and location, evaluation, and be available. The Department is aware that due process procedures). However, the De- the supply of adequately trained teachers partment will place a high priority on inves- may, at least at the outset of the imposition tigating cases which may involve exclusion of this requirement, be insufficient to meet of a child from the education system or a the demand of all recipients. This factor will pattern or practice of discriminatory place- be considered in determining the appro- ments or education. priateness of the remedy for noncompliance 22. Location and notification. Section 84.32 with this section. A new § 84.33(b)(2) has been requires public schools to take steps annu- added, which allows this requirement to be ally to identify and locate handicapped chil- met through the full implementation of an dren who are not receiving an education and individualized education program developed to publicize to handicapped children and in accordance with the standards of the their parents the rights and duties estab- EHA.

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Paragraph (c) of § 84.33 sets forth the spe- recipient can show that the needs of the stu- cific financial obligations of a recipient. If a dent would, on balance, be served by place- recipient does not itself provide handicapped ment in another setting. persons with the requisite services, it must Although under § 84.34, the needs of the assume the cost of any alternate placement. handicapped person are determinative as to If, however, a recipient offers adequate serv- proper placement, it should be stressed that, ices and if alternate placement is chosen by where a handicapped student is so disruptive a student’s parent or guardian, the recipient in a regular classroom that the education of need not assume the cost of the outside serv- other students is significantly impaired, the ices. (If the parent or guardian believes that needs of the handicapped child cannot be met his or her child cannot be suitably educated in that environment. Therefore, regular in the recipient’s program, he or she may placement would not be appropriate to his or make use of the procedures established in her needs and would not be required by § 84.36.) Under this paragraph, a recipient’s § 84.34. obligation extends beyond the provision of Among the factors to be considered in plac- tuition payments in the case of placement ing a child is the need to place the child as outside the regular program. Adequate close to home as possible. A new sentence transportation must also be provided. Re- has been added to paragraph (a) requiring recipients must also pay for psychological cipients to take this factor into account. As services and those medical services nec- pointed out in several comments, the par- essary for diagnostic and evaluative pur- ents’ right under § 84.36 to challenge the poses. placement of their child extends not only to If the recipient places a student, because of placement in special classes or separate his or her handicap, in a program that neces- schools but also to placement in a distant sitates his or her being away from home, the school and, in particular, to residential payments must also cover room and board placement. An equally appropriate edu- and nonmedical care (including custodial cational program may exist closer to home; and supervisory care). When residential care this issue may be raised by the parent or is necessitated not by the student’s handicap guardian under §§ 84.34 and 84.36. but by factors such as the student’s home conditions, the recipient is not required to New paragraph (b) specified that handi- pay the cost of room and board. capped children must also be provided non- Two new sentences have been added to academic services in as integrated a setting paragraph (c)(1) to make clear that a recipi- as possible. This requirement is especially ent’s financial obligations need not be met important for children whose educational solely through its own funds. Recipients may needs necessitate their being solely with rely on funds from any public or private other handicapped children during most of source including insurers and similar third each day. To the maximum extent appro- parties. priate, children in residential settings are The EHA requires a free appropriate edu- also to be provided opportunities for partici- cation to be provided to handicapped chil- pation with other children. dren ‘‘no later than September 1, 1978,’’ but Section 84.34(c) (formerly § 84.38) requires section 504 contains no authority for delay- that any facilities that are identifiable as ing enforcement. To resolve this problem, a being for handicapped students be com- new paragraph (d) has been added to § 84.33. parable in quality to other facilities of the Section 84.33(d) requires recipients to recipient. A number of comments objected to achieve full compliance with the free appro- this section on the basis that it encourages priate public education requirements of the creation and maintenance of such facili- § 84.33 as expeditiously as possible, but in no ties. This is not the intent of the provision. event later than September 1, 1978. The pro- A separate facility violates section 504 unless vision also makes clear that, as of the effec- it is indeed necessary to the provision of an tive date of this regulation, no recipient may appropriate education to certain handi- exclude a qualified handicapped child from capped students. In those instances in which its educational program. This provision such facilities are necessary (as might be the against exclusion is consistent with the case, for example, for severely retarded per- order of providing services set forth in sec- sons), this provision requires that the edu- tion 612(3) of the EHA, which places the high- cational services provided be comparable to est priority on providing services to handi- those provided in the facilities of the recipi- capped children who are not receiving an ent that are not identifiable as being for education. handicapped persons. 24. Educational setting. Section 84.34 pre- 25. Evaluation and placement. Because the scribes standards for educating handicapped failure to provide handicapped persons with persons with nonhandicapped persons to the an appropriate education is so frequently the maximum extent appropriate to the needs of result of misclassification or misplacement, the handicapped person in question. A handi- § 84.33(b)(1) makes compliance with its provi- capped student may be removed from the sions contingent upon adherence to certain regular educational setting only where the procedures designed to ensure appropriate

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classification and placement. These proce- The proposed regulation would have re- dures, delineated in §§ 84.35 and 84.36, are con- quired a complete individual reevaluation of cerned with testing and other evaluation the student each year. The Department has methods and with procedural due process concluded that it is inappropriate in the sec- rights. tion 504 regulation to require full reevalua- Section 84.35(a) requires that an individual tions on such a rigid schedule. Accordingly, evaluation be conducted before any action is § 84.35(c) requires periodic reevaluations and taken with respect either to the initial specifies that reevaluations in accordance placement of a handicapped child in a reg- with the EHA will constitute compliance. ular or special education program or to any The proposed regulation implementing the subsequent significant change in that place- EHA allows reevaluation at three-year inter- ment. Thus, a full reevaluation is not re- vals except under certain specified cir- quired every time an adjustment in place- cumstances. ment is made. ‘‘Any action’’ includes denials Under § 84.36, a recipient must establish a of placement. system of due process procedures to be af- Paragraphs (b) and (c) of § 84.35 establishes forded to parents or guardians before the re- procedures designed to ensure that children cipient takes any action regarding the iden- are not misclassified, unnecessarily labeled tification, evaluation, or educational place- as being handicapped, or incorrectly placed ment of a person who, because of handicap, because of inappropriate selection, adminis- needs or is believed to need special education tration, or interpretation of evaluation ma- or related services. This section has been re- terials. This problem has been extensively vised. Because the due process procedures of documented in ‘‘Issues in the Classification the EHA, incorporated by reference in the of Children,’’ a report by the Project on Clas- proposed section 504 regulation, are inappro- sification of Exceptional Children, in which priate for some recipients not subject to that the HHS Interagency Task Force partici- Act, the section now specifies minimum nec- pated. The provisions of these paragraphs are essary procedures: notice, a right to inspect aimed primarily at abuses in the placement records, an impartial hearing with a right to process that result from misuse of, or undue representation by counsel, and a review pro- or misplaced reliance on, standardized scho- cedure. The EHA procedures remain one lastic aptitude tests. means of meeting the regulation’s due proc- Paragraph (b) has been shortened but not ess requirements, however, and are rec- substantively changed. The requirement in ommended to recipients as a model. former subparagraph (1) that recipients provide and administer evaluation materials in 26. Nonacademic services. Section 84.37 re- the native language of the student has been quires a recipient to provide nonacademic deleted as unnecessary, since the same re- and extracurricular services and activities in quirement already exists under title VI and such manner as is necessary to afford handi- is more appropriately covered under that capped students an equal opportunity for statute. Subparagraphs (1) and (2) are, in participation. Because these services and ac- general, intended to prevent misinterpreta- tivities are part of a recipient’s education tion and similar misuse of test scores and, in program, they must, in accordance with the particular, to avoid undue reliance on gen- provisions of § 84.34, be provided in the most eral intelligence tests. Subparagraph (3) re- integrated setting appropriate. quires a recipient to administer tests to a Revised paragraph (c)(2) does permit sepa- student with impaired sensory, manual, or ration or differentiation with respect to the speaking skills in whatever manner is nec- provision of physical education and athletics essary to avoid distortion of the test results activities, but only if qualified handicapped by the impairment. Former subparagraph (4) students are also allowed the opportunity to has been deleted as unnecessarily repetitive compete for regular teams or participate in of the other provisions of this paragraph. regular activities. Most handicapped stu- Paragraph (c) requires a recipient to draw dents are able to participate in one or more upon a variety of sources in the evaluation regular physical education and athletics ac- process so that the possibility of error in tivities. For example, a student in a wheel- classification is minimized. In particular, it chair can participate in regular archery requires that all significant factors relating course, as can a deaf student in a wrestling to the learning process, including adaptive course. behavior, be considered. (Adaptive behavior Finally, the one-year transition period pro- is the effectiveness with which the indi- vided in former § 84.37(a)(3) was deleted in re- vidual meets the standards of personal inde- sponse to the almost unanimous objection of pendence and social responsibility expected commenters to that provision. of his or her age and cultural group.) Infor- 27. Preschool and adult education. Section mation from all sources must be documented 84.38 prohibits discrimination on the basis of and considered by a group of persons, and the handicap in preschool and adult education procedure must ensure that the child is programs. Former paragraph (b), which em- placed in the most integrated setting appro- phasized that compensatory programs for priate. disadvantaged children are subject to section

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504, has been deleted as unnecessary, since it the intent of the provision and, therefore, it is comprehended by paragraph (a). has been amended to place the burden on the 28. Private education. Section 84.39 sets Director of the Office for Civil Rights, rather forth the requirements applicable to recipi- than on the recipient, to identify alternate ents that operate private education protests. grams and activities. The obligations of Second, a new paragraph (d), concerning these recipients have been changed in two validity studies, has been added. Under the significant respects: First, private schools proposed regulation, overall success in an are subject to the evaluation and due process education program, not just first-year provisions of the subpart only if they operate grades, was the criterion against which ad- special education programs; second, under missions tests were to be validated. This ap- § 84.39(b), they may charge more for pro- proach has been changed to reflect the com- viding services to handicapped students than ment of professional testing services that to nonhandicapped students to the extent use of first year grades would be less disrup- that additional charges can be justified by tive of present practice and that periodic va- increased costs. lidity studies against overall success in the Paragraph (a) of § 84.39 is intended to make education program would be sufficient check clear that recipients that operate private on the reliability of first-year grades. education programs and activities are not re- Section 84.42(b)(3) also requires a recipient quired to provide an appropriate education to assure itself that admissions tests are se- to handicapped students with special edu- lected and administered to applicants with cational needs if the recipient does not offer impaired sensory, manual, or speaking skills programs designed to meet those needs. in such manner as is necessary to avoid un- Thus, a private school that has no program fair distortion of test results. Methods have for mentally retarded persons is neither re- been developed for testing the aptitude and quired to admit such a person into its pro- achievement of persons who are not able to gram nor to arrange or pay for the provision take written tests or even to make the of the person’s education in another pro- marks required for mechanically scored ob- gram. A private recipient without a special jective tests; in addition, methods for testing program for blind students, however, would persons with visual or hearing impairments not be permitted to exclude, on the basis of are available. A recipient, under this para- blindness, a blind applicant who is able to graph, must assure itself that such methods participate in the regular program with are used with respect to the selection and ad- minor adjustments in the manner in which ministration of any admissions tests that it the program is normally offered. uses. Section 84.42(b)(3)(iii) has been amended to SUBPART E—POSTSECONDARY EDUCATION require that admissions tests be adminis- Subpart E prescribes requirements for non- tered in facilities that, on the whole, are ac- discrimination in recruitment, admission, cessible. In this context, on the whole means and treatment of students in postsecondary that not all of the facilities need be education programs and activities, including accessibile so long as a sufficient number of vocational education. facilities are available to handicapped per- 29. Admission and recruitment. In addition to sons. a general prohibition of discrimination on Revised § 84.42(b)(4) generally prohibits the basis of handicap in § 84.42(a), the regula- preadmission inquiries as to whether an ap- tion delineates, in § 84.42(b), specific prohibi- plicant has a handicap. The considerations tions concerning the establishment of limi- that led to this revision are similar to those tations on admission of handicapped stu- underlying the comparable revision of § 84.14 dents, the use of tests or selection criteria, on preemployment inquiries. The regulation and preadmission inquiry. Several changes does, however, allow inquiries to be made, have been made in this provision. after admission but before enrollment, as to Section 84.42(b) provides that postsec- handicaps that may require accommodation. ondary educational institutions may not use New paragraph (c) parallels the section on any test or criterion for admission that has preemployment inquiries and allows postsec- a disproportionate, adverse effect on handi- ondary institutions to inquire about appli- capped persons unless it has been validated cants’ handicaps before admission, subject to as a predictor of academic success and alter- certain safeguards, if the purpose of the in- nate tests or criteria with a less dispropor- quiry is to take remedial action to correct tionate, adverse effect are shown by the De- past discrimination or to take voluntary ac- partment to be available. There are two sig- tion to overcome the limited participation of nificant changes in this approach from the handicapped persons in postsecondary edu- July 16 proposed regulation. cational institutions. First, many commenters expressed concern Proposed § 84.42(c), which would have al- that § 84.42(b)(2)(ii) could be interpreted to lowed different admissions criteria in certain require a ‘‘global search’’ for alternate tests cases for handicapped persons, was widely that do not have a disproportionate, adverse misinterpreted in comments from both impact on handicapped persons. this was not handicapped persons and recipients. We have

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concluded that the section is unnecessary, preciation course is conducted for the deaf and it has been deleted. student. It shoud be stressed that academic 30. Treatment of students. Section 84.43 con- requirements that can be demonstrated by tains general provisions prohibiting the dis- the recipient to be essential to its program criminatory treatment of qualified handi- of instruction or to particular degrees need capped applicants. Paragraph (b) requires re- not be changed. cipients to ensure that equal opportunities Paragraph (b) provides that postsecondary are provided to its handicapped students in institutions may not impose rules that have education programs and activities that are the effect of limiting the participation of not operated by the recipient. The recipient handicapped students in the education pro- must be satisfied that the outside education gram. Such rules include prohibition of tape program or activity as a whole is non- recorders or braillers in classrooms and dog discriminatory. For example, a college must guides in campus buildings. Several recipi- ensure that discrimination on the basis of ents expressed concern about allowing stu- handicap does not occur in connection with dents to tape record lectures because the teaching assignments of student teachers in professor may later want to copyright the elementary or secondary schools not oper- lectures. This problem may be solved by re- ated by the college. Under the ‘‘as a whole’’ quiring students to sign agreements that wording, the college could continue to use el- they will not release the tape recording or ementary or secondary school systems that transcription or otherwise hinder the profes- discriminate if, and only if, the college’s stu- sor’s ability to obtain a copyright. dent teaching program, when viewed in its Paragraph (c) of this section, concerning entirety, offered handicapped student teach- the administration of course examinations ers the same range and quality of choice in to students with impaired sensory, manual, student teaching assignments afforded non- or speaking skills, parallels the regulation’s handicapped students. provisions on admissions testing (§ 84.42(b)) Paragraph (c) of this section prohibits a re- and will be similarly interpreted. cipient from excluding qualified handicapped Under § 84.44(d), a recipient must ensure students from any course, course of study, or that no handicapped student is subject to other part of its education program or activ- discrimination in the recipient’s program be- ity. This paragraph is designed to eliminate cause of the absence of necessary auxiliary the practice of excluding handicapped per- educational aids. Colleges and universities sons from specific courses and from areas of expressed concern about the costs of compli- concentration because of factors such as am- ance with this provision. bulatory difficulties of the student or as- The Department emphasizes that recipi- sumptions by the recipient that no job would ents can usually meet this obligation by as- be available in the area in question for a per- sisting students in using existing resources son with that handicap. for auxiliary aids such as state vocational New paragraph (d) requires postsecondary rehabilitation agencies and private chari- institutions to operate their programs and table organizations. Indeed, the Department activities so that handicapped students are anticipates that the bulk of auxiliary aids provided services in the most integrated set- will be paid for by state and private agen- ting appropriate. Thus, if a college had sev- cies, not by colleges or universities. In those eral elementary physics classes and had circumstances where the recipient institu- moved one such class to the first floor of the tion must provide the educational auxiliary science building to accommodate students in aid, the institution has flexibility in choos- wheelchairs, it would be a violation of this ing the methods by which the aids will be paragraph for the college to concentrate supplied. For example, some universities handicapped students with no mobility im- have used students to work with the institu- pairments in the same class. tion’s handicapped students. Other institu- 31. Academic adjustments. Paragraph (a) of tions have used existing private agencies § 84.44 requires that a recipient make certain that tape texts for handicapped students free adjustments to academic requirements and of charge in order to reduce the number of practices that discriminate or have the ef- readers needed for visually impaired stu- fect of discriminating on the basis of handi- dents. cap. This requirement, like its predecessor in As long as no handicapped person is ex- the proposed regulation, does not obligate an cluded from a program because of the lack of institution to waive course or other aca- an appropriate aid, the recipient need not demic requirements. But such institutions have all such aids on hand at all times. Thus, must accommodate those requirements to readers need not be available in the recipi- the needs of individual handicapped stu- ent’s library at all times so long as the dents. For example, an institution might schedule of times when a reader is available permit an otherwise qualified handicapped is established, is adhered to, and is suffi- student who is deaf to substitute an art ap- cient. Of course, recipients are not required preciation or music history course for a re- to maintain a complete braille library. quired course in music appreciation or could 32. Housing. Section 84.45(a) requires post- modify the manner in which the music ap- secondary institutions to provide housing to

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handicapped students at the same cost as ify for the award. For example, a student they provide it to other students and in a who has a neurological disorder might be de- convenient, accessible, and comparable man- nied a varsity football scholarship on the ner. Commenters, particularly blind persons basis of his inability to play football, but a pointed out that some handicapped persons deaf person could not, on the basis of handi- can live in any college housing and need not cap, be denied a scholarship for the school’s wait to the end of the transition period in diving team. The deaf person could, however, Subpart C to be offered the same variety and be denied a scholarship on the basis of com- scope of housing accommodations given to parative diving ability. nonhandicapped persons. The Department Commenters on § 84.46(b), which applies to concurs with this position and will interpret assistance in obtaining outside employment this section accordingly. for students, expressed similar concerns to A number of colleges and universities re- those raised under § 84.43(b), concerning coop- acted negatively to paragraph (b) of this sec- erative programs. This paragraph has been tion. It provides that, if a recipient assists in changed in the same manner as § 84.43(b) to making off-campus housing available to its include the ‘‘as a whole’’ concept and will be students, it should develop and implement interpreted in the same manner as § 84.43(b). procedures to assure itself that off-campus 35. Nonacademic services. Section 84.47 (for- housing, as a whole, is available to handi- merly § 84.48) establishes nondiscrimination capped students. Since postsecondary insti- standards for physical education and ath- tutions are presently required to assure letics counseling and placement services, themselves that off-campus housing is pro- and social organizations. This section sets vided in a manner that does not discriminate the same standards as does § 84.38 of Subpart on the basis of sex (§ 86.32 of the title IX reg- D, discussed above, and will be interpreted in ulation), they may use the procedures devel- a similar fashion. oped under title IX in order to comply with § 84.45(b). It should be emphasized that not SUBPART F—HEALTH, WELFARE, AND SOCIAL every off-campus living accommodation need SERVICES be made accessible to handicapped persons. 33. Health and insurance. Section 84.46 of Subpart F applies to recipients that oper- the proposed regulation, providing that re- ate health, welfare, and social service pro- cipients may not discriminate on the basis of grams. The Department received fewer com- handicap in the provision of health related ments on this subpart than on others. services, has been deleted as duplicative of Although many commented that Subpart F the general provisions of § 84.43. This deletion lacked specificity, these commenters pro- represents no change in the obligation of re- vided neither concrete suggestions nor addi- cipients to provide nondiscriminatory health tions. Nevertheless, some changes have been and insurance plans. The Department will made, pursuant to comment, to clarify the continue to require that nondiscriminatory obligations of recipients in specific areas. In health services be provided to handicapped addition, in an effort to reduce duplication students. Recipients are not required, how- in the regulation, the section governing re- ever, to provide specialized services and aids cipients providing health services (proposed to handicapped persons in health programs. § 84.52) has been consolidated with the sec- If, for example, a college infirmary treats tion regulating providers of welfare and so- only simple disorders such as cuts, bruises, cial services (proposed § 84.53). Since the sep- and colds, its obligation to handicapped per- arate provisions that appeared in the pro- sons is to treat such disorders for them. posed regulation were almost identical, no 34. Financial assistance. Section 84.46(a) substantive change should be inferred from (formerly § 84.47), prohibiting discrimination their consolidation. in providing financial assistance, remains Several commenters asked whether Sub- substantively the same. It provides that re- part F applies to vocational rehabilitation cipients may not provide less assistance to agencies whose purpose is to assist in the re- or limit the eligibility of qualified handi- habilitation of handicapped persons. To the capped persons for such assistance, whether extent that such agencies receive financial the assistance is provided directly by the re- assistance from the Department, they are cipient or by another entity through the recovered by Subpart F and all other relevant cipient’s sponsorship. Awards that are made subparts of the regulation. Nothing in this under wills, trusts, or similar legal instru- regulation, however, precludes such agencies ments in a discriminatory manner are per- from servicing only handicapped persons. In- missible, but only if the overall effect of the deed, § 84.4(c) permits recipients to offer serv- recipient’s provision of financial assistance ices or benefits that are limited by federal is not discriminatory on the basis of handi- law to handicapped persons or classes of cap. handicapped persons. It will not be considered discriminatory to Many comments suggested requiring state deny, on the basis of handicap, an athletic health, welfare, and social service agencies scholarship to a handicapped person if the to take an active role in the enforcement of handicap renders the person unable to qual- section 504 with regard to local health and

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social service providers. The Department be- A new paragraph (a)(5) concerning the pro- lieves that the possibility for federal-state vision of different or separate services or cooperation in the administration and en- benefits has been added. This provision pro- forcement of section 504 warrants further hibits such treatment unless necessary to consideration. Moreover, the Department provide qualified handicapped persons with will rely largely on state Medicaid agencies, benefits and services that are as effective as as it has under title VI, for monitoring com- those provided to others. pliance by individual Medicaid providers. Section 84.52(a)(2) of the proposed regula- A number of comments also discussed tion has been omitted as duplicative of re- whether section 504 should be read to require vised § 84.22 (b) and (c) in Subpart C. As dis- payment of compensation to institutional- cussed above, these sections permit health ized handicapped patients who perform serv- care providers to arrange to meet patients in ices for the institution in which they reside. accessible facilities and to make referrals in The Department of Labor has recently issued carefully limited circumstances. a proposed regulation under the Fair Labor Section 84.52(a)(3) of the proposed regula- Standards Act (FLSA) that covers the question has been redesignated § 84.52(b) and has tion of compensation for institutionalized been amended to cover written material con- persons, 42 FR 15224 (March 18, 1977). This De- cerning waivers of rights or consent to treat- partment will seek information and comment as well as general notices concerning ment from the Department of Labor con- health benefits or services. The section re- cerning that agency’s experience admin- quires the recipient to ensure that qualified istering the FLSA regulation. handicapped persons are not denied effective 36. Health, welfare, and other social service notice because of their handicap. For exam- providers. As already noted, § 84.53 has been ple, recipients could use several different combined with proposed § 84.53 into a single types of notice in order to reach persons section covering health, welfare, and other with impaired vision or hearing, such as social services. Section 84.52(a) has been ex- brailled messages, radio spots, and tacticle panded in several respects. The addition of devices on cards or envelopes to inform blind new paragraph (a)(2) is intended to make persons of the need to call the recipient for clear the basic requirement of equal oppor- further information. tunity to receive benefits or services in the Sections 84.52(a)(4), 84.52(a)(5), and 84.52(b) health, welfare, and social service areas. The have been omitted from the regulation as un- paragraph parallels §§ 84.4(b)(ii) and 84.43(b). necessary. They are clearly comprehended by New paragraph (a)(3) requires the provision the more general sections banning discrimi- of effective benefits or services, as defined in nation. § 84.4(b)(2) (i.e., benefits or services which Section 84.52(c) is a new section requiring ‘‘afford handicapped persons equal oppor- recipient hospitals to establish a procedure tunity to obtain the same result (or) to gain for effective communication with persons the same benefit * * *’’). with impaired hearing for the purpose of pro- Section 84.52(a) also includes provisions viding emergency health care. Although it concerning the limitation of benefits or serv- would be appropriate for a hospital to fulfill ices to handicapped persons and the subjec- its responsibilities under this section by hav- tion of handicapped persons to different eli- ing a full-time interpreter for the deaf on gibility standards. (These provisions were staff, there may be other means of accom- previously included in the welfare recipient plishing the desired result of assuring that section (§ 84.53(a)).) One common misconcep- some means of communication is imme- tion about the regulation is that it would re- diately available for deaf persons needing quire specialized hospitals and other health emergency treatment. care providers to treat all handicapped per- Section 84.52(d), also a new provision, re- sons. The regulation makes no such require- quires recipients with fifteen or more em- ment. Thus, a burn treatment center need ployees to provide appropriate auxiliary aids not provide other types of medical treatment for persons with impaired sensory, manual, to handicapped persons unless it provides or speaking skills. Further, the Director such medical services to nonhandicapped may require a small provider to furnish aux- persons. It could not, however, refuse to iliary aids where the provision of aids would treat the burns of a deaf person because of not adversely affect the ability of the recipi- his or her deafness. ent to provide its health benefits or service. Commenters had raised the question of Thus although a small nonprofit neighbor- whether the prohibition against different hood clinic might not be obligated to have standards of eligibility might preclude re- available an interpreter for deaf persons, the cipients from providing special services to Director may require provision of such aids handicapped persons or classes of handi- as may be reasonably available to ensure capped persons. The regulation will not be so that qualified handicapped persons are not interpreted, and the specific section in ques- denied appropriate benefits or services be- tion has been eliminated. Section 84.4(c) cause of their handicaps. makes clear that special programs for handi- 37. Treatment of Drug Addicts and Alcoholics. capped persons are permitted. Section 84.53 is a new section that prohibits

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discrimination in the treatment and admis- tained in this part as applied to matters con- sion of drug and alcohol addicts to hospitals cerning health care for handicapped infants. and outpatient facilities. This section is in- These interpretative guidelines are illus- cluded pursuant to section 407, Pub. L. 92– trative; they do not independently establish 255, the Drug Abuse Office and Treatment rules of conduct. Act of 1972 (21 U.S.C. 1174), as amended, and (1) With respect to programs and activities section 321, Public Law 91–616, the Com- receiving Federal financial assistance, prehensive Alcohol Abuse and Alcoholism health care providers may not, solely on the Prevention, Treatment, and Rehabilitation basis of present or anticipated physical or Act of 1970 (42 U.S.C. 4581), as amended, and mental impairments of an infant, withhold section 321, Public Law 93–282. Section 504 treatment or nourishment from the infant itself also prohibits such discriminatory who, in spite of such impairments, will medi- treatment and, in addition, prohibits similar cally benefit from the treatment or nourish- discriminatory treatment by other types of ment. health providers. Section 84.53 prohibits dis- (2) Futile treatment or treatment that will crimination against drug abusers by opera- do no more than temporarily prolong the act tors of outpatient facilities, despite the fact of dying of a terminally ill infant is not con- that section 407 pertains only to hospitals, sidered treatment that will medically ben- because of the broader application of section efit the infant. 504. This provision does not mean that all (3) In determining whether certain possible hospitals and outpatient facilities must treatments will be medically beneficial to an treat drug addiction and alcoholism. It sim- infant, reasonable medical judgments in se- ply means, for example, that a cancer clinic lecting among alternative courses of treat- may not refuse to treat cancer patients sim- ment will be respected. ply because they are also alcoholics. (4) Section 504 and the provisions of this 38. Education of institutionalized persons. part are not applicable to parents (who are The regulation retains § 84.54 of the proposed not recipients of Federal financial assist- regulation that requires that an appropriate ance). However, each recipient health care education be provided to qualified handi- provider must in all aspects of its health capped persons who are confined to residen- care programs receiving Federal financial as- tial institutions or day care centers. sistance provide health care and related services in a manner consistent with the re- SUBPART G—PROCEDURES quirements of section 504 and this part. Such In § 84.61, the Secretary has adopted the aspects includes decisions on whether to re- title VI complaint and enforcement proce- port, as required by State law or otherwise, dures for use in implementing section 504 to the appropriate child protective services until such time as they are superseded by agency a suspected instance of medical ne- the issuance of a consolidated procedural glect of a child, or to take other action to regulation applicable to all of the civil seek review or parental decisions to withhold rights statutes and executive orders adminis- consent for medically indicated treatment. tered by the Department. Whenever parents make a decision to withhold consent for medically beneficial treat- APPENDIX B TO PART 84—GUIDELINES ment or nourishment, such recipient pro- FOR ELIMINATING DISCRIMINATION viders may not, solely on the basis of the in- AND DENIAL OF SERVICES ON THE fant’s present or anticipated future mental or physical impairments, fail to follow appli- BASIS OF RACE, COLOR, NATIONAL cable procedures on reporting such incidents ORIGIN, SEX, AND HANDICAP IN VO- to the child protective services agency or to CATIONAL EDUCATION PROGRAMS seek judicial review. [NOTE] (5) The following are examples of applying these interpretative guidelines. These exam- NOTE: For the text of these guidelines, see ples are stated in the context of decisions 45 CFR Part 80, Appendix B. made by recipient health care providers. [44 FR 17168, Mar. 21, 1979] Were these decisions made by parents, the guideline stated in section (a)(4) would APPENDIX C TO PART 84—GUIDELINES apply. These examples assume no facts or RELATING TO HEALTH CARE FOR complications other than those stated. Be- HANDICAPPED INFANTS cause every case must be examined on its individual facts, these are merely illustrative (a) Interpretative guidelines relating to the examples to assist in understanding the applicability of this part to health care for framework for applying the nondiscrimina- handicapped infants. The following are inter- tion requirements of section 504 and this pretative guidelines of the Department set part. forth here to assist recipients and the public (i) Withholding of medically beneficial sur- in understanding the Department’s interpre- gery to correct an intestinal obstruction in tation of section 504 and the regulations con- an infant with Down’s Syndrome when the

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withholding is based upon the anticipated fu- which may include additional contact with ture mental retardation of the infant and the complainant and a requirement that per- there are no medical contraindications to tinent records be provided to the Depart- the surgery that would otherwise justify ment, will generally be completed within 24 withholding the surgery would constitute a hours (or sooner if indicated) after receipt of discriminatory act, violative of section 504. the complaint. (ii) Withholding of treatment for medically (2) Unless impracticable, whenever a re- correctable physical anomalies in children cipient hospital has an Infant Care Review born with spina bifida when such denial is Committee, established and operated sub- based on anticipated mental impairment pa- stantially in accordance with the provisions ralysis or incontinence of the infant, rather of 45 CFR 84.55(f), the Department will, as than on reasonable medical judgments that part of its preliminary inquiry, solicit the treatment would be futile, too unlikely of information available to, and the analysis success given complications in the particular and recommendations of, the ICRC. Unless, case, or otherwise not of medical benefit to in the judgment of the responsible Depart- the infant, would constitute a discrimina- ment official, other action is necessary to tory act, violative of section 504. protect the life or health of a handicapped (iii) Withholding of medical treatment for infant, prior to initiating an on-site inves- an infant born with anencephaly, who will tigation, the Department will await receipt inevitably die within a short period of time, of this information from the ICRC for 24 would not constitute a discriminatory act hours (or less if indicated) after receipt of because the treatment would be futile and do the complaint. The Department may require no more than temporarily prolong the act of a subsequent written report of the ICRC’s dying. findings, accompanied by pertinent records (iv) Withholding of certain potential treat- and documentation. ments from a severely premature and low birth weight infant on the grounds of reason- (3) On the basis of the information ob- able medical judgments concerning the im- tained during preliminary inquiry, including probability of success or risks of potential information provided by the hospital (includ- harm to the infant would not violate section ing the hospital’s ICRC, if any), information 504. provided by the complainant, and all other (b) Guidelines for HHS investigations relating information obtained, the Department will to health care for handicapped infants. The fol- determine whether there is a need for an on- lowing are guidelines of the Department in site investigation of the complaint. When- conducting investigations relating to health ever the Department determines that doubt care for handicapped infants. They are set remains that the recipient hospital or some forth here to assist recipients and the public other recipient is in compliance with this in understanding applicable investigative part or additional documentation is desired procedures. These guidelines do not establish to substantiate a conclusion, the Depart- rules of conduct, create or affect legally en- ment will initiate an on-site investigation or forceable rights of any person, or modify ex- take some other appropriate action. Unless isting rights, authorities or responsibilities impracticable, prior to initiating an on-site pursuant to this part. These guidelines re- investigation, the Department’s medical flect the Department’s recognition of the consultant (referred to in paragraph 6) will special circumstances presented in connec- contact the hospital’s ICRC or appropriate tion with complaints of suspected life- medical personnel of the recipient hospital. threatening noncompliance with this part in- (4) In conducting on-site investigations, volving health care for handicapped infants. when a recipient hospital has an ICRC estab- These guidelines do not apply to other inves- lished and operated substantially in accord- tigations pursuant to this part, or other civil ance with the provisions of 45 CFR 84.55(f), rights statutes and rules. Deviations from the investigation will begin with, or include these guidelines may occur when, in the at the earliest practicable time, a meeting judgment of the responsible Department offi- with the ICRC or its designees. In all on-site cial, other action is necessary to protect the investigations, the Department will make life or health of a handicapped infant. every effort to minimize any potential in- (1) Unless impracticable, whenever the De- convenience or disruption, accommodate the partment receives a complaint of suspected schedules of health care professionals and life-threatening noncompliance with this avoid making medical records unavailable. part in connection with health care for a The Department will also seek to coordinate handicapped infant in a program or activity its investigation with any related investiga- receiving Federal financial assistance, HHS tions by the state child protective services will immediately conduct a preliminary in- agency so as to minimize potential disrup- quiry into the matter by initiating telephone tion. contact with the recipient hospital to obtain (5) It is the policy of the Department to information relating to the condition and make no comment to the public or media re- treatment of the infant who is the subject of garding the substance of a pending prelimi- the complaint. The preliminary inquiry, nary inquiry or investigation.

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(6) The Department will obtain the assist- 85.32–85.40 [Reserved] ance of a qualified medical consultant to 85.41 Program accessibility: Discrimination evaluate the medical information (including prohibited. medical records) obtained in the course of a 85.42 Program accessibility: Existing facili- preliminary inquiry or investigation. The ties. name, title and telephone number of the De- 85.43 Program accessibility: New construc- partment’s medical consultant will be made tion and alterations. available to the recipient hospital. The De- 85.44–85.50 [Reserved] partment’s medical consultant will, if appro- 85.51 Communications. priate, contact medical personnel of the re- 85.52–85.60 [Reserved] cipient hospital in connection with the pre- 85.61 Compliance procedures. liminary inquiry, investigation or medical 85.62 Coordination and compliance respon- consultant’s evaluation. To the extent prac- sibilities. ticable, the medical consultant will be a spe- AUTHORITY: 29 U.S.C. 794. cialist with respect to the condition of the infant who is the subject of the preliminary SOURCE: 53 FR 25603, July 8, 1988, unless inquiry or investigation. The medical con- otherwise noted. sultant may be an employee of the Depart- EDITORIAL NOTE: At the request of the De- ment or another person who has agreed to partment of Health and Human Services, the serve, with or without compensation, in that ‘‘Section-by-Section Analysis’’ portion of the capacity. preamble of the document published at 53 FR (7) The Department will advise the recipi- 25595, July 8, 1988, as corrected at 53 FR 26559, ent hospital of its conclusions as soon as pos- July 13, 1988, appears at the end of Part 85. sible following the completion of a preliminary inquiry or investigation. Whenever § 85.1 Purpose. final administrative findings following an investigation of a complaint of suspected life- The purpose of this part is to effec- threatening noncompliance cannot be made tuate section 119 of the Rehabilitation, promptly, the Department will seek to no- Comprehensive Services, and Develop- tify the recipient and the complainant of the mental Disabilities Amendments of Department’s decision on whether the mat- 1978, which amended section 504 of the ter will be immediately referred to the De- Rehabilitation Act of 1973 to prohibit partment of Justice pursuant to 45 CFR 80.8. (8) Except as necessary to determine or ef- discrimination on the basis of handicap fect compliance, the Department will (i) in in programs or activities conducted by conducting preliminary inquiries and inves- Executive agencies or the United tigations, permit information provided by States Postal Service. the recipient hospital to the Department to be furnished without names or other identi- § 85.2 Application. fying information relating to the infant and This part applies to all programs or the infant’s family; and (ii) to the extent permitted by law, safeguard the confiden- activities conducted by the agency, ex- tiality of information obtained. cept for programs or activities conducted outside the United States that [49 FR 1653, Jan. 12, 1984] do not involve individuals with handicaps in the United States. PART 85—ENFORCEMENT OF NON- DISCRIMINATION ON THE BASIS § 85.3 Definitions. OF HANDICAP IN PROGRAMS For purposes of this part, the term— OR ACTIVITIES CONDUCTED BY Agency means the Department of THE DEPARTMENT OF HEALTH Health and Human Services or any AND HUMAN SERVICES component part of the Department of Health and Human Services that con- Sec. ducts a program or activity covered by 85.1 Purpose. this part. Component agency means 85.2 Application. such component part. 85.3 Definitions. Assistant Attorney General means the 85.4–85.10 [Reserved] Assistant Attorney General, Civil 85.11 Self-evaluation. Rights Division, United States Depart- 85.12 Notice. ment of Justice. 85.13–85.20 [Reserved] 85.21 General prohibitions against discrimi- Auxiliary aids means services or de- nation. vices that enable persons with im- 85.22–85.30 [Reserved] paired sensory, manual, or speaking 85.31 Employment. skills to have an equal opportunity to

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participate in, and enjoy the benefits muscular dystrophy, multiple sclerosis, of, programs or activities conducted by cancer, heart disease, diabetes, mental the agency. For example, auxiliary aids retardation, emotional illness, and useful for persons with impaired vision drug addiction and alcoholism. include readers, Brailled materials, (2) Major life activities includes func- audio recordings, and other similar tions such as caring for one’s self, per- services and devices. Auxiliary aids forming manual tasks, walking, seeing, useful for persons with impaired hear- hearing, speaking, breathing, learning ing include telephone handset ampli- and working. fiers, telephones compatible with hear- (3) Has a record of such impairment ing aids, telecommunication devices means has a history of, or is for deaf persons (TDD’s) interpreters, misclassified as having, a mental or notetakers, written materials, and physical impairment that substantially other similar services and devices. limits one or more major life activi- Complete complaint means a written ties. statement that contains the complain- (4) Is regarded as having an impairment ant’s name and address and describes means: the agency’s alleged discriminatory ac- (i) Has a physical or mental impair- tion in sufficient detail to inform the ment that does not substantially limit agency of the nature and date of the al- major life activities but is treated by leged violation of section 504. It shall the agency as constituting such a limi- be signed by the complainant or by tation. someone authorized to do so on his or (ii) Has a physical or mental impair- her behalf. Complaints filed on behalf ment that substantially limits major of classes or third parties shall describe life activities only as a result of the at- or identify (by name, if possible) the titudes of others toward such impair- alleged victims of discrimination. ment; or Facility means all or any portion of (iii) Has none of the impairments de- buildings, structures, equipment, fined in paragraph (1) of this definition roads, walks, parking lots, rolling but is treated by the agency as having stock or other conveyances, or other such an impairment. real or personal property. OCR means the Office for Civil Individual with Handicaps means any Rights of the Department of Health person who has a physical or mental and Human Services. impairment that substantially limits OCR Director/Special Assistant means one or more major life activities, has a the Director of the Office for Civil record of such an impairment, or is re- Rights, who serves concurrently as the garded as having such an impairment. Special Assistant to the Secretary for As used in this definition, the phrase: Civil Rights, or a designee of the Direc- (1) Physical or mental impairment in- tor/Special Assistant. cludes: Qualified individual with handicaps (i) Any physiological disorder or con- means: dition, cosmetic disfigurement, or ana- (1) With respect to preschool, elemen- tomical loss affecting one or more of tary, or secondary education services the following body systems: neuro- provided by the agency, an individual logical; musculoskeletal; special sense with handicaps who is a member of a organs; respiratory, including speech class of persons otherwise entitled by organs; cardiovascular; reproductive; statute, regulation, or agency policy to digestive; genito-urinary; hemic and receive educational services from the lymphatic; skin; and endocrine; or agency; (ii) Any mental or psychological dis- (2) With respect to any other agency order, such as mental retardation, or- program or activity under which a per- ganic brain syndrome, emotional or son is required to perform services or mental illness, and specific learning to achieve a particular level of accom- disabilities. The term physical or mental plishment, an individual with handi- impairment includes, but is not limited caps who meets the essential eligibility to, such diseases and conditions as or- requirements and who can achieve the thopedic, visual, speech and hearing purpose of the program or activity impairments, cerebral palsy, epilepsy, without modifications in the program

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or activity that the agency can dem- self-evaluation, maintain on file and onstrate would result in a fundamental make available for public inspection alteration in its nature; and and copying— (3) With respect to any other pro- (1) A description of areas examined gram or activity, an individual with and any problems identified; and handicaps who meets the essential eli- (2) A description of any modifications gibility requirements for participation made. in, or receipt of benefits from, that program or activity; and § 85.12 Notice. (4) Qualified handicapped person as The agency shall make available to that term is defined for purposes of em- employees, applicants, participants, ployment in 29 CFR 1613.702(f), which is beneficiaries, and other interested per- made applicable to this part by § 85.31. sons such information regarding the Secretary means the Secretary of the provisions of this part and its applica- Department of Health and Human bility to the programs or activities Services or his/her designee. conducted by the agency, and make Section 504 means section 504 of the such information available to them in Rehabilitation Act of 1973 (Pub. L. 93– such a manner as the agency head finds 112, 87 Stat. 394 (29 U.S.C. 794)), as necessary to apprise such persons of amended by the Rehabilitation Act the protections against discrimination Amendments of 1974 (Pub. L. 93–516, 88 assured them by section 504 and this Stat. 1617); the Rehabilitation, Com- part. prehensive Services, and Develop- mental Disabilities Amendments of §§ 85.13–85.20 [Reserved] 1978 (Pub. L. 95–602, 92 Stat. 2955); the Rehabilitation Act Amendments of 1986 § 85.21 General prohibitions against (Pub. L 99–566, 100 Stat. 1810); and the discrimination. Civil Rights Restoration Act of 1987 (a) No qualified individual with (Pub. L. 100–259, 102 Stat. 28). As used handicaps shall, on the basis of handi- in this part, section 504 applies only to cap, be excluded from participation in, programs or activities conducted by be denied the benefits of, or otherwise the agency and not to federally as- be subjected to discrimination under sisted programs. any program or activity conducted by the agency. §§ 85.4–85.10 [Reserved] (b) (1) The agency, in providing any aid, benefit, or service, may not, di- § 85.11 Self-evaluation. rectly or through contractual, licens- (a) The agency shall, within one year ing, or other arrangements, on the of the effective date of this part, evalu- basis of handicap— ate its current policies and practices, (i) Deny a qualified individual with and the effects thereof, that do not or handicaps the opportunity to partici- may not meet the requirements of this pate in or benefit from the aid, benefit, part, and, to the extent modification of or service; any such policies and practices is re- (ii) Afford a qualified individual with quired, the agency shall proceed to handicaps an opportunity to partici- make the necessary modifications. Any pate in or benefit from the aid, benefit, new operating or staff divisions estab- or service that is not equal to that af- lished within the agency shall have one forded others; year from the date of their establish- (iii) Provide a qualified individual ment to carry out this evaluation. with handicaps with an aid, benefit, or (b) The agency shall provide an op- service that is not as effective in af- portunity to interested persons, includ- fording equal opportunity to obtain the ing individuals with handicaps or orga- same result, to gain the same benefit, nizations representing individuals with or to reach the same level of achieve- handicaps, to participate in the self- ment as that provided to others; evaluation by submitting comments (iv) Provide different or separate (both oral and written). aids, benefits, or services to individuals (c) The agency shall, for at least with handicaps or to any class or indi- three years following completion of the viduals with handicaps than is provided

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to others unless such action is nec- individuals with handicaps to discrimi- essary to provide qualified individuals nation on the basis of handicap. How- with handicaps with aids, benefits or ever, the programs or activities of enti- services that are as effective as those ties that are licensed or certified by provided to others; the agency are not, themselves, cov- (v) Deny a qualified individual with ered by this part. handicaps the opportunity to partici- (c) The exclusion of individuals with- pate as a member of a planning or advi- out handicaps from the benefits of a sory board; or program limited by Federal statute or (vi) Otherwise limit a qualified indi- Executive order to individuals with vidual with handicaps in the enjoy- handicaps or the exclusion of a specific ment of any right, privilege, advan- class of individuals with handicaps tage, or opportunity enjoyed by others from a program limited by Federal receiving the aid, benefit, or service. statute or Executive order to a dif- (2) The agency may not deny a quali- ferent class of individuals with handi- fied individual with handicaps the op- caps is not prohibited by this part. portunity to participate in programs or (d) The agency shall administer pro- activities that are not separate or dif- grams and activities in the most inte- ferent, despite the existence of permis- grated setting appropriate to the needs sibly separate or different programs or of qualified individuals with handicaps. activities. (3) The agency may not, directly or §§ 85.22–85.30 [Reserved] through contractual or other arrangements, utilize criteria or methods of § 85.31 Employment. administration the purpose or effect of No qualified individuals with handi- which would— caps shall, on the basis of handicap, be (i) Subject qualified individuals with subjected to discrimination in employ- handicaps to discrimination on the ment under any program or activity basis of handicap; or conducted by the agency. The defini- (ii) Defeat or substantially impair actions, requirements, and procedures of complishment of the objectives of a section 501 of the Rehabilitation Act of program or activity with respect to in- 1973 (9 U.S.C. 791), as established by the dividuals with handicaps. Equal Employment Opportunity Com- (4) The agency may not, in deter- mission in 9 CFR part 1613, shall apply mining the site or location of a facil- to employment in federally conducted ity, make selections the purpose or ef- programs and activities. fect of which would— (i) Exclude individuals with handi- §§ 85.32–85.40 [Reserved] caps from, deny them the benefits of, or otherwise subject them to discrimi- § 85.41 Program accessibility: Dis- nation under any program or activity crimination prohibited. conducted by the agency; or Except as otherwise provided in (ii) Defeat or substantially impair § 85.42, no qualified individual with the accomplishment of the objectives handicaps shall, because the agency’s of a program or activity with respect facilities are inaccessible to or unus- to individuals with handicaps. able by such persons, be denied the (5) The agency, in the selection of benefits of, be excluded from participa- procurement contractors, may not use tion in, or otherwise be subjected to criteria that subject qualified individ- discrimination under any program or uals with handicaps to discrimination activity conducted by the agency. on the basis of handicap. (6) The agency may not administer a § 85.42 Program accessibility: Existing licensing or certification program in a facilities. manner that subjects qualified individ- (a) General. The agency shall operate uals with handicaps to discrimination each program or activity so that the on the basis of handicap, nor may the program or activity, when viewed in its agency establish requirements for the entirety, is readily accessible to and programs or activities of licensees or usable by individuals with handicaps. certified entities that subject qualified This paragraph does not—

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(1) Necessarily require the agency to (2) In choosing among available make each of its existing facilities ac- methods for meeting the requirements cessible to and usable by individuals of this section, the agency shall give with handicaps; or priority to those methods that offer (2) Require the agency to take any programs and activities to qualified inaction that it can demonstrate would dividuals with handicaps in the most result in a fundamental alteration in integrated setting appropriate. the nature of a program or activity or (c) Time period for compliance. The in undue financial and administrative agency shall comply with the obliga- burdens. In those circumstances where tions established under this section agency personnel believe that the pro- within 60 days of the effective date of posed action would fundamentally this part except where structural alter the program or activity or would changes in facilities are undertaken; result in undue financial and adminis- such changes shall be made within trative burdens, the agency has the three years of the effective date of this burden of proving that compliance with part, but, in any event, as expedi- § 85.42(a) would result in such alter- tiously as possible. ation or burdens. The decision that (d) Transition plan. In the event that compliance would result in such alter- structural changes to facilities must be ation or burdens must be made by the undertaken to achieve program acces- agency head or his or her designee sibility, and it is not expected that after considering all agency resources such changes can be completed within available for use in the funding and op- six months, the agency shall develop, eration of the conducted program or within six months of the effective date activity in question, and must be ac- of this part, a transition plan setting companied by a written statement of forth the steps necessary to complete reasons for reaching that conclusion. If such changes. The agency shall provide an action would result in such an alter- an opportunity to interested persons, ation or such burdens, the agency shall including individuals with handicaps or take any other action that would not organizations representing individuals result in such an alteration or such with handicaps, to participate in the burdens but would nevertheless ensure development of the transition plan by that individuals with handicaps receive submitting comments (both oral and the benefits and services of the pro- written). A copy of the transition plan gram or activity. shall be made available for public in- (b) Methods. (1) The agency may com- spection. The plan shall, at a min- ply with the requirements of this sec- imum— tion through such means as redesign of (1) Identify physical obstacles in the equipment, reassignment of services to agency’s facilities that limit the acces- accessible buildings, assignment of sibility of its programs or activities to aides to beneficiaries, home visits, de- individuals with handicaps; livery of services at alternate acces- (2) Describe in detail the methods sible sites, alteration of existing facili- that will be used to make the facilities ties and construction of new facilities, accessible; use of accessible rolling stock, or any (3) Specify the schedule for taking other methods that result in making the steps necessary to achieve compli- its programs or activities readily ac- ance with this section and, if the time cessible to and usable by individuals period of the transition plan is longer with handicaps. The agency is not re- than one year, identify steps that will quired to make structural changes in be taken during each year of the tran- existing facilities where other methods sition period; and are effective in achieving compliance (4) Indicate the official responsible with this section. The agency, in mak- for the implementation of the plan. ing alterations to existing buildings, shall meet accessibility requirements § 85.43 Program accessibility: New to the extent compelled by the Archi- construction and alterations. tectural Barriers Act of 1968, as amend- Each building or part of a building ed (42 U.S.C. 4151–4157), and any regula- that is constructed or altered by, or on tions implementing it. behalf of, or for the use of the agency

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shall be designed, constructed, or al- cial and administrative burdens. In tered so as to be readily accessible to those circumstances where agency per- and usable by individuals with handi- sonnel believe that the proposed action caps. The definitions, requirements, would fundamentally alter the program and standards of the Architectural Bar- or activity or would result in undue fi- riers Act (42 U.S.C. 4151–4157) as estab- nancial and administrative burdens, lished in 41 CFR 101–19.600 to 101–19.607 the agency has the burden of proving apply to buildings covered by this sec- that compliance with § 85.51 would re- tion. sult in such alteration or burdens. The decision that compliance would result §§ 85.44–85.50 [Reserved] in such alteration or burdens must be § 85.51 Communications. made by the agency head or his or her designee after considering all agency (a) The agency shall take appropriate resources available for use in the fund- steps to ensure effective communica- ing and operation of the conducted pro- tion with applicants, participants, per- gram or activity in question and must sonnel of other Federal entities, and be accompanied by a written statement members of the public. of the reasons for reaching that conclu- (1) The agency shall furnish appro- sion. If an action required to comply priate auxiliary aids where necessary with this section would result in such to afford an individual with handicaps an alteration or such burdens, the an equal opportunity to participate in, agency shall take any other action and enjoy the benefits of, program or that would not result in such an alter- activity conducted by the agency. ation or such burdens but would never- (i) In determining what type of auxil- theless ensure that, to the maximum iary aid is necessary, the agency shall extent possible, individuals with handi- give primary consideration to the re- caps receive the benefits and services quests of the individual with handi- of the program or activity. caps. (ii) The agency need not provide indi- §§ 85.52–85.60 [Reserved] vidually prescribed devices, readers for personal use or study, or other devices § 85.61 Compliance procedures. of a personal nature. (2) Where the agency communicates (a) Except as provided in paragraph with applicants and beneficiaries by (c) of this section, this section applies telephone, telecommunications devices to all allegations of discrimination on for deaf persons (TDD’s) or equally ef- the basis of handicap in programs or fective telecommunication systems activities conducted by the agency. shall be used to communicate with per- (b) Responsibility for the implemen- sons with impaired hearing. tation and operation of this section (b) The agency shall ensure that in- shall be vested in the CCR Director/ terested persons, including persons Special Assistant. with impaired vision or hearing, can (c) The agency shall process com- obtain information as to the existence plaints alleging violations of section and location of accessible services, ac- 504 with respect to employment accord- tivities, and facilities. ing to the procedures established by (c) The agency shall provide signage the Equal Employment Opportunity at a primary entrance to each of its in- Commission in 29 CFR part 1613 pursu- accessible facilities, directing users to ant to section 501 of the Rehabilitation a location at which they can obtain in- Act of 1973 (29 U.S.C. 791) and HHS In- formation about accessible facilities. struction 1613–3. Part 1613 requires The international symbol for accessi- complainants to obtain pre-complaint bility shall be used at each primary en- counseling within 30 days of the alleged trance of an accessible facility. discriminatory act, and to file com- (d) This section does not require the plaints within 15 days of the close of agency to take any action that it can counseling. Responsibility for the ac- demonstrate would result in a funda- ceptance, investigation, and the ren- mental alteration in the nature of a dering of decisions with respect to em- program or activity or in undue finan- ployment complaints is vested in the

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Assistant Secretary for Personnel Ad- vestigations to a component agency or ministration. other Federal agencies, except that the (d) OCR shall accept and investigate authority for making the final deter- all complete complaints for which it mination may not be delegated. has jurisdiction. All complete com- [53 FR 25603, July 8, 1988; 53 FR 26559, July 13, plaints must be filed within 180 days of 1988] the alleged act of discrimination. OCR may extend this time for good cause. § 85.62 Coordination and compliance (e) If OCR receives a complaint over responsibilities. which it does not have jurisdiction, it (a) Each component agency shall be shall promptly notify the complainant primarily responsible for compliance and shall make reasonable efforts to with this part in connection with the refer the complaint to the appropriate programs and activities it conducts. Federal government entity. (b) The OCR Director/Special Assist- (f) OCR shall notify the Architectural ant shall have the overall responsi- and Transportation Barriers Compli- bility to coordinate implementation of ance Board upon receipt of any com- this part. The OCR Director/Special As- plaint alleging that a building or facil- sistant shall have authority to conduct ity that is subject to the Architectural investigations, to conduct compliance Barriers Act of 1968, as amended (42 reviews, and to initiate such other ac- U.S.C. 4151–4157), is not readily acces- tions as may be necessary to facilitate sible to and usable by individuals with and ensure effective implementation of handicaps. and compliance with, this part. (g) Within 180 days of the receipt of a (c) If as a result of an investigation complete complaint for which it has ju- or in connection with any other com- risdiction, OCR shall notify the compliance or implementation activity, plainant of the results of the investiga- the OCR Director/Special Assistant de- tions in a letter containing— termines that a component agency ap- (1) Findings of fact and conclusions pears to be in noncompliance with its of law; responsibilities under this part, OCR (2) A description of a remedy for each will undertake appropriate action with violation found; and the component agency to assure com- (3) A notice of the right to appeal. pliance. In the event that OCR and the (h) Appeals of the findings of fact and component agency are unable to agree conclusions of law or remedies must be on a resolution of any particular mat- filed by the complainant within 60 days ter, the matter shall be submitted to of receipt from the agency of the letter the Secretary for resolution. required by § 85.61(g). OCR may extend this time for good cause. EDITORIAL NOTE: At the request of the De- (i) Timely appeals shall be accepted partment of Health and Human Services, the and processed by the OCR Director/Spe- ‘‘Section-by-Section Analysis’’ portion of the cial Assistant. Decisions on such ap- preamble of the document published at 53 FR 25595, July 8, 1988, as corrected at 53 FR 26559, peals shall not be heard by the person July 13, 1988, follows: who made the initial decision. (j) OCR shall notify the complainant SECTION-BY-SECTION ANALYSIS OF of the results of the appeal within 60 REGULATION AND RESPONSE TO COMMENTS days of the receipt of the request. If Where no discussion of comments follows OCR determines that it needs addi- the analysis of a section, no comments have tional information from the complain- been received thereon. ant, it shall have 60 days from the date it receives the additional information Section 85.1 Purpose. to make its determination on the ap- Section 85.1 states the purpose of the rule, peal. which is to effectuate section 119 of the Re- (k) The time limits cited in (g) and habilitation, Comprehensive Services, and (j) above may be extended with the per- Developmental Disabilities Amendments of 1978, which amended section 504 of the Reha- mission of the Assistant Attorney Gen- bilitation Act of 1973 to prohibit discrimina- eral. tion on the basis of handicap in programs or (l) The agency may delegate its au- activities conducted by Executive agencies thority for conducting complaint in- or the United States Postal Service.

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Section 85.2 Application. tivities conducted outside the United States that do not involve individuals with handi- The proposed regulation covers all pro- caps in the United States. grams and activities conducted by the De- partment of Health and Human Services The major programs subject to this regula- (‘‘HHS’’ or the ‘‘agency’’). tion are listed below. Each of the compo- This includes the following components: nents listed above occupies facilities which the public may have occasion to visit, en- The Office of the Secretary gages in written and oral communication Office of the Under Secretary with the public, and hires Federal employ- Office of the Deputy Under Secretary ees. In addition, some components operate Office of the Assistant Secretary for Public programs which involve extensive public use, Affairs as summarized below: Office of the Assistant Secretary for Legis- Office of the Secretary—No major oper- lation ating programs or activities conducted Office of the Assistant Secretary for Plan- directly by the Federal government. ning and Evaluation Office of the Assistant Secretary for Man- Office of Human Development Services— agement and Budget No major operating programs or activi- Office of the Assistant Secretary for ties conducted directly by the Federal 1 Peronnel Administration government. Office of the General Counsel Public Health Service—Directly operated Office of Inspector General programs include the Indian Health Serv- Office for Civil Rights ice, and intramural research conducted 1 Office of Consumer Affairs by the National Institutes of Health. Office of Human Development Services Health Care Financing Administration— Office of the Assistant Secretary for Directly operates the Medicare program.1 Human Development Services Social Security Administration—Directly Administration on Aging operates the Old Age, Survivors, and Dis- Administration for Children, Youth and ability Insurance, and Supplemental Se- Families curity Income for the Aged, Blind, and Administration for Native Americans Disabled programs. Administration on Developmental Disabil- Family Support Administration—No major ities operating programs or activities con- Public Health Service ducted directly by the Federal govern- Office of the Assistant Secretary for ment.1 Health One commenter urged the inclusion of a Agency for Toxic Substances and Disease program operated by one component of the Registry Office of the Secretary, and for a list of all Alcohol, Drug Abuse and Mental Health programs and activities to be appended to Administration the regulation. In light of the fact that all Centers for Disease Control programs and activities are covered, that a Food and Drug Administration comprehensive list of all programs would be Health Resources and Services Administra- very lengthy, and that such a list would have tion to be amended frequently as new programs Indian Health Service are enacted and existing programs expire, National Institutes of Health the above list appears to be sufficient. Health Care Financing Administration Social Security Administration Section 85.3 Definitions. Family Support Administration. Agency. For purposes of this part agency Under this section, a federally conducted means the Department of Health and Human program or activity is, in simple terms, any- Services or any component part of the De- thing a Federal agency does. Aside from em- partment of Health and Human Services that ployment, there are two major categories of conducts a program or activity covered by federally conducted programs or activities this part. Component agency means any such covered by this regulation: those involving component part. general public contact as part of ongoing Assistant Attorney General. Assistant Attor- agency operations, and those directly admin- ney General refers to the Assistant Attorney istered by the agency for program bene- General, Civil Rights Division, United States ficiaries and participants. Activities in the Department of Justice. first category include communication with the public (telephone contacts, office walk- ins, or interviews) and the public’s use of the 1 Financial assistance programs conducted agency’s facilities. Activities in the second through grants to States and other recipi- category include programs that provide Fed- ents are covered by the section 504 rule for eral services or benefits. This regulation federally assisted programs at 45 CFR Part does not, however, apply to programs or ac- 84.

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Auxiliary aids. Auxiliary aids means services One commenter proposed not to delete the or devices that enable persons with impaired phrase or interest in such property. As pre- sensory, manual, or speaking skills to have viously stated, the phrase or interest in such an equal opportunity to participate in, and property has been deleted because the term enjoy the benefits of, the agency’s programs facility, as used in this part, refers to struc- or activities. The definition provides exam- tures and not to intangible property rights. ples of commonly used auxiliary aids. Al- Individual with Handicaps. The definition of though auxiliary aids are required explicitly individual with handicaps is identical to the only by § 85.51(a)(1), they may also be nec- definition of handicapped person appearing in essary to meet other requirements of this the section 504 coordination regulation for regulation. federally assisted programs (28 CFR 41.31), Two commenters suggested expanding the and the HHS regulation for federally assisted definition of auxiliary aids and one of them programs (45 CFR 84.3(j)). Although section further suggested re-naming auxiliary aids to 103(d) of the Rehabilitation Act Amendments read aids for reasonable accommodation and of 1986 changed the statutory term handi- specifically include the services of attendants. capped individual to individual with handicaps, the legislative history of the amendment in- The items set out in § 85.3 are clearly described as examples, and are not intended to dicates that no substantive change was in- constitute an exhaustive list. By giving extended. Thus, although the term has been amples rather than by including a list, other changed in this regulation to be consistent aids can be used, and, in appropriate cases, with the statute as amended, the definition required, without amending the regulation. is unchanged. In particular, although the In certain instances, the services of attend- term as revised refers to handicaps in the ants may indeed be appropriate; in those in- plural, it does not exclude persons who have stances, they will fall under the definition in only one handicap. § 85.3. Therefore, there is no need to change One commenter suggested that we add sen- the text of the regulations. sory to the phrase physical or mental impair- Complete complaint. Complete complaint is ment. Since the definition set out in § 85.3 defined to include all of the information nec- specifically includes the sense organs among essary to enable the agency to investigate the body systems whose impairment con- the complaint. The definition is necessary, stitutes a handicap, we have not found it because the 180 day period for the agency’s necessary to amend the regulation. investigation (see § 85.61(g)) begins when the OCR. OCR means the Office for Civil agency receives a complete complaint. Rights of the Department of Health and Two commenters stated their belief that Human Services. the definition of complete complaint is too re- OCR Director/Special Assistant means the strictive, and urged language which would Director of the Office for Civil Rights, who give the complainant specific information as serves concurrently as the Special Assistant to what additional information is needed, to the Secretary for Civil Rights, or a des- and a further 30 days to submit such infor- ignee of the OCR Director/Special Assistant. mation, failing which the complaint would Qualified individual with handicaps. The def- be dismissed without prejudice, and the com- inition of qualified individual with handicaps plainant would be so informed. is a revised version of the definition of quali- Procedures similar to this suggestion are fied handicapped person appearing in the sec- currently in place, and complainants will be tion 504 coordination regulation for federally given reasonable opportunities to complete assisted programs (28 CFR 41.32) and the HHS the information submitted. There appears to section 504 regulation for federally assisted be no need to spell these procedures out in the regulation. programs (45 CFR 84.3(k)). Facility. The definition of facility is similar Paragraph (1) is an adaptation of existing to that in the section 504 coordination regu- definitions of qualified handicapped person for lation for federally assisted programs (28 purposes of federally assisted preschool, ele- CFR 41.3(f)), except that the term rolling mentary, and secondary education programs stock or other conveyances has been added and (see, e.g., 45 CFR 84.3(k)(2)). It provides that the phrase or interest in such property has an individual with handicaps is qualified for been deleted because the term facility, as preschool, elementary, or secondary edu- used in this part, refers to structures and not cation programs conducted by the agency, if to intangible property rights. It should, how- he or she is a member of a class of persons ever, be noted that this part applies to all otherwise entitled by statute, regulation, or programs and activities conducted by the agency policy to receive these services from agency regardless of whether the facility in the agency. In other words, an individual which they are conducted is owned, leased, with handicaps is qualified if, considering all or used on some other basis by the agency. factors other than the handicapping condi- The term facility is used in §§ 85.41, 85.42, and tion, he or she is entitled to receive edu- 85.61(f). cational services from the agency.

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Paragraph (2) deviates from existing regu- preting the Davis decision, in order to ex- lations for federally assisted programs be- plain why the language of this part does not cause of intervening court decisions. It de- precisely track that of the regulations con- fines qualified individual with handicaps with cerning federally assisted recipients (45 CFR regard to any program other than those cov- Part 84). Two other commenters stated their ered by paragraph (1) under which a person is view that incorporating Davis and Alexander required to perform services or to achieve a into the regulation was unduly restrictive, level of accomplishment. In such programs, a and that the differences between this part qualified individual with handicaps is one and Part 84 would result in holding HHS to who can achieve the purpose of the program a lesser standard than HHS holds recipients without modifications in the program that of Federal financial assistance. the agency can demonstrate would result in We believe that the Supreme Court’s deci- a fundamental alteration in its nature. This sion in Davis as well as the subsequent lower definition reflects the decision of the Su- court decisions following Davis interpret sec- preme Court in Davis. tion 504 and that it is necessary to reflect In that case, the Court ruled that a hear- those decisions in the Department’s regula- ing-impaired applicant to a nursing school tion. The suggested changes are therefore was not a qualified handicapped person be- not being adopted. cause her hearing impairment would prevent The agency has the burden of dem- her from participating in the clinical train- onstrating that a proposed modification ing portion of the program. The Court found would constitute a fundamental alteration in that, if the program were modified so as to the nature of its program or activity. Fur- enable the respondent to participate (by ex- thermore, in demonstrating that a modifica- empting her from the clinical training re- tion would result in such an alteration, the quirements), she would not receive even a agency must follow the procedures estab- rough equivalent of the training a nursing pro- lished in §§ 85.42(a) and 85.51(d), which are dis- gram normally gives. Id. at 410. It also found cussed below, for demonstrating that an ac- that the purpose of [the] program was to train tion would result in undue financial and ad- persons who could serve the nursing profession ministrative burdens to the agency. That is, in all customary ways, Id. at 413, and that the the decision must be made by the agency respondent would be unable, because of her head or his or her designee in writing after hearing impairment, to perform some func- consideration of all resources which are le- tions expected of a registered nurse. It, gally available to the agency for the purpose, therefore, concluded that the school was not and must be accompanied by an explanation required by section 504 to make such modi- of the reasons for the decision. If the agency fications that would result in a fundamental head determines that an action would result alteration in the nature of the program. Id. at in a fundamental alteration, the agency 410. must consider options that would enable the We have incorporated the Court’s language individual with handicaps to achieve the pur- in the definition of qualified individual with pose of the program but would not result in handicaps in order to make clear that such a such an alteration. person must be able to participate in the Two commenters suggested that the total program offered by the agency. The agency resources of the agency be considered in de- is required to make modifications in order to termining undue burden. Because many De- enable an applicant with handicaps to par- partment funds are earmarked for specific ticipate, but is not required to offer a pro- purposes and are therefore unavailable for gram of a fundamentally different nature. use elsewhere, the entire agency budget is The test is whether, with appropriate modi- not an appropriate consideration. fications, the applicant can achieve the pur- For programs or activities which do not pose of the program offered, not whether the fall under either of the first two paragraphs, applicant could benefit or obtain results paragraph (3) adopts the existing definition from some other program that the agency of qualified handicapped person with respect does not offer. Although the revised defini- to services (28 CFR 41.32(b)) in the coordination allows exclusion of some individuals tion regulation for programs receiving Fed- with handicaps from some programs, it re- eral financial assistance. Under this defini- quires that an individual with handicaps who tion, a qualified individual with handicaps is is capable of achieving the purpose of the an individual with handicaps who meets the program must be accommodated, provided essential eligibility requirements for partici- that the modifications do not fundamentally pation in the program or activity. alter the purpose of the program. Paragraph (4) explains that qualified indi- One commenter proposed inserting the sec- vidual with handicaps means qualified handi- ond sentence from the above paragraph into capped person as that term is defined for pur- the regulatory text. We believe that the use poses of employment in the EEOC regulation of this language in the preamble is suffi- at 29 CFR 1613.702(f), which is made applica- cient. ble to this part by § 85.31. Nothing in this Another commenter commended HHS for part changes existing regulations pertaining the discussion of Davis, and the cases inter- to employment.

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One commenter proposed using the general ment of transition plans. It is expected that section 504 definition of qualified handicapped component agencies will consult with indi- person in employment cases rather than the viduals with handicaps among their own definition of the EEOC regulation. The defi- staff in the course of preparing self-evalua- nition has been supplied by the Equal Em- tions. ployment Opportunity Commission which Because modification requirements are in- coordinates all employment discrimination tended to address any potential problems in matters throughout the government. It is the agency’s programs or activities, they are also the Department’s view that it is impor- not specified in the regulation. tant to have a uniform definition of what constitutes employment discrimination Section 85.12 Notice. throughout the Federal government. Section 85.12 requires the agency to dis- Secretary means the Secretary of the De- seminate sufficient information to employ- partment of Health and Human Services or ees, applicants, participants, beneficiaries, the Secretary’s designee. and other interested persons to apprise them Section 504. This definition makes clear of the rights and protections afforded by sec- that, as used in this part, section 504 applies tion 504 and this part. Methods of providing only to programs or activities conducted by this information include, for example, the the agency itself and not to programs or ac- publication of information in handbooks, tivities to which it provides Federal finan- manuals, and pamphlets that are distributed cial assistance. to the public to describe the agency’s pro- Section 85.11 Self-evaluation. grams and activities or in connection with recruitment; the display of informative post- The agency shall conduct a self-evaluation ers in service centers and other public of its compliance with section 504 within one places; or the broadcasting of information by year of the effective date of this regulation. television or radio. The self-evaluation requirement is present in One commenter suggested the inclusion of the existing section 504 coordination regula- a reference to recruitment materials in the tion for programs or activities receiving above examples. Such a reference has been Federal financial assistance (28 CFR included. 41.5(b)(2)) and the HHS regulations for federally assisted programs (45 CFR 84.6(k)). Expe- Section 85.21 General prohibitions against rience has demonstrated the self-evaluation discrimination. process to be a valuable means of establishing a working relationship with individ- Section 85.21 is an adaptation of the cor- uals with handicaps that promotes both ef- responding section of the section 504 coordi- fective and efficient implementation of sec- nation regulation for programs and activi- tion 504. ties receiving Federal financial assistance One commenter stated that a three-year (28 CFR 41.51). retention period is insufficient, and proposed Paragraph (a) restates the nondiscrimina- that self-evaluations be kept indefinitely. tion mandate of section 504. The remaining The regulation requires the self-evaluation paragraphs in § 85.21 establish the general to be kept for a minimum of three years, but principles for analyzing whether any par- does not include a maximum. It is expected ticular action of the agency violates this that the self-evaluation will be retained for mandate. These principles serve as the ana- the period provided in current document re- lytical foundation for the remaining sections tention policies. of the part. If the agency violates a provision Another commenter proposed that copies in any of the subsequent sections, it will also of the self-evaluation be made available for violate one of the general prohibitions found copying as well as for public inspection. This in § 85.21. When there is no applicable subse- proposal has been adopted. quent provision, the general prohibitions A further commenter proposed the inclu- stated in this section apply. sion of provisions for assurances, transition Paragraph (b) prohibits overt denials of plans and specific modification require- equal treatment of individuals with handi- ments. We believe that while assurances are caps. The agency may not refuse to provide appropriate—and can be specifically en- an individual with handicaps with an equal forced—in section 504 regulations for feder- opportunity to participate in or benefit from ally assisted programs or activities, all of its program simply because the person is the entities involved in this part are under handicapped. Such blatantly exclusionary the control of the Secretary, who can issue practices could result from the use of the necessary directives; assurances are irrebuttable presumptions that absolutely therefore not required. exclude certain classes of disabled persons The final rule provides for participation in (e.g., epileptics, hearing-impaired persons, the self-evaluation process by individuals persons with heart ailments) from participa- with handicaps or organizations representing tion in programs or activities without regard individuals with handicaps by submitting to an individual’s actual ability to partici- comments, which may include the develop- pate. Use of an irrebuttable presumption is

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permissible only when in all cases a physical neutral on their face, but deny individuals condition by its very nature would prevent with handicaps an effective opportunity to an individual from meeting the essential eli- participate. gibility requirements for participation in the Paragraph (b)(4) specifically applies the activity in question. It would be permissible, prohibition enunciated in § 85.21(b)(3) to the therefore, to exclude without an individual process of selecting sites for construction of evaluation all persons who are blind in both new facilities or existing facilities to be used eyes from eligibility for a license to operate by the agency. Paragraph (b)(4) does not a commercial vehicle in interstate com- apply to construction of additional buildings merce; but it may not be permissible to at an existing site. automatically disqualify all those who are Paragraph (b)(5) prohibits the agency, in blind in just one eye. the selection of procurement contractors, In addition, section 504 prohibits more from using criteria that subject qualified in- than just the most obvious denials of equal dividuals with handicaps to discrimination treatment. It is not enough to admit persons on the basis of handicap. in wheelchairs to a program if the facilities in which the program is conducted are inac- Paragraph (b)(6) prohibits the agency from cessible. Paragraph (b)(1)(iii), therefore, re- discriminating against qualified individuals quires that the opportunity to participate or with handicaps on the basis of handicap in benefit afforded to an individual with handi- the granting of licenses or certifications. A caps be as effective as that afforded to oth- person is a qualified individual with handicaps ers. The later sections on program accessi- with respect to licensing or certification if bility (§§ 85.41–43) and communication (§ 85.51) he or she can meet the essential eligibility are specific applications of this principle. requirements for receiving the license or cer- Despite the mandate of paragraph (d) that tification (see § 85.3). the agency administer its programs and ac- In addition, the agency may not establish tivities in the most integrated setting appro- requirements for the programs or activities priate to the needs of qualified individuals of licensees or certified entities that subject with handicaps, paragraph (b)(1)(iv), in con- qualified individuals with handicaps to dis- junction with paragraph (d), permits the crimination on the basis of handicap. For ex- agency to develop separate or different aids, ample, the agency must comply with this re- benefits, or services when necessary to pro- quirement when establishing safety stand- vide individuals with handicaps with an ards for the operations of licensees. In that equal opportunity to participate in or ben- case, the agency must ensure that the stand- efit from the agency’s programs or activi- ards it promulgates do not discriminate ties. Paragraph (b)(1)(iv) requires that dif- against the employment of qualified individ- ferent or separate aids, benefits, or services uals with handicaps in an impermissible be provided only when necessary to ensure manner. that the aids, benefits, or services are as ef- Paragraph (b)(6) does not extend section fective as those provided to others. Even 504 directly to the programs or activities of when separate or different aids, benefits or licensees or certified entities themselves. services would be more effective, paragraph The programs or activities of Federal licens- (b)(2) provides that a qualified individual ees or certified entities are not themselves with handicaps still has the right to choose federally conducted programs or activities; to participate in the program that is not de- nor are they programs or activities receiving signed to accommodate individuals with Federal financial assistance merely by vir- handicaps. Paragraph (b)(1)(v) prohibits the agency tue of the Federal license or certificate. from denying a qualified individual with However, as noted above, section 504 may af- handicaps the opportunity to participate as fect the content of the rules established by a member of a planning or advisory board. the agency for the operation of the program Paragraph (b)(1)(vi) prohibits the agency or activity of the licensee or certified entity from limiting a qualified individual with and thereby indirectly affect limited aspects handicaps in the enjoyment of any right, of their operations. privilege, advantage, or opportunity enjoyed One commenter suggested pointing out by others receiving any aid, benefit, or serv- that Federal licensees or certified entities, ice. having received services from Federal em- Paragraph (b)(3) prohibits the agency from ployees during the process of licensing or utilizing criteria or methods of administra- certification, thereby become Federally as- tion that deny individuals with handicaps sisted recipients, and are covered by 45 CFR access to the agency’s programs or activi- Part 84. Such an argument is beyond the ties. The phrase criteria or methods of adminis- scope of this part, and is therefore not being tration refers to official written agency poli- included. cies, as well as the actual practices of the Another commenter suggested including agency. This paragraph prohibits both bla- language such as that found in 45 CFR tantly exclusionary policies or practices and 84.4(b)(1) to the effect that agencies may not nonessential policies and practices that are perpetuate discrimination against qualified

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individuals with handicaps by providing sig- In addition to this section, § 85.61(c) speci- nificant assistance to an agency, organiza- fies that the agency will use the existing tion or person that discriminates on the EEOC procedures to resolve allegations of basis of handicap. Assistance from the agen- employment discrimination. cy that would provide significant support to an organization constitutes Federal finan- Section 85.41 Program accessibility: cial assistance and the organization, as a re- Discrimination prohibited. cipient of such assistance, would be covered Section 85.41 states the general non- by the section 504 regulation for federally as- discrimination principle underlying the pro- sisted programs. gram accessibility requirements of §§ 85.42 Paragraph (c) provides that programs con- and 85.43. ducted pursuant to Federal statute or Execu- tive order that are designed to benefit only Section 85.42 Program accessibility: Existing individuals with handicaps or a given class of facilities. individuals with handicaps may be limited to This part adopts the program accessibility individuals those with handicaps. concept found in the existing section 504 co- Paragraph (d) provides that the agency ordination regulation for programs or activi- must administer programs and activities in ties receiving Federal financial assistance the most integrated setting appropriate to (28 CFR 41.57) with certain modifications. the next of qualified individuals with handi- Thus, § 85.42 requires that each agency pro- caps, i.e. in a setting that enables individuals gram or activity, when viewed in its en- with handicaps to interact with nonhandi- tirety, be readily accessible to and usable by capped individuals to the fullest extent pos- individuals with handicaps. The part also sible. makes clear that the agency is not required Section 85.31 Employment. to make each of its existing facilities accessible (§ 85.42(a)(1)). However, § 85.42, unlike 28 Section 85.31 prohibits discrimination on CFR 41.57, places explicit limits on the agen- the basis of handicap in employment by the cy’s obligation to ensure program accessi- agency. Courts have held that section 504, as bility (§ 85.42(a)(2)). amended in 1978, covers the employment One commenter stated that the provisions practices of Executive agencies. Gardner v. of § 85.42(a)(1) were negatively worded and Morris, 752 F.2d 1271, 1277 (8th Cir. 1985); Smith may reflect a misinterpretation of the deci- v. United States Postal Service, 742 F.2d 257, sion of the Supreme Court in Grove City Col- 259–60 (6th Cir. 1984); Prewitt v. United States lege v. Bell, 465 U.S. 555 (1984), and argued for Postal Service, 662 F.2d 292, 302–04 (5th Cir. deletion of this language. 1981). Contra McGuiness v. United States Postal The language is identical to that in the Service, 744 F.2d 1318, 1320–21 (7th Cir. 1984); section 504 regulation for federally assisted Boyd v. United States Postal Service, 752 F.2d programs or activities. We believe that the 410, 413–14 (9th Cir. 1985). inclusion of this language is necessary in Courts uniformly have held that, in order order to make clear that, while every aspect to give effect to section 501 of the Rehabili- of every Federal program or activity need tation Act, which covers Federal employ- not be accessible, each program or activity, ment, the administrative procedures of sec- when viewed as a whole, must be accessible. tion 501 must be followed in processing com- Another commenter recommended adding plaints of employment discrimination under the language ‘‘where other methods are section 504. Morgan v. United States Postal equally effective in achieving compliance Service, 798 F.2d 1162, 1164–65 (8th Cir. 1986); from § 84.42(b) to § 84.42(a)(1). We believe that, Smith, 742 F.2d at 262; Prewitt, 662 F.2d at 304. because §§ 84.42 (a) and (b) treat different as- Accordingly, § 85.31 (Employment) of this pects of the subject, their language must rule adopts the definitions, requirements, necessarily differ. and procedures of section 501 as established Paragraph (a)(2) generally codifies recent in regulations of the EEOC at 29 CFR Part case law that defines the scope of the agen- 1613. Responsibility for coordinating enforce- cy’s obligation to ensure program accessi- ment of Federal laws prohibiting discrimina- bility. This paragraph provides that in meet- tion in employment is assigned to the EEOC ing the program accessibility requirement, by Executive Order 12067 (3 CFR, 1978 Comp., the agency is not required to take any action p. 206). Under this authority, the EEOC es- that would result in a fundamental alter- tablishes government-wide standards on non- ation in the nature of its program or activ- discrimination in employment on the basis ity, or in undue financial and administrative of handicap. burdens. A similar limitation is provided in One commenter proposed that the general § 85.51(d). This provision is based on the Su- definition of qualified individual with handi- preme Court’s holding in Southeastern Com- caps be used in this section, instead of that munity College v. Davis, 442 U.S. 397 (1979), used under section 501. We believe that the that section 504 does not require program above paragraphs sufficiently explain the modifications that result in a fundamental need for using the section 501 definition. alteration in the nature of a program, and on

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the Court’s statement that section 504 does It is our view that compliance with not require modifications that would result § 85.42(a) would in most cases not result in in ‘‘undue financial and administrative bur- undue financial and administrative burdens dens.’’ 442 U.S. at 412. Since Davis, circuit on the agency. In determining whether fi- courts have applied this limitation on a nancial and administrative burdens are showing that only one of the two ‘‘undue undue, all agency resources available for use burdens’’ would be created as a result of the in the funding and operation of the con- modification sought to be imposed under sec- ducted program or activity should be consid- tion 504. See, e.g., Dopico v. Goldschmidt, 687 ered. The burden of proving that compliance F.2d 644 (2d Cir. 1982); American Public Transit with § 85.42(a) would fundamentally alter the Association v. Lewis, 655 F.2d 1272 (D.C. Cir. nature of a program or activity or would re- 1981). sult in undue financial and administrative Paragraph (a)(2) and § 85.51(d) are also sup- burdens rests with the agency. The decision ported by the Supreme Court’s decision in that compliance would result in such alter- Alexander v. Choate, 469 U.S. 287 (1985). Alex- ation or burdens must be made by the agen- ander involved a challenge to the State of cy head or his or her designee, and must be Tennessee’s reduction of inpatient hospital accompanied by a written statement of the care coverage under Medicaid from 20 to 14 reasons for reaching that conclusion. Any days per year. Plaintiffs argued that this re- person who believes that he or she or any duction violated section 504 because it had specific class of persons has been injured by an adverse impact on handicapped persons. the agency head’s decision or failure to make The Court assumed without deciding that a decision may file a complaint under the section 504 reaches at least some conduct compliance procedures established in § 85.61. that has an unjustifiable disparate impact on The opportunity to file such a complaint re- handicapped people, but held that the reduc- sponds to one commenter’s suggestion that tion was not ‘‘the sort of disparate impact’’ review by a high level Department official be discrimination that might be prohibited by assured. section 504 or its implementing regulation. Paragraph (b)(1) sets forth a number of Id at 299. means by which program accessibility may Relying on Davis, the Court said that section 504 guarantees qualified handicapped be achieved, including redesign of equip- persons ‘‘meaningful access to the benefits ment, reassignment of services to accessible the grantee offers,’’ id. at 301, and that buildings, and provision of aides. In choosing ‘‘reasonable adjustments in the nature of the among methods, the agency shall give pri- benefit offered must at times be made to as- ority consideration to those that will be con- sure meaningful access.’’ Id. n.21 (emphasis sistent with provision of services in the most added). However, section 504 does not require integrated setting appropriate to the needs ‘‘ ‘changes,’ ‘adjustments,’ or ‘modifications’ of individuals with handicaps. Structural to existing programs that would be ‘substan- changes in existing facilities are required tial’ * * * or that would constitute ‘funda- only when there is no other feasible way to mental alteration[s] in the nature of a pro- make the agency’s program accessible. (It gram.’ ’’ Id. at n.20 (citations omitted). Alex- should be noted that ‘‘structural changes’’ ander supports the position, based on Davis include all physical changes to a facility; the and the earlier lower court decisions, that in term does not refer only to changes to struc- some situations, certain accommodations for tural features, such as removal of or alter- a handicapped person may so alter an agen- ation to a load-bearing structural member.) cy’s program or activity, or entail such ex- The agency may comply with the program tensive costs and administrative burdens accessibility requirement by delivering serv- that the refusal to undertake the accom- ices at alternate accessible sites or making modations is not discriminatory. Thus, fail- home visits as appropriate. ure to include such an ‘‘undue burdens’’ pro- One commenter proposed that methods vision could lead to judicial invalidation of other than structural changes to ensure ac- the regulation or reversal of a particular en- cessibility should be ‘‘equally effective’’. The forcement action taken pursuant to the reg- regulations implementing section 504 for fed- ulation. erally assisted programs do not contain such This paragraph, however, does not estab- language. The addition of the proposed lan- lish an absolute defense; it does not relieve guage would impose a regulatory standard the agency of all obligations to individuals on the Department not required of recipi- with handicaps. Although the agency is not ents. In view of the fact that the 1978 amend- required to take actions that would result in ments were intended to apply the same re- a fundamental alteration in the nature of a quirements to federally conducted programs program or activity or in undue financial as apply to federally assisted programs, the and administrative burdens, it nevertheless proposed language is not being adopted. must take any other steps necessary to en- Paragraphs (c) and (d) establish time peri- sure that individuals with handicaps receive ods for complying with the program accessi- the benefits and services of the federally bility requirement. As currently required for conducted program or activity. federally assisted programs by 28 CFR

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41.57(b), the agency must make any nec- use of an existing Federal facility, and the essary structural changes in facilities as agency believes that same program accessi- soon as practicable, but in no event later bility standards should apply to both owned than three (3) years after the effective date and leased existing buildings. of this part. Where structural modifications In Rose v. United States Postal Service, 774 are required and it is not expected that these F.2d 1355 (9th Cir. 1985), the Ninth Circuit can be completed within six months, a tran- held that the Architectural Barriers Act re- sition plan should be developed within six quires accessibility at the time of lease. The months of the effective date of this part. Rose court did not address the question of Aside from structural changes, all other nec- whether section 504 likewise requires acces- essary steps to achieve compliance shall be sibility as a condition of lease, and the case taken within sixty days. was remanded to the District Court for, One commenter proposes to limit the time among other things, consideration of this allowed for making structural modifications issue. Two commenters urged that leased to one year. We note that the basic require- buildings be required to be accessible at the ment is that these changes be made ‘‘as soon time of lease. The agency may provide more as practicable,’’ and that the three-year specific guidance on section 504 requirements limit is the maximum period of time. Fur- for leased buildings after the litigation is thermore, the three-year maximum for transition plans is identical to that contained in completed. the regulations for federally assisted recipi- Section 85.51 Communications. ents. Section 85.51 requires the agency to take Section 85.43 Program accessibility: New appropriate steps to ensure effective commu- construction and alterations. nication with personnel of other Federal en- Overlapping coverage exists with respect tities, applicants, participants, and members to new construction and alterations under of the public. These steps shall include pro- section 504 and the Architectural Barriers cedures for determining when auxiliary aids Act of 1968, as amended (42 U.S.C. 4151–4157). are necessary under § 85.1(a)(1) to afford an Section 85.43 provides that those buildings individual with handicaps an equal oppor- that are constructed or altered by, on behalf tunity to participate in, and enjoy the bene- of, or for the use of the agency shall be de- fits of, the agency’s program or activity. signed, constructed, or altered to be readily They shall also include an opportunity for accessible to and usable by individuals with individuals with handicaps to request the handicaps in accordance with 41 CFR Part auxiliary aids of their choice. This expressed 101–19, 101–19.600 to 101–19.607 (GSA regula- choice shall be given primary consideration tion which incorporates the Uniform Federal by the agency (§ 85.51(a)(1)(i)). The agency Accessibility Standards). This standard was shall honor the choice unless it can dem- promulgated pursuant to the Architectural onstrate that another effective means of Barriers Act of 1968, as amended (42 U.S.C. communication exists or that use of the 4151–4157). We believe that it is appropriate means chosen would not be required under to adopt the existing Architectural Barriers § 85.51(d). That paragraph limits the obliga- Act standard for section 504 compliance be- tions of the agency to ensure effective com- cause new and altered buildings subject to munication in accordance with Davis and the this regulation are also subject to the Archi- circuit court opinions interpreting it (see tectural Barriers Act and because adoption supra preamble discussion of § 85.42(c)(2)). Un- of the standard will avoid duplicative and less not required by § 85.51(d), the agency possibly inconsistent standards. shall provide auxiliary aids at no cost to the Existing buildings leased by the agency individual with handicaps. after the effective date of this regulation are not required by the regulation to meet acces- One commenter proposed that the choice of sibility standards simply by virtue of being auxiliary aid made by the individual with leased. They are subject, however, to the handicaps should govern unless it would con- program accessibility standards for existing stitute an undue hardship on the agency. We facilities in § 85.42. To the extent the build- believe that the language set out above is ings are newly constructed or altered, they adequate to ensure consideration of an indi- must also meet the new constructions and vidual’s preference. alteration requirements of § 85.43. Another commenter proposed that the reg- Federal practice under section 504 has al- ulation require all films and videotapes pro- ways treated newly leased buildings as sub- duced by the agency to be captioned for the ject to the existing facility program accessi- hearing-impaired. The Department intends bility standard. Unlike the construction of to examine all appropriate methods of ensur- new buildings where architectural barriers ing effective communication. can be avoided at little or no cost, the appli- The same commenter applauded HHS for cation of new construction standards to an the inclusion of the language requiring HHS existing building being leased raises the to inform individuals with handicaps of their same prospect of retrofitting buildings as the section 504 rights.

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The discussion of § 85.42(a), Program acces- tain information concerning accessible serv- sibility, Existing facilities, regarding the de- ices, activities, and facilities. termination of what constitutes undue finan- Paragraph (c) requires the agency to pro- cial and administrative burdens, also applies vide signage at inaccessible facilities that di- to § 85.51(d) and should be referred to for a rect users to locations with information complete understanding of the agency’s obli- about accessible facilities. gation to comply with § 85.51. One commenter suggested specifically In some circumstances, a notepad and mentioning the international symbol for written materials may be sufficient to per- deafness, and placing such signs at the main mit effective communication with a hearing- entrance of buildings equipped to service the impaired person. In many circumstances, hearing-impaired. We believe that the lan- however, they may not be, particularly when guage contained in §§ 85.51 (b) and (c) requires the information being communicated is com- the agency to ensure that individuals with plex or exchanged for a lengthy period of handicaps, including those with impaired time (e.g. a meeting) or where the hearing- hearing, can obtain information regarding impaired applicant or participant is not accessibility, and that this requirement is skilled in spoken or written language. In sufficient to afford flexibility on the part of these cases, a sign language interpreter may the agency regarding use of appropriate sign- be appropriate. age. One commenter proposed changing the lan- One commenter proposed adding the words guage to state that notepads rarely suffice ‘‘in the most integrated setting appropriate’’ for communication with the hearing-im- to the language in § 85.51(d). This language paired. Considering that a significant num- already appears elsewhere in the regulation, ber of the hearing-impaired may not be e.g. in § 85.42(b)(2), and it is the Department’s skilled in sign language, we believe that the intention to act in accordance with that pro- language used is appropriate. vision. For vision-impaired persons, effective communication might be achieved by several Section 85.61 Compliance procedures. means, including readers and audio recordings. In general, the agency intends to in- Paragraph (a) specifies that paragraphs (b) form the public of (1) the communications and (d) through (l) of this section establish services it offers to afford individuals with the procedures for processing complaints handicaps an equal opportunity to partici- other than employment complaints. Para- pate in or benefit from its programs and ac- graph (c) provides that the agency will proc- tivities, (2) the opportunity to request a par- ess employment complaints according to ticular mode of communication, and (3) the procedures established in existing regula- agency’s preferences regarding auxiliary aids tions of the EEOC (29 CFR Part 1613) pursu- if it can demonstrate that several different ant to section 501 of the Rehabilitation Act modes are effective. of 1973 (29 U.S.C. 791). The agency shall ensure effective commu- Paragraph (b) designates the official re- nication with vision-impaired and hearing- sponsible for coordinating implementation of impaired persons involved in proceedings § 85.61. The NPRM stated that responsibility conducted by the agency. Auxiliary aids for the implementation and operation of this must be afforded where necessary to ensure ‘‘part’’ shall be vested in the OCR Director/ effective communication at the proceedings. Special Assistant. The final rule has been re- If sign language interpreters are necessary, vised by replacing the word ‘‘part’’ with the the agency may require that it be given rea- word ‘‘section’’ to clarify the responsibility sonable notice prior to the proceedings of the for coordinating implementation of § 85.61. need for an interpreter. Moreover, the agen- The agency is required to accept and inves- cy need not provide individually prescribed tigate all complete complaints (§ 85.61(d)). devices, readers for personal use or study, or Two commenters suggested that a complain- other devices of a personal nature ant have an opportunity to remedy an in- (§ 85.51(a)(1)(ii)). For example, the agency complete complaint. Current administrative need not provide eye glasses or hearing aids procedures provide for this practice and it to applicants or participants in its programs. need not be included in the text of the regu- Similarly, the regulation does not require lation. the agency to provide wheelchairs to persons If the agency determines that it does not with mobility impairments. have jurisdiction over a complaint, it shall One commenter proposed that the items promptly notify the complainant and make which agencies are not required to provide reasonable efforts to refer the complaint to and the circumstances involved be described the appropriate entity of the Federal Gov- in more detail. We believe that the descrip- ernment (§ 85.61(e)). One commenter pointed tion given is sufficient, because the interpre- out that where a reference to another entity tation of this provision will be made on a of the Federal government is required, the case-by-case basis. obligation to refer should be absolute, not Paragraph (b) requires the agency to en- limited to reasonable efforts. The language sure that individuals with handicaps can ob- ‘‘shall make reasonable efforts to refer’’ is

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not intended to minimize the Department’s Paragraph (c) specifies the respective roles obligation. of OCR and of the HHS component in cases Paragraph (f) requires the agency to notify in which noncompliance is found. the Architectural and Transportation Bar- In the event that OCR and the HHS compo- riers Compliance Board (ATBCB) upon re- nent cannot agree on a resolution of any par- ceipt of a complaint alleging that a building ticular matter, such matter will be sub- or facility subject to the Architectural Bar- mitted to the Secretary for resolution. riers Act was designed, constructed, or altered in a manner that does not provide PART 86—NONDISCRIMINATION ready access and use by individuals with handicaps. ON THE BASIS OF SEX IN EDU- Paragraph (g) requires the agency to pro- CATION PROGRAMS OR ACTIVI- vide to the complainant, in writing, findings TIES RECEIVING FEDERAL FINAN- of fact and conclusions of law, the relief CIAL ASSISTANCE granted if noncompliance is found, and notice of the right to appeal (§ 85.61(g)). One ap- Subpart A—Introduction peal within the agency shall be provided (§ 85.61(i)). The appeal will not be heard by Sec. the same person who made the initial deter- 86.1 Purpose and effective date. mination of compliance or noncompliance. 86.2 Definitions. Paragraph (1) permits the agency to dele- 86.3 Remedial and affirmative action and gate its authority for investigating com- self-evaluation. plaints to other Federal agencies. However, 86.4 Assurance required. the statutory obligation of the agency to 86.5 Transfers of property. make a final determination of compliance or 86.6 Effect of other requirements. noncompliance may not be delegated. 86.7 Effect of employment opportunities. Commenters have suggested the following: 86.8 Designation of responsible employee Notifying complainants whenever their and adoption of grievance procedures. complaints are referred to another agency. 86.9 Dissemination of policy. Current administrative procedures provide for this practice and it need not be included Subpart B—Coverage in the text of the regulation. 86.11 Application. Describing the basic parameters for sub- 86.12 Educational institutions controlled by mitting or obtaining evidence used to decide religious organizations. appeals. Since the grounds for appeal may be 86.13 Military and merchant marine edu- extremely varied, it would not be practicable cational institutions. to set out parameters for every appeal. 86.14 Membership practices of certain orga- Including a statement as to complainants’ nizations. rights to judicial review. These rights are 86.15 Admissions. statutory and beyond the scope of this regu- 86.16 Educational institutions eligible to lation. submit transition plans. Obtaining the expertise of ATBCB in ap- 86.17 Transition plans. propriate cases. A provision regarding notifi- 86.18–86.20 [Reserved] cation of ATBCB is already included in the regulation. Subpart C—Discrimination on the Basis of Including a statement that all other regu- Sex In Admission and Recruitment Pro- lations, forms and directives issued by HHS hibited are superseded by the nondiscrimination requirements of this part. The Department 86.21 Admission. views any other issuances falling short of the 86.22 Preference in admission. requirements of this regulation as insuffi- 86.23 Recruitment. cient to ensure compliance and therefore 86.24–86.30 [Reserved] such a statement is unnecessary. Provisions for attorneys fees and com- Subpart D—Discrimination on the Basis of pensation to the prevailing party. Such pro- Sex in Education Programs or Activities visions are statutory and beyond the scope of Prohibited this regulation. 86.31 Education programs or activities. Section 85.62 Coordination and compliance 86.32 Housing. responsibilities. 86.33 Comparable facilities. 86.34 Access to course offerings. Section 85.62 sets out the respective re- 86.35 Access to schools operated by L.E.A.s. sponsibilities of the components of HHS and 86.36 Counseling and use of appraisal and of the Director, OCR/Special Assistant in the counseling materials. implementation of section 504 to programs 86.37 Financial assistance. and activities conducted by HHS. 86.38 Employment assistance to students.

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86.39 Health and insurance benefits and Stat. 484. The effective date of this part services. shall be July 21, 1975. 86.40 Marital or parental status. 86.41 Athletics. (Secs. 901, 902, Education Amendments of 1972, 86 Stat. 373, 374; 20 U.S.C. 1681, 1682, as 86.42 Textbooks and curricular material. amended by Pub. L. 93–568, 88 Stat. 1855, and 86.43–86.50 [Reserved] sec. 844, Education Amendments of 1974, 88 Stat. 484, Pub. L. 93–380) Subpart E—Discrimination on the Basis of Sex In Employment in Education Pro- § 86.2 Definitions. grams or Activities Prohibited As used in this part, the term— 86.51 Employment. (a) Title IX means title IX of the Edu- 86.52 Employment criteria. cation Amendments of 1972, Pub. L. 92– 86.53 Recruitment. 318, as amended by section 3 of Pub. L. 86.54 Compensation. 93–568, 88 Stat. 1855, except sections 904 86.55 Job classification and structure. and 906 thereof; 20 U.S.C. 1681, 1682, 86.56 Fringe benefits. 1683, 1685, 1686. 86.57 Marital or parental status. (b) Department means the Department 86.58 Effect of State or local law or other of Health and Human Services. requirements. (c) Secretary means the Secretary of 86.59 Advertising. Health and Human Services. 86.60 Pre-employment inquiries. (d) Director means the Director of the 86.61 Sex as bona-fide occupational quali- Office for Civil Rights of the Depart- fication. ment. 86.62–86.70 [Reserved] (e) Reviewing Authority means that component of the Department dele- Subpart F—Procedures [Interim] gated authority by the Secretary to ap- 86.71 Interim procedures. point, and to review the decisions of, administrative law judges in cases aris- SUBJECT INDEX TO TITLE IX PREAMBLE AND ing under this part. REGULATION (f) Administrative law judge means a APPENDIX A TO PART 86—GUIDELINES FOR person appointed by the reviewing au- ELIMINATING DISCRIMINATION AND DENIAL OF SERVICES ON THE BASIS OF RACE, thority to preside over a hearing held COLOR, NATIONAL ORIGIN, SEX, AND HAND- under this part. ICAP IN VOCATIONAL EDUCATION PROGRAMS (g) Federal financial assistance means [NOTE] any of the following, when authorized or extended under a law administered SOURCE: 40 FR 24137, June 4, 1975, unless by the Department: otherwise noted. (1) A grant or loan of Federal financial assistance, including funds made Subpart A—Introduction available for: (i) The acquisition, construction, ren- § 86.1 Purpose and effective date. ovation, restoration, or repair of a The purpose of this part is to effec- building or facility or any portion tuate title IX of the Education Amend- thereof; and ments of 1972, as amended by Pub. L. (ii) Scholarships, loans, grants, wages 93–568, 88 Stat. 1855 (except sections 904 or other funds extended to any entity and 906 of those Amendments) which is for payment to or on behalf of students designed to eliminate (with certain ex- admitted to that entity, or extended ceptions) discrimination on the basis of directly to such students for payment sex in any education program or activ- to that entity. (2) A grant of Federal real or per- ity receiving Federal financial assist- sonal property or any interest therein, ance, whether or not such program or including surplus property, and the activity is offered or sponsored by an proceeds of the sale or transfer of such educational institution as defined in property, if the Federal share of the this part. This part is also intended to fair market value of the property is effectuate section 844 of the Education not, upon such sale or transfer, prop- Amendments of 1974, Pub. L. 93–380, 88 erly accounted for to the Federal Gov- ernment.

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(3) Provision of the services of Fed- (i) Recipient means any State or po- eral personnel. litical subdivision thereof, or any in- (4) Sale or lease of Federal property strumentality of a State or political or any interest therein at nominal con- subdivision thereof, any public or pri- sideration, or at consideration reduced vate agency, institution, or organiza- for the purpose of assisting the recipi- tion, or other entity, or any person, to ent or in recognition of public interest whom Federal financial assistance is to be served thereby, or permission to extended directly or through another use Federal property or any interest recipient and which operates an edu- therein without consideration. cation program or activity which re- (5) Any other contract, agreement, or ceives such assistance, including any arrangement which has as one of its subunit, successor, assignee, or trans- purposes the provision of assistance to feree thereof. any education program or activity, ex- (j) Applicant means one who submits cept a contract of insurance or guaran application, request, or plan re- anty. quired to be approved by a Department (h) Program or activity and program official, or by a recipient, as a condi- means all of the operations of— tion to becoming a recipient. (1)(i) A department, agency, special (k) Educational institution means a purpose district, or other instrumen- local educational agency (L.E.A.) as tality of a State or of a local govern- defined by section 801(f) of the Elemen- ment; or tary and Secondary Education Act of (ii) The entity of such a State or 1965 (20 U.S.C. 881), a preschool, a pri- local government that distributes Fed- vate elementary or secondary school, eral financial assistance and each such or an applicant or recipient of the type department or agency (and each other defined by paragraph (l), (m), (n), or (o) State or local government entity) to of this section. which the assistance is extended, in the (l) Institution of graduate higher edu- case of assistance to a State or local cation means an institution which: government; (1) Offers academic study beyond the (2)(i) A college, university, or other bachelor of arts or bachelor of science postsecondary institution, or a public degree, whether or not leading to a cer- system of higher education; or tificate of any higher degree in the lib- (ii) A local educational agency (as de- eral arts and sciences; or fined in 20 U.S.C. 7801), system of voca- (2) Awards any degree in a profes- tional education, or other school sys- sional field beyond the first profes- tem; sional degree (regardless of whether (3)(i) An entire corporation, partner- the first professional degree in such ship, or other private organization, or field is awarded by an institution of an entire sole proprietorship— undergraduate higher education or pro- (A) If assistance is extended to such fessional education); or corporation, partnership, private orga- (3) Awards no degree and offers no nization, or sole proprietorship as a further academic study, but operates whole; or ordinarily for the purpose of facili- (B) Which is principally engaged in tating research by persons who have the business of providing education, received the highest graduate degree in health care, housing, social services, or any field of study. parks and recreation; or (m) Institution of undergraduate higher (ii) The entire plant or other com- education means: parable, geographically separate facil- (1) An institution offering at least ity to which Federal financial assist- two but less than four years of college ance is extended, in the case of any level study beyond the high school other corporation, partnership, private level, leading to a diploma or an asso- organization, or sole proprietorship; or ciate degree, or wholly or principally (4) Any other entity which is estab- creditable toward a baccalaureate de- lished by two or more of the entities gree; or described in paragraph (h)(1), (2), or (3) (2) An institution offering academic of this section; any part of which is ex- study leading to a baccalaureate de- tended Federal financial assistance. gree; or

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(3) An agency or body which certifies against persons on the basis of sex in credentials or offers degrees, but which an education program or activity, such may or may not offer academic study. recipient shall take such remedial ac- (n) Institution of professional education tion as the Director deems necessary to means an institution (except any insti- overcome the effects of such discrimi- tution of undergraduate higher edu- nation. cation) which offers a program of aca- (b) Affirmative action. In the absence demic study that leads to a first profes- of a finding of discrimination on the sional degree in a field for which there basis of sex in an education program or is a national specialized accrediting activity, a recipient may take affirma- agency recognized by the United States tive action to overcome the effects of Commissioner of Education. conditions which resulted in limited (o) Institution of vocational education participation therein by persons of a means a school or institution (except particular sex. Nothing herein shall be an institution of professional or grad- interpreted to alter any affirmative ac- uate or undergraduate higher edu- tion obligations which a recipient may cation) which has as its primary pur- have under Executive Order 11246. pose preparation of students to pursue (c) Self-evaluation. Each recipient a technical, skilled, or semiskilled oc- education institution shall, within one cupation or trade, or to pursue study in year of the effective date of this part: a technical field, whether or not the (1) Evaluate, in terms of the require- school or institution offers certificates, ments of this part, its current policies diplomas, or degrees and whether or and practices and the effects thereof not it offers fulltime study. concerning admission of students, (p) Administratively separate unit treatment of students, and employ- means a school, department or college ment of both academic and non-aca- of an educational institution (other demic personnel working in connection than a local educational agency) ad- with the recipient’s education program mission to which is independent of ad- or activity; mission to any other component of (2) Modify any of these policies and such institution. practices which do not or may not (q) Admission means selection for meet the requirements of this part; and part-time, full-time, special, associate, (3) Take appropriate remedial steps transfer, exchange, or any other enroll- to eliminate the effects of any dis- ment, membership, or matriculation in crimination which resulted or may or at an education program or activity have resulted from adherence to these operated by a recipient. policies and practices. (r) Student means a person who has (d) Availability of self-evaluation and gained admission. related materials. Recipients shall main- (s) Transition plan means a plan sub- tain on file for at least three years fol- ject to the approval of the United lowing completion of the evaluation re- States Commissioner of Education pur- quired under paragraph (c) of this sec- suant to section 901(a)(2) of the Edu- tion, and shall provide to the Director cation Amendments of 1972, under upon request, a description of any which an educational institution oper- modifications made pursuant to para- ates in making the transition from graph (c) (2) of this section and of any being an educational institution which remedial steps taken pursuant to para- admits only students of one sex to graph (c) (3) of this section. being one which admits students of (Secs. 901, 902, Education Amendments of both sexes without discrimination. 1972, 86 Stat. 373, 374; 20 U.S.C. 1681, 1682) (Secs. 901, 902, 908, Education Amendments of [40 FR 24128, June 4, 1975; 40 FR 39506, Aug. 1972, 20 U.S.C. 1681, 1682, 1687) 28, 1975] [40 FR 24137, June 4, 1975, as amended at 70 FR 24320, May 9, 2005] § 86.4 Assurance required. (a) General. Every application for § 86.3 Remedial and affirmative action Federal financial assistance for any and self-evaluation. education program or activity shall as (a) Remedial action. If the Director condition of its approval contain or be finds that a recipient has discriminated accompanied by an assurance from the

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applicant or recipient, satisfactory to Federal Government both the trans- the Director, that the education pro- feror and the transferee shall be gram or activity operated by the appli- deemed to be recipients, subject to the cant or recipient and to which this part provisions of Subpart B of this part. applies will be operated in compliance with this part. An assurance of compli- (Secs. 901, 902, Education Amendments of 1972, 86 Stat. 373, 374; 20 U.S.C. 1681, 1682) ance with this part shall not be satisfactory to the Director if the applicant § 86.6 Effect of other requirements. or recipient to whom such assurance applies fails to commit itself to take (a) Effect of other Federal provisions. whatever remedial action is necessary The obligations imposed by this part in accordance with § 86.3(a) to elimi- are independent of, and do not alter, nate existing discrimination on the obligations not to discriminate on the basis of sex or to eliminate the effects basis of sex imposed by Executive of past discrimination whether occur- Order 11246, as amended; sections 799A ring prior or subsequent to the submis- and 845 of the Public Health Service sion to the Director of such assurance. Act (42 U.S.C. 295h–9 and 298b–2); Title (b) Duration of obligation. (1) In the VII of the Civil Rights Act of 1964 (42 case of Federal financial assistance ex- U.S.C. 2000e et seq.); the Equal Pay Act tended to provide real property or (29 U.S.C. 206 and 206(d)); and any other structures thereon, such assurance Act of Congress or Federal regulation. shall obligate the recipient or, in the case of a subsequent transfer, the (Secs. 901, 902, 905, Education Amendments of transferee, for the period during which 1972, 86 Stat. 373, 374, 375; 20 U.S.C. 1681, 1682, the real property or structures are used 1685) to provide an education program or ac- (b) Effect of State or local law or other tivity. requirements. The obligation to comply (2) In the case of Federal financial as- with this part is not obviated or allevi- sistance extended to provide personal ated by any State or local law or other property, such assurance shall obligate requirement which would render any the recipient for the period during applicant or student ineligible, or limit which it retains ownership or posses- the eligibility of any applicant or stu- sion of the property. dent, on the basis of sex, to practice (3) In all other cases such assurance any occupation or profession. shall obligate the recipient for the pe- (c) Effect of rules or regulations of pri- riod during which Federal financial as- vate organizations. The obligation to sistance is extended. comply with this part is not obviated (c) Form. The Director will specify the form of the assurances required by or alleviated by any rule or regulation paragraph (a) of this section and the of any organization, club, athletic or extent to which such assurances will be other league, or association which required of the applicant’s or recipi- would render any applicant or student ent’s subgrantees, contractors, sub- ineligible to participate or limit the contractors, transferees, or successors eligibility or participation of any ap- in interest. plicant or student, on the basis of sex, in any education program or activity (Secs. 901, 902, Education Amendments of operated by a recipient and which re- 1972, 86 Stat. 373, 374; 20 U.S.C. 1681, 1682) ceives Federal financial assistance. [40 FR 24137, June 4, 1975, as amended at 70 FR 24321, May 9, 2005] (Secs. 901, 902, Education Amendments of 1972, 86 Stat. 373, 374; 20 U.S.C. 1681, 1682) § 86.5 Transfers of property. [40 FR 24137, June 4, 1975, as amended at 70 If a recipient sells or otherwise trans- FR 24321, May 9, 2005] fers property financed in whole or in part with Federal financial assistance § 86.7 Effect of employment opportuni- to a transferee which operates any edu- ties. cation program or activity, and the The obligation to comply with this Federal share of the fair market value part is not obviated or alleviated be- of the property is not upon such sale or cause employment opportunities in any transfer properly accounted for to the occupation or profession are or may be

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more limited for members of one sex to employment therein, and to admis- than for members of the other sex. sion thereto unless Subpart C does not (Secs. 901, 902, Education Amendments of apply to the recipient, and that inquir- 1972, 86 Stat. 373, 374; 20 U.S.C. 1681, 1682) ies concerning the application of title IX and this part to such recipient may § 86.8 Designation of responsible em- be referred to the employee designated ployee and adoption of grievance pursuant to § 86.8, or to the Director. procedures. (2) Each recipient shall make the ini- (a) Designation of responsible employee. tial notification required by paragraph Each recipient shall designate at least (a) (1) of this section within 90 days of one employee to coordinate its efforts the effective date of this part or of the to comply with and carry out its re- date this part first applies to such responsibilities under this part, including cipient, whichever comes later, which any investigation of any complaint communicated to such recipient alleg- notification shall include publication ing its noncompliance with this part or in: alleging any actions which would be (i) Local newspapers; prohibited by this part. The recipient (ii) Newspapers and magazines oper- shall notify all its students and em- ated by such recipient or by student, ployees of the name, office address and alumnae, or alumni groups for or in telephone number of the employee or connection with such recipient; and employees appointed pursuant to this (iii) Memoranda or other written paragraph. communications distributed to every (b) Complaint procedure of recipient. A student and employee of such recipi- recipient shall adopt and publish griev- ent. ance procedures providing for prompty (b) Publications. (1) Each recipient and equitable resolution of student and shall prominently include a statement employee complaints alleging any ac- of the policy described in paragraph (a) tion which would be prohibited by this of this section in each announcement, part. bulletin, catalog, or application form (Secs. 901, 902, Education Amendments of which it makes available to any person 1972, 86 Stat. 373, 374; 20 U.S.C. 1681, 1682) of a type, described in paragraph (a) of § 86.9 Dissemination of policy. this section, or which is otherwise used in connection with the recruitment of (a) Notification of policy. (1) Each re- students or employees. cipient shall implement specific and continuing steps to notify applicants (2) A recipient shall not use or dis- for admission and employment, stu- tribute a publication of the type de- dents and parents of elementary and scribed in this paragraph which sug- secondary school students, employees, gests, by text or illustration, that such sources of referral of applicants for ad- recipient treats applicants, students, mission and employment, and all or employees differently on the basis of unions or professional organizations sex except as such treatment is per- holding collective bargaining or profes- mitted by this part. sional agreements with the recipient, (c) Distribution. Each recipient shall that it does not discriminate on the distribute without discrimination on basis of sex in the educational pro- the basis of sex each publication de- grams or activities which it operates, scribed in paragraph (b) of this section, and that is required by title IX and this and shall apprise each of its admission part not to discriminate in such a man- and employment recruitment rep- ner. Such notification shall contain resentatives of the policy of non- such information, and be made in such discrimination described in paragraph manner, as the Director finds nec- (a) of this section, and require such essary to apprise such persons of the protections against discrimination as- representatives to adhere to such pol- sured them by title IX and this part, icy. but shall state at least that the re- (Secs. 901, 902, Education Amendments of quirement not to discriminate in edu- 1972, 86 Stat. 373, 374; 20 U.S.C. 1681, 1682) cation programs and activities extends

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Subpart B—Coverage tices of the Young Men’s Christian As- sociation, the Young Women’s Chris- § 86.11 Application. tian Association, the Girl Scouts, the Except as provided in this subpart, Boy Scouts and Camp Fire Girls. this Part 86 applies to every recipient (c) Voluntary youth service organiza- and to the education program or activ- tions. This part does not apply to the ity operated by such recipient which membership practices of voluntary receives Federal financial assistance. youth service organizations which are (Secs. 901, 902, Education Amendments of exempt from taxation under section 1972, 86 Stat. 373, 374; 20 U.S.C. 1681, 1682) 501(a) of the Internal Revenue Code of 1954 and the membership of which has [40 FR 24137, June 4, 1975, as amended at 70 FR 24321, May 9, 2005] been traditionally limited to members of one sex and principally to persons of § 86.12 Educational institutions con- less than nineteen years of age. trolled by religious organizations. (Secs. 901, 902, Education Amendments of (a) Application. This part does not 1972, 86 Stat. 373, 374; 20 U.S.C. 1681, 1682; sec. apply to an educational institution 3(a) of Pub. L. 93–568, 88 Stat. 1862 amending which is controlled by a religious orga- sec. 901) nization to the extent application of this part would not be consistent with § 86.15 Admissions. the religious tenets of such organiza- (a) Admissions to educational insti- tion. tutions prior to June 24, 1973, are not (b) Exemption. An educational institution which wishes to claim the exemp- covered by this part. tion set forth in paragraph (a) of this (b) Administratively separate units. For section, shall do so by submitting in the purposes only of this section, writing to the Director a statement by §§ 86.16 and 86.17, and Subpart C, each the highest ranking official of the in- administratively separate unit shall be stitution, identifying the provisions of deemed to be an educational institu- this part which conflict with a specific tion. tenet of the religious organization. (c) Application of Subpart C. Except as (Secs. 901, 902, Education Amendments of provided in paragraphs (d) and (e) of 1972, 86 Stat. 373, 374; 20 U.S.C. 1681, 1682) this section, Subpart C applies to each recipient. A recipient to which Subpart § 86.13 Military and merchant marine C applies shall not discriminate on the educational institutions. basis of sex in admission or recruit- This part does not apply to an edu- ment in violation of that subpart. cational institution whose primary (d) Educational institutions. Except as purpose is the training of individuals provided in paragraph (e) of this sec- for a military service of the United tion as to recipients which are edu- States or for the merchant marine. cational institutions, Subpart C applies (Secs. 901, 902, Education Amendments of only to institutions of vocational edu- 1972, 86 Stat. 373, 374; 20 U.S.C. 1681, 1682) cation, professional education, graduate higher education, and public insti- § 86.14 Membership practices of cer- tutions of undergraduate higher edu- tain organizations. cation. (a) Social fraternities and sororities. (e) Public institutions of undergraduate This part does not apply to the mem- higher education. Subpart C does not bership practices of social fraternities apply to any public institution of un- and sororities which are exempt from dergraduate higher education which taxation under section 501(a) of the In- traditionally and continually from its ternal Revenue Code of 1954, the active establishment has had a policy of ad- membership of which consists pri- mitting only students of one sex. marily of students in attendance at institutions of higher education. (Secs. 901, 902, Education Amendments of (b) YMCA, YWCA, Girl Scouts, Boy 1972, 86 Stat. 373, 374; 20 U.S.C. 1681, 1682) Scouts and Camp Fire Girls. This part [40 FR 24128, June 4, 1975; 40 FR 39506, Aug. does not apply to the membership prac- 28, 1975]

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§ 86.16 Educational institutions eligi- regular students and, if so, when it ble to submit transition plans. began to do so. (a) Application. This section applies (3) Identify and describe with respect to each educational institution to to the educational institution or ad- which Subpart C applies which: ministratively separate unit any obsta- (1) Admitted only students of one sex cles to admitting students without dis- as regular students as of June 23, 1972; crimination on the basis of sex. or (4) Describe in detail the steps nec- (2) Admitted only students of one sex essary to eliminate as soon as prac- as regular students as of June 23, 1965, ticable each obstacle so identified and but thereafter admitted as regular stu- indicate the schedule for taking these dents, students of the sex not admitted steps and the individual directly re- prior to June 23, 1965. sponsible for their implementation. (b) Provision for transition plans. An (5) Include estimates of the number educational institution to which this of students, by sex, expected to apply section applies shall not discriminate for, be admitted to, and enter each on the basis of sex in admission or re- class during the period covered by the cruitment in violation of Subpart C un- plan. less it is carrying out a transition plan (c) Nondiscrimination. No policy or approved by the United States Com- practice of a recipient to which § 86.16 missioner of Education as described in applies shall result in treatment of ap- § 86.17, which plan provides for the plicants to or students of such recipi- elimination of such discrimination by ent in violation of Subpart C unless the earliest practicable date but in no such treatment is necessitated by an event later than June 23, 1979. obstacle identified in paragraph (b)(3) of this section and a schedule for elimi- (Secs. 901, 902, Education Amendments of nating that obstacle has been provided 1972, 86 Stat. 373, 374; 20 U.S.C. 1681, 1682) as required by paragraph (b)(4) of this section. § 86.17 Transition plans. (d) Effects of past exclusion. To over- (a) Submission of plans. An institution come the effects of past exclusion of to which § 86.16 applies and which is students on the basis of sex, each edu- composed of more than one administra- cational institution to which § 86.16 ap- tively separate unit may submit either plies shall include in its transition a single transition plan applicable to plan, and shall implement, specific all such units, or a separate transition steps designed to encourage individuals plan applicable to each such unit. of the previously excluded sex to apply (b) Content of plans. In order to be ap- for admission to such institution. Such proved by the United States Commis- steps shall include instituting recruit- sioner of Education, a transition plan ment programs which emphasize the shall: institution’s commitment to enrolling (1) State the name, address, and Fed- students of the sex previously ex- eral Interagency Committee on Edu- cluded. cation (FICE) Code of the educational (Secs. 901, 902, Education Amendments of institution submitting such plan, the 1972, 86 Stat. 373, 374; 20 U.S.C. 1681, 1682) administratively separate units to [40 FR 24128, June 4, 1975; 40 FR 39506, Aug. which the plan is applicable, and the 28, 1975] name, address, and telephone number of the person to whom questions con- §§ 86.18–86.20 [Reserved] cerning the plan may be addressed. The person who submits the plan shall be the chief administrator or president of Subpart C—Discrimination on the the institution, or another individual Basis of Sex in Admission and legally authorized to bind the institu- Recruitment Prohibited tion to all actions set forth in the plan. (2) State whether the educational in- § 86.21 Admission. stitution or administratively separate (a) General. No person shall, on the unit admits students of both sexes, as basis of sex, be denied admission, or be

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subjected to discrimination in admis- inquiry as to the sex of an applicant for sion, by any recipient to which this admision, but only if such inquiry is subpart applies, except as provided in made equally of such applicants of both §§ 86.16 and 86.17. sexes and if the results of such inquiry (b) Specific prohibitions. (1) In deter- are not used in connection with dis- mining whether a person satisfies any crimination prohibited by this part. policy or criterion for admission, or in (Secs. 901, 902, Education Amendments of making any offer of admission, a re- 1972, 86 Stat. 373, 374; 20 U.S.C. 1681, 1682) cipient to which this subpart applies shall not: § 86.22 Preference in admission. (i) Give preference to one person over A recipient to which this subpart ap- another on the basis of sex, by ranking plies shall not give preference to appli- applicants separately on such basis, or cants for admission, on the basis of at- otherwise; tendance at any educational institu- (ii) Apply numerical limitations upon tion or other school or entity which ad- the number or proportion of persons of mits as students or predominantly either sex who may be admitted; or members of one sex, if the giving of (iii) Otherwise treat one individual such preference has the effect of dis- differently from another on the basis of criminating on the basis of sex in vio- sex. lation of this subpart. (2) A recipient shall not administer or operate any test or other criterion (Secs. 901, 902, Education Amendments of 1972, 86 Stat. 373, 374; 20 U.S.C. 1681, 1682) for admission which has a disproportionately adverse effect on persons on § 86.23 Recruitment. the basis of sex unless the use of such test or criterion is shown to predict (a) Nondiscriminatory recruitment. A validly success in the education pro- recipient to which this subpart applies gram or activity in question and alter- shall not discriminate on the basis of native tests or criteria which do not sex in the recruitment and admission have such a disproportionately adverse of students. A recipient may be re- effect are shown to be unavailable. quired to undertake additional recruit- (c) Prohibitions relating to marital or ment efforts for one sex as remedial ac- parental status. In determining whether tion pursuant to § 86.3(a), and may a person satisfies any policy or cri- choose to undertake such efforts as af- terion for admission, or in making any firmative action pursuant to § 86.3(b). (b) offer of admission, a recipient to which Recruitment at certain institutions. A recipient to which this subpart ap- this subpart applies: plies shall not recruit primarily or ex- (1) Shall not apply any rule con- clusively at educational institutions, cerning the actual or potential paren- schools or entities which admit as stu- tal, family, or marital status of a students only or predominantly members dent or applicant which treats persons of one sex, if such actions have the ef- differently on the basis of sex; fect of discriminating on the basis of (2) Shall not discriminate against or sex in violation of this subpart. exclude any person on the basis of pregnancy, childbirth, termination of (Secs. 901, 902, Education Amendments of pregnancy, or recovery therefrom, or 1972, 86 Stat. 373, 374; 20 U.S.C. 1681, 1682) establish or follow any rule or practice which so discriminates or excludes; §§ 86.24–86.30 [Reserved] (3) Shall treat disabilities related to pregnancy, childbirth, termination of Subpart D—Discrimination on the pregnancy, or recovery therefrom in Basis of Sex in Education Pro- the same manner and under the same grams or Activities Prohibited policies as any other temporary disability or physical condition; and § 86.31 Education programs or activi- (4) Shall not make pre-admission in- ties. quiry as to the marital status of an ap- (a) General. Except as provided else- plicant for admission, including wheth- where in this part, no person shall, on er such applicant is ‘‘Miss’’ or ‘‘Mrs.’’ the basis of sex, be excluded from par- A recipient may make pre-admission ticipation in, be denied the benefits of,

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or be subjected to discrimination under to study abroad, and which are award- any academic, extracurricular, re- ed to students who are already matric- search, occupational training, or other ulating at or who are graduates of the education program or activity operated recipient institution; Provided, a recipi- by a recipient which receives Federal ent educational institution which ad- financial assistance. This subpart does ministers or assists in the administra- not apply to actions of a recipient in tion of such scholarships, fellowship, or connection with admission of its stu- other awards which are restricted to dents to an education program or ac- members of one sex provides, or other- tivity of (1) a recipient to which Sub- wise makes available reasonable oppor- part C does not apply, or (2) an entity, tunities for similar studies for mem- not a recipient, to which Subpart C bers of the other sex. Such opportuni- would not apply if the entity were a re- ties may be derived from either domes- cipient. tic or foreign sources. (b) Specific prohibitions. Except as pro- (d) Aid, benefits, or services not provided in this subpart, in providing any vided by recipient. (1) This paragraph aid, benefit, or service to a student, a applies to any recipient which requires recipient shall not, on the basis of sex: participation by any applicant, stu- (1) Treat one person differently from dent, or employee in any education another in determining whether such program or activity not operated whol- person satisfies any requirement or ly by such recipient, or which facili- condition for the provision of such aid, tates, permits, or considers such par- benefit, or service; ticipation as part of or equivalent to (2) Provide different aid, benefits, or an education program or activity oper- services or provide aid, benefits, or ated by such recipient, including par- services in a different manner; ticipation in educational consortia and (3) Deny any person any such aid, cooperative employment and student- benefit, or service; teaching assignments. (4) Subject any person to separate or (2) Such recipient; different rules of behavior, sanctions, (i) Shall develop and implement a or other treatment; procedure designed to assure itself that (5) Discriminate against any person the operator or sponsor of such other in the application of any rules of ap- education program or activity takes no pearance; action affecting any applicant, student, (6) Apply any rule concerning the or employee of such recipient which domicile or residence of a student or this part would prohibit such recipient applicant, including eligibility for in- from taking; and (ii) Shall not facilitate, require, per- state fees and tuition; mit, or consider such participation if (7) Aid or perpetuate discrimination such action occurs. against any person by providing significant assistance to any agency, or- (Secs. 901, 902, Education Amendments of ganization, or person which discrimi- 1972, 86 Stat. 373, 374; 20 U.S.C. 1681, 1682) nates on the basis of sex in providing [40 FR 24137, June 4, 1975, as amended at 70 any aid, benefit or service to students FR 24321, May 9, 2005] or employees; (8) Otherwise limit any person in the § 86.32 Housing. enjoyment of any right, privilege, ad- (a) Generally. A recipient shall not, vantage, or opportunity. on the basis of sex, apply different (c) Assistance administered by a recipi- rules or regulations, impose different ent educational institution to study at a fees or requirements, or offer different foreign institution. A recipient edu- services or benefits related to housing, cational institution may administer or except as provided in this section (in- assist in the administration of scholar- cluding housing provided only to mar- ships, fellowships, or other awards es- ried students). tablished by foreign or domestic wills, (b) Housing provided by recipient. (1) A trusts, or similar legal instruments, or recipient may provide separate housing by acts of foreign governments and re- on the basis of sex. stricted to members of one sex, which (2) Housing provided by a recipient to are designed to provide opportunities students of one sex, when compared to

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that provided to students of the other expeditiously as possible but in no sex, shall be as a whole: event later than one year from the ef- (i) Proportionate in quantity to the fective date of this regulation. With re- number of students of that sex apply- spect to physical education classes and ing for such housing; and activities at the secondary and post- (ii) Comparable in quality and cost to secondary levels, the recipient shall the student. comply fully with this section as expe- (c) Other housing. (1) A recipient shall ditiously as possible but in no event not, on the basis of sex, administer dif- later than three years from the effec- ferent policies or practices concerning tive date of this regulation. occupancy by its students of housing (b) This section does not prohibit other than provided by such recipient. grouping of students in physical edu- (2) A recipient which, through solici- cation classes and activities by ability tation, listing, approval of housing, or as assessed by objective standards of otherwise, assists any agency, organization, or person in making housing individual performance developed and available to any of its students, shall applied without regard to sex. take such reasonable action as may be (c) This section does not prohibit sep- necessary to assure itself that such aration of students by sex within phys- housing as is provided to students of ical education classes or activities dur- one sex, when compared to that pro- ing participation in wrestling, boxing, vided to students of the other sex, is as rugby, ice hockey, football, basketball a whole: (i) Proportionate in quantity and other sports the purpose or major and (ii) comparable in quality and cost activity of which involves bodily con- to the student. A recipient may render tact. such assistance to any agency, organi- (d) Where use of a single standard of zation, or person which provides all or measuring skill or progress in a phys- part of such housing to students only ical education class has an adverse ef- of one sex. fect on members of one sex, the recipi- (Secs. 901, 902, 907, Education Amendments of ent shall use appropriate standards 1972, 86 Stat. 373, 374, 375; 20 U.S.C. 1681, 1682, which do not have such effect. 1686) (e) Portions of classes in elementary and secondary schools which deal ex- § 86.33 Comparable facilities. clusively with human sexuality may be A recipient may provide separate toi- conducted in separate sessions for boys let, locker room, and shower facilities and girls. on the basis of sex, but such facilities (f) Recipients may make require- provided for students of one sex shall ments based on vocal range or quality be comparable to such facilities pro- which may result in a chorus or cho- vided for students of the other sex. ruses of one or predominantly one sex. (Secs. 901, 902, Education Amendments of (Secs. 901, 902, Education Amendments of 1972, 86 Stat. 373, 374) 1972, 86 Stat. 373, 374; 20 U.S.C. 1681, 1682) § 86.34 Access to course offerings. § 86.35 Access to schools operated by A recipient shall not provide any L.E.A.s. course or otherwise carry out any of its education program or activity sepa- A recipient which is a local edu- rately on the basis of sex, or require or cational agency shall not, on the basis refuse participation therein by any of of sex, exclude any person from admis- its students on such basis, including sion to: health, physical education, industrial, (a) Any institution of vocational edu- business, vocational, technical, home cation operated by such recipient; or economics, music, and adult education (b) Any other school or educational courses. unit operated by such recipient, unless (a) With respect to classes and activi- such recipient otherwise makes avail- ties in physical education at the ele- able to such person, pursuant to the mentary school level, the recipient same policies and criteria of admission, shall comply fully with this section as

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courses, services, and facilities com- amount or types of such assistance, parable to each course, service, and fa- limit eligibility for such assistance cility offered in or through such which is of any particular type or schools. source, apply different criteria, or otherwise discriminate; (2) through solici- (Secs. 901, 902, Education Amendments of 1972, 86 Stat. 373, 374; 20 U.S.C. 1681, 1682) tation, listing, approval, provision of facilities or other services, assist any § 86.36 Counseling and use of ap- foundation, trust, agency, organiza- praisal and counseling materials. tion, or person which provides assist- (a) Counseling. A recipient shall not ance to any of such recipient’s students discriminate against any person on the in a manner which discriminates on basis of sex in the counseling or guid- the basis of sex; or (3) apply any rule or ance of students or applicants for ad- assist in application of any rule con- mission. cerning eligibility for such assistance which treats persons of one sex dif- (b) Use of appraisal and counseling ma- ferently from persons of the other sex terials. A recipient which uses testing with regard to marital or parental sta- or other materials for appraising or tus. counseling students shall not use dif- (b) Financial aid established by certain ferent materials for students on the legal instruments. (1) A recipient may basis of their sex or use materials administer or assist in the administra- which permit or require different treat- tion of scholarships, fellowships, or ment of students on such basis unless other forms of financial assistance es- such different materials cover the tablished pursuant to domestic or for- same occupations and interest areas eign wills, trusts, bequests, or similar and the use of such different materials legal instruments or by acts of a for- is shown to be essential to eliminate eign government which requires that sex bias. Recipients shall develop and awards be made to members of a par- use internal procedures for ensuring ticular sex specified therein; Provided, that such materials do not discrimi- That the overall effect of the award of nate on the basis of sex. Where the use such sex-restricted scholarships, fel- of a counseling test or other instru- lowships, and other forms of financial ment results in a substantially dis- assistance does not discriminate on the proportionate number of members of basis of sex. one sex in any particular course of (2) To ensure nondiscriminatory study or classification, the recipient awards of assistance as required in shall take such action as is necessary paragraph (b)(1) of this section, recipi- to assure itself that such disproportion ents shall develop and use procedures is not the result of discrimination in under which: the instrument or its application. (i) Students are selected for award of (c) Disproportion in classes. Where a financial assistance on the basis of recipient finds that a particular class nondiscriminatory criteria and not on contains a substantially dispropor- the basis of availability of funds re- tionate number of individuals of one stricted to members of a particular sex; sex, the recipient shall take such ac- (ii) An appropriate sex-restricted tion as is necessary to assure itself scholarship, fellowship, or other form that such disproportion is not the re- of financial assistance is allocated to sult of discrimination on the basis of each student selected under paragraph sex in counseling or appraisal mate- (b)(2)(i) of this section; and rials or by counselors. (iii) No student is denied the award (Secs. 901, 902, Education Amendments of for which he or she was selected under 1972, 86 Stat. 373, 374; 20 U.S.C. 1681, 1682) paragraph (b)(2)(i) of this section because of the absence of a scholarship, § 86.37 Financial assistance. fellowship, or other form of financial (a) General. Except as provided in assistance designated for a member of paragraphs (b) and (c) of this section, that student’s sex. in providing financial assistance to any (c) Athletic scholarships. (1) To the ex- of its students, a recipient shall not: (1) tent that a recipient awards athletic On the basis of sex, provide different scholarships or grants-in-aid, it must

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provide reasonable opportunities for vides full coverage health service shall such awards for members of each sex in provide gynecological care. proportion to the number of students (Secs. 901, 902, Education Amendments of of each sex participating in inter- 1972, 86 Stat. 373, 374; 20 U.S.C. 1681, 1682) scholastic or intercollegiate athletics. (2) Separate athletic scholarships or § 86.40 Marital or parental status. grants-in-aid for members of each sex (a) Status generally. A recipient shall may be provided as part of separate not apply any rule concerning a stu- athletic teams for members of each sex dent’s actual or potential parental, to the extent consistent with this para- family, or marital status which treats graph and § 86.41. students differently on the basis of sex. (b) Pregnancy and related conditions. (Secs. 901, 902, Education Amendments of (1) A recipent shall not discriminate 1972, 86 Stat. 373, 374; 20 U.S.C. 1681, 1682; and against any student, or exclude any sec. 844, Education Amendments of 1974, Pub. student from its education program or L. 93–380, 88 Stat. 484) activity, including any class or extra- [40 FR 24128, June 4, 1975; 40 FR 39506, Aug. curricular activity, on the basis of such 28, 1975] student’s pregnancy, childbirth, false pregnancy, termination of pregnancy § 86.38 Employment assistance to stu- or recovery therefrom, unless the students. dent requests voluntarily to partici- (a) Assistance by recipient in making pate in a separate portion of the pro- available outside employment. A recipi- gram or activity of the recipient. ent which assists any agency, organiza- (2) A recipient may require such a tion or person in making employment student to obtain the certification of a available to any of its students: physician that the student is phys- (1) Shall assure itself that such em- ically and emotionally able to continue ployment is made available without participation so long as such a certification is required of all students for discrimination on the basis of sex; and other physical or emotional conditions (2) Shall not render such services to requiring the attention of a physician. any agency, organization, or person (3) A recipient which operates a por- which discriminates on the basis of sex tion of its education program or activ- in its employment practices. ity separately for pregnant students, (b) Employment of students by recipi- admittance to which is completely vol- ents. A recipient which employs any of untary on the part of the student as its students shall not do so in a manner provided in paragraph (b)(1) of this sec- which violates Subpart E of this part. tion shall ensure that the separate por- (Secs. 901, 902, Education Amendments of tion is comparable to that offered to 1972, 86 Stat. 373, 374; 20 U.S.C. 1681, 1682) non-pregnant students. (4) A recipient shall treat pregnancy, § 86.39 Health and insurance benefits childbirth, false pregnancy, termi- and services. nation of pregnancy and recovery therefrom in the same manner and In providing a medical, hospital, ac- under the same policies as any other cident, or life insurance benefit, serv- temporary disability with respect to ice, policy, or plan to any of its stu- any medical or hospital benefit, serv- dents, a recipient shall not discrimi- ice, plan or policy which such recipient nate on the basis of sex, or provide administers, operates, offers, or par- such benefit, service, policy, or plan in ticipates in with respect to students a manner which would violate Subpart admitted to the recipient’s educational E of this part if it were provided to em- program or activity. ployees of the recipient. This section (5) In the case of a recipient which shall not prohibit a recipient from pro- does not maintain a leave policy for its viding any benefit or service which students, or in the case of a student may be used by a different proportion who does not otherwise qualify for of students of one sex than of the leave under such a policy, a recipient other, including family planning serv- shall treat pregnancy, childbirth, false ices. However, any recipient which pro- pregnancy, termination of pregnancy

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and recovery therefrom as a justifica- (2) The provision of equipment and tion for a leave of absence for so long supplies; a period of time as is deemed medically (3) Scheduling of games and practice necessary by the student’s physician, time; at the conclusion of which the student (4) Travel and per diem allowance; shall be reinstated to the status which (5) Opportunity to receive coaching she held when the leave began. and academic tutoring; (6) Assignment and compensation of (Secs. 901, 902, Education Amendments of 1972, 86 Stat. 373, 374; 20 U.S.C. 1681, 1682) coaches and tutors; (7) Provision of locker rooms, prac- [40 FR 24137, June 4, 1975, as amended at 70 tice and competitive facilities; FR 24321, May 9, 2005] (8) Provision of medical and training facilities and services; § 86.41 Athletics. (9) Provision of housing and dining (a) General. No person shall, on the facilities and services; basis of sex, be excluded from partici- (10) Publicity. pation in, be denied the benefits of, be Unequal aggregate expenditures for treated differently from another person members of each sex or unequal ex- or otherwise be discriminated against penditures for male and female teams in any interscholastic, intercollegiate, if a recipient operates or sponsors sepa- club or intramural athletics offered by rate teams will not constitute non- a recipient, and no recipient shall pro- compliance with this section, but the vide any such athletics separately on Director may consider the failure to such basis. provide necessary funds for teams for (b) Separate teams. Notwithstanding one sex in assessing equality of oppor- the requirements of paragraph (a) of tunity for members of each sex. this section, a recipient may operate or (d) Adjustment period. A recipient sponsor separate teams for members of which operates or sponsors inter- each sex where selection for such scholastic, intercollegiate, club or in- teams is based upon competitive skill tramural athletics at the elementary or the activity involved is a contact school level shall comply fully with sport. However, where a recipient oper- this section as expeditiously as pos- ates or sponsors a team in a particular sible but in no event later than one sport for members of one sex but oper- year from the effective date of this reg- ates or sponsors no such team for mem- ulation. A recipient which operates or bers of the other sex, and athletic op- sponsors interscholastic, intercolle- portunities for members of that sex giate, club or intramural athletics at have previously been limited, members the secondary or post-secondary school of the excluded sex must be allowed to level shall comply fully with this sec- try-out for the team offered unless the tion as expeditiously as possible but in sport involved is a contact sport. For no event later than three years from the purposes of this part, contact the effective date of this regulation. sports include boxing, wrestling, rugby, ice hockey, football, basketball and (Secs. 901, 902, Education Amendments of other sports the purpose of major ac- 1972, 86 Stat. 373, 374; 20 U.S.C. 1681, 1682; and tivity of which involves bodily contact. sec. 844, Education Amendments of 1974, Pub. L. 93–380, 88 Stat. 484) (c) Equal opportunity. A recipient which operates or sponsors inter- [40 FR 24128, June 4, 1975; 40 FR 39506, Aug. scholastic, intercollegiate, club or in- 28, 1975] tramural athletics shall provide equal § 86.42 Textbooks and curricular mate- athletic opportunity for members of rial. both sexes. In determining whether equal opportunities are available the Nothing in this regulation shall be Director will consider, among other interpreted as requiring or prohibiting factors: or abridging in any way the use of par- (1) Whether the selection of sports ticular textbooks or curricular mate- and levels of competition effectively rials. accommodate the interests and abili- (Secs. 901, 902, Education Amendments of ties of members of both sexes; 1972, 86 Stat. 373, 374; 20 U.S.C. 1681, 1682)

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§§ 86.43–86.50 [Reserved] (3) Rates of pay or any other form of compensation, and changes in com- Subpart E—Discrimination on the pensation; (4) Job assignments, classifications Basis of Sex in Employment in and structure, including position de- Education Programs or Activi- scriptions, lines of progression, and se- ties Prohibited niority lists; (5) The terms of any collective bar- § 86.51 Employment. gaining agreement; (a) General. (1) No person shall, on (6) Granting and return from leaves the basis of sex, be excluded from par- of absence, leave for pregnancy, child- ticipation in, be denied the benefits of, birth, false pregnancy, termination of or be subjected to discrimination in pregnancy, leave for persons of either employment, or recruitment, consider- sex to care for children or dependents, ation, or selection therefor, whether or any other leave; full-time or part-time, under any edu- (7) Fringe benefits available by vir- cation program or activity operated by tue of employment, whether or not ad- a recipient which receives Federal fi- ministered by the recipient; nancial assistance. (8) Selection and financial support (2) A recipient shall make all em- for training, including apprenticeship, ployment decisions in any education professional meetings, conferences, and program or activity operated by such other related activities, selection for recipient in a nondiscriminatory man- tuition assistance, selection for ner and shall not limit, segregate, or sabbaticals and leaves of absence to classify applicants or employees in any pursue training; way which could adversely affect any (9) Employer-sponsored activities, in- applicant’s or employee’s employment cluding those that are social or rec- opportunities or status because of sex. reational; and (3) A recipient shall not enter into (10) Any other term, condition, or any contractual or other relationship privilege of employment. which directly or indirectly has the ef- (Secs. 901, 902, Education Amendments of fect of subjecting employees or stu- 1972, 86 Stat. 373, 374; 20 U.S.C. 1681, 1682) dents to discrimination prohibited by this subpart, including relationships [40 FR 24137, June 4, 1975, as amended at 70 with employment and referral agen- FR 24321, May 9, 2005] cies, with labor unions, and with orga- § 86.52 Employment criteria. nizations providing or administering fringe benefits to employees of the re- A recipient shall not administer or cipient. operate any test or other criterion for (4) A recipient shall not grant pref- any employment opportunity which erences to applicants for employment has a disproportionately adverse effect on the basis of attendance at any edu- on persons on the basis of sex unless: cational institution or entity which ad- (a) Use of such test or other criterion mits as students only or predominantly is shown to predict validly successful members of one sex, if the giving of performance in the position in ques- such preferences has the effect of dis- tion; and criminating on the basis of sex in vio- (b) Alternative tests or criteria for lation of this part. such purpose, which do not have such (b) Application. The provisions of this disproportionately adverse effect, are subpart apply to: shown to be unavailable. (1) Recruitment, advertising, and the (Secs. 901, 902, Education Amendments of process of application for employment; 1972, 86 Stat. 373, 374; 20 U.S.C. 1681, 1682) (2) Hiring, upgrading, promotion, consideration for and award of tenure, § 86.53 Recruitment. demotion, transfer, layoff, termi- (a) Nondiscriminatory recruitment and nation, application of nepotism poli- hiring. A recipient shall not discrimi- cies, right of return from layoff, and nate on the basis of sex in the recruit- rehiring; ment and hiring of employees. Where a

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recipient has been found to be pres- § 86.56 Fringe benefits. ently discriminating on the basis of sex in the recruitment or hiring of employ- (a) Fringe benefits defined. For pur- ees, or has been found to have in the poses of this part, fringe benefits means: past so discriminated, the recipient Any medical, hospital, accident, life in- shall recruit members of the sex so dis- surance or retirement benefit, service, criminated against so as to overcome policy or plan, any profit-sharing or the effects of such past or present dis- bonus plan, leave, and any other ben- crimination. efit or service of employment not sub- (b) Recruitment patterns. A recipient ject to the provision of § 86.54. shall not recruit primarily or exclu- (b) Prohibitions. A recipient shall not: sively at entities which furnish as ap- (1) Discriminate on the basis of sex plicants only or predominantly mem- with regard to making fringe benefits bers of one sex if such actions have the available to employees or make fringe effect of discriminating on the basis of benefits available to spouses, families, sex in violation of this subpart. or dependents of employees differently upon the basis of the employee’s sex; (Secs. 901, 902, Education Amendments of (2) Administer, operate, offer, or par- 1972, 86 Stat. 373, 374; 20 U.S.C. 1681, 1682) ticipate in a fringe benefit plan which § 86.54 Compensation. does not provide either for equal periodic benefits for members of each sex, A recipient shall not make or enforce or for equal contributions to the plan any policy or practice which, on the by such recipient for members of each basis of sex: sex; or (a) Makes distinctions in rates of pay or other compensation; (3) Administer, operate, offer, or par- (b) Results in the payment of wages ticipate in a pension or retirement plan to employees of one sex at a rate less which establishes different optional or than that paid to employees of the op- compulsory retirement ages based on posite sex for equal work on jobs the sex or which otherwise discriminates in performance of which requires equal benefits on the basis of sex. skill, effort, and responsibility, and (Secs. 901, 902, Education Amendments of which are performed under similar 1972, 86 Stat. 373, 374; 20 U.S.C. 1681, 1682) working conditions. § 86.57 Marital or parental status. (Secs. 901, 902, Education Amendments of 1972, 86 Stat. 373, 374; 20 U.S.C. 1681, 1682) (a) General. A recipient shall not apply any policy or take any employ- § 86.55 Job classification and struc- ment action: ture. (1) Concerning the potential marital, A recipient shall not: parental, or family status of an em- (a) Classify a job as being for males ployee or applicant for employment or for females; which treats persons differently on the (b) Maintain or establish separate basis of sex; or lines of progression, seniority lists, ca- (2) Which is based upon whether an reer ladders, or tenure systems based employee or applicant for employment on sex; or is the head of household or principal (c) Maintain or establish separate wage earner in such employee’s or ap- lines of progression, seniority systems, plicant’s family unit. career ladders, or tenure systems for (b) Pregnancy. A recipient shall not similar jobs, position descriptions, or discriminate against or exclude from job requirements which classify per- employment any employee or applicant sons on the basis of sex, unless sex is a for employment on the basis of preg- bona-fide occupational qualification nancy, childbirth, false pregnancy, ter- for the positions in question as set mination of pregnancy, or recovery forth in § 86.61. therefrom. (Secs. 901, 902, Education Amendments of (c) Pregnancy as a temporary disability. 1972, 86 Stat. 373, 374; 20 U.S.C. 1681, 1682) A recipient shall treat pregnancy, [40 FR 24128, June 4, 1975; 40 FR 39506, Aug. childbirth, false pregnancy, termi- 28, 1975] nation of pregnancy, and recovery

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therefrom and any temporary dis- is a bona-fide occupational qualifica- ability resulting therefrom as any tion for the particular job in question. other temporary disability for all job (Secs. 901, 902, Education Amendments of related purposes, including commence- 1972, 86 Stat. 373, 374; 20 U.S.C. 1681, 1682) ment, duration and extensions of leave, payment of disability income, accrual § 86.60 Pre-employment inquiries. of seniority and any other benefit or (a) Marital status. A recipient shall service, and reinstatement, and under not make pre-employment inquiry as any fringe benefit offered to employees to the marital status of an applicant by virtue of employment. for employment, including whether (d) Pregnancy leave. In the case of a such applicant is ‘‘Miss or Mrs.’’ recipient which does not maintain a (b) Sex. A recipient may make pre- leave policy for its employees, or in the employment inquiry as to the sex of an case of an employee with insufficient applicant for employment, but only if leave or accrued employment time to such inquiry is made equally of such qualify for leave under such a policy, a applicants of both sexes and if the re- recipient shall treat pregnancy, child- sults of such inquiry are not used in birth, false pregnancy, termination of connection with discrimination prohib- pregnancy and recovery therefrom as a ited by this part. justification for a leave of absence (Secs. 901, 902, Education Amendments of without pay for a reasonable period of 1972, 86 Stat. 373, 374; 20 U.S.C. 1681, 1682) time, at the conclusion of which the employee shall be reinstated to the sta- § 86.61 Sex as a bona-fide occupational tus which she held when the leave qualification. began or to a comparable position, A recipient may take action other- without decrease in rate of compensa- wise prohibited by this subpart pro- tion or loss of promotional opportuni- vided it is shown that sex is a bona-fide ties, or any other right or privilege of occupational qualification for that ac- employment. tion, such that consideration of sex (Secs. 901, 902, Education Amendments of with regard to such action is essential 1972, 86 Stat. 373, 374; 20 U.S.C. 1681, 1682) to successful operation of the employment function concerned. A recipient § 86.58 Effect of State or local law or shall not take action pursuant to this other requirements. section which is based upon alleged (a) Prohibitory requirements. The obli- comparative employment characteris- gation to comply with this subpart is tics or stereotyped characterizations of not obviated or alleviated by the exist- one or the other sex, or upon pref- ence of any State or local law or other erence based on sex of the recipient, requirement which imposes prohibi- employees, students, or other persons, but nothing contained in this section tions or limits upon employment of shall prevent a recipient from consid- members of one sex which are not im- ering an employee’s sex in relation to posed upon members of the other sex. employment in a locker room or toilet (b) Benefits. A recipient which pro- facility used only by members of one vides any compensation, service, or sex. benefit to members of one sex pursuant to a State or local law or other require- (Secs. 901, 902, Education Amendments of ment shall provide the same compensa- 1972, 86 Stat. 373, 374; 20 U.S.C. 1681, 1682) tion, service, or benefit to members of §§ 86.62–86.70 [Reserved] the other sex. (Secs. 901, 902, Education Amendments of Subpart F—Procedures [Interim] 1972, 86 Stat. 373, 374; 20 U.S.C. 1681, 1682) § 86.71 Interim procedures. § 86.59 Advertising. For the purposes of implementing A recipient shall not in any adver- this part during the period between its tising related to employment indicate effective date and the final issuance by preference, limitation, specification, or the Department of a consolidated pro- discrimination based on sex unless sex cedural regulation applicable to title

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IX and other civil rights authorities C administered by the Department, the Comparable facilities procedural provisions applicable to Housing, [42, 54]; 86.32 title VI of the Civil Rights Act of 1964 Other, 86.33, 86.35(b) are hereby adopted and incorporated Compensation, [84, 87, 92]; 86.54 herein by reference. These procedures Counseling may be found at 45 CFR 80–6 through Disproportionate classes, [45, 59]; 86.36(c) 80–11 and 45 CFR Part 81. General, [45, 59]; 86.36(a) Materials, [45, 59]; 86.36(b) (Secs. 901, 902, Education Amendments of Course Offerings 1972, 86 Stat. 373, 374; 20 U.S.C. 1681, 1682) Adjustment period, [55]; 86.34(a) (i) General, [7, 43]; 86.34 SUBJECT INDEX TO TITLE IX PREAMBLE Music classes, [43]; 86.34(f) AND REGULATION 1 Physical education, [43, 56, 58]; Sex education, [43, 57]; 86.34(e) A Coverage, [5]; 86.11 to 86.17 Exemptions Access to Course Offerings [43, 55, 56, 57, 58]; Curricular materials, [52]; 86.42(a) 86.34 Access to Schools Operated by LEA’s, [44]; D 86.35 Admissions, [5, 6, 30]; 86.15, 86.21 Definitions, [14, 15]; 86.2(a) to (r) Affirmative and remedial action, [16, 17, Designation of responsible employee, [20, 22]; 24]; 86.3 (a), (b) 86.8(a), (b) Administratively separate units, Dissemination of policy, [21]; 86.9 [30];86.15(b), 86.2(o) Distribution, 86.9(c) Educational Institutions, [30], 86.15(d), Notification of policy, [21]; 86.9(a) 86.2(n) Publications, 86.9(b) General, 86.21(a), 86.2(p), Dress codes 86.31(b) (4) Prohibitions relating to marital and paren- E tal status, [32, 36]; 86.21(c) Professional schools, [30], 86.2(m) Education Institutions Public institutions of undergraduate high- Controlled by religious organizations, 86.12 er education, 86.15(e) Application, [28, 29]; 86.12(a) Recruitment, [34, 35]; 86.23 Exemption, [26]; 86.12(b) Specific prohibitions, 86.21(b) Education Program and Activities Tests, [31]; 86.21(b)(2) Benefiting from Federal financial assist- Preference in admission, [35]; 86.22 ance, [10, 11]; 86.11 Advertising, 86.59 General, [10, 11, 53]; 86.31(a) Programs not operated by recipient, [41, Affirmative Action, see ‘‘Remedial and Af- 54]; 86.31(c) firmative Actions’’ Specific prohibitions, [38, 39, 40, 53]; 86.31 Assistance to ‘‘outside’’ discriminatory orga- (b) nizations, [40, 53]; 86.31(b)(7), (c) Effective Date, [3] Assurances, [18]; 86.4 Employee responsible for Title IX, see Duration of obligation, 86.4(b) ‘‘Designation of Responsible Employee’’ Form, 86.4(c) Employment Athletics, [69 to 78]; 86.41 Advertising, 86.59 Adjustment period, [78]; 86.41(d) Application, 86.51(b) Contact sport defined, 86.41(d) Compensation, [84, 92]; 86.54 Equal opportunity, [76, 77]; 86.41(d) Employment criteria, 86.52 Determining factors, 86.41(c) (i) to (x) Fringe benefits, [88, 89]; 86.56 Equipment, 86.41(c) General, [81, 82, 87]; 86.51 Expenditures, 86.41(c) Job Classification and Structure, 86.55 Facilities, 86.41(c) Marital and Parental Status, 86.57 Travel, 86.41(c) Pregnancy, [85, 93]; 86.57(b) Scholarships, [64, 65]; 86.37(d) Pregnancy as Temporary Disability, [85, General, [69, 70, 71, 72, 73, 74, 75]; 86.41(a) 93]; 86.57(c) Separate teams, [75]; 86.41(b) Pregnancy Leave, [85, 93, 94]; 86.57(d) Pre-Employment Inquiry B Recruitment, [83, 90, 91, 95] BFOQ, [96]; 86.61 Sex as a BFOQ, [96]; 86.61 Student Employment, [66]; 86.38 Tenure, 86.51(b) (2) 1 Preamble paragraph numbers are in Exemptions, [5, 27, 28, 29, 30, 53]; 86.12(b), brackets [ ]. 86.13, 86.14, 86.15(a), 86.15(d), 86.16

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F Military and Merchant Marine Educational Institutions, [29]; 86.13 Federal Financial Assistance, 86.2(a) Financial Assistance to students, [46, 60, 61]; P 86.37 Athletic Scholarships, [46, 64, 65]; 86.37(d) Pooling, see ‘‘Financial Assistance’’, 86.37 Foreign institutions, study at [63]; 86.31(c) Pre-employment Inquiries General, 86.37 Marital status, [86, 95]; 86.60(a) Non-need scholarships, [62]; 86.37(b) Sex, 86.60(b) Pooling of sex-restrictive, [46, 61, 62]; Preference in Admissions, [35]; 86.22 86.37(b) See also ‘‘Remedial and Affirmative Ac- Sex-restrictive assistance through foreign tion’’ or domestic wills [46, 61, 62]; 86.37(b) Pregnancy, Employment Foreign Scholarships, see ‘‘Financial assist- General, [85, 93, 94]; 86.57 ance’’ 86.37 and ‘‘Assistance to ‘outside’ Pregnancy, [85, 93, 94]; 86.57(b) discriminatory organizations’’, 86.31(c) Pregnancy as temporary disability, [85, 93, Fraternities/Sororities 94]; 86.57(c) Social, [53, 27, 28]; 86.14(a) Pregnancy leave, [85, 93, 94]; 86.57(d) Business/professional, [40, 53, 27, 28]; Students 86.31(b) (7) General, [49, 50]; 86.40(a) and (b) Honor societies, [40, 53]; 86.31(b) (7) Pregnancy and related conditions; [50]; Fringe benefits, [67, 88, 89]; 86.56, 86.39 86.40(b) (1) to (5) Part-time employees, [89] Class Participation, [50, 55, 58]; 86.40(b) (1) Physical certification, [50]; 86.40(b) (2) G Special class, [50]; 86.40 (b) (3) Grievance Procedure, see ‘‘Designation of re- Temporary leave, [50]; 86.40(b) (4), (5) sponsible employee’’, 86.8(a) (b) Private Undergraduate Professional Schools, [30]; 86.15(d) H Purpose of Regulation, [13]; 86.1

Health and Insurance Benefits and Services, R [67, 88, 93]; 86.39, 86.56 Honor societies, [40, 53]; 86.31(b) (7) Real Property, 86.2(g) Housing, 86.32 Recruitment Generally, [42]; 86.32(b) Employment Provided by recipient, 86.32(b) Nondiscrimination, [83, 91]; 86.53(a) Other housing, [54]; 86.32(c) Patterns, 86.53(b) Student J Nondiscrimination, [34, 35]; 86.23(a) Job Classification and Structure, 86.55 Recruitment at certain institutions, 86.23 (b) L Religious Organizations Application, [29, 28]; 86.12(a) LEA’s, [44]; 86.35 Exemption, [26]; 86.12(b) M Remedial and Affirmative Actions, [16, 17, 24]; 86.3 Marital and Parental Status Employment S General, [85, 93, 94]; 86.57 Pregnancy, [85, 93, 94]; 86.57(b) Scholarships, see ‘‘Financial Assistance’’, Pregnancy as a temporary disability, [85, 86.37 93, 94]; 86.57(c) Self-evaluation, [16, 22]; 86.3(c) (d) Pregnancy leave, [85, 93, 94]; 86.57(d) Surplus Property (see Transfer of Property Students 86.5) General, [49]; 86.40(a) (b) Duration of obligation 86.4(b) Pregnancy and related conditions, [50]; Real Property 86.4(b) (1) 86.40(b) (1) (2) (3) (4) (5) T Class participation, [50]; 86.40(b) (1) Physician certification, [50]; 86.40(b) (2) Textbooks and curricular materials, [52, 79, Special classes, [50]; 86.40(b) (3) 80]; 86.42 Temporary leave, [50]; 86.40(b) (4) (5) Termination of funds, [10, 11] Membership Practices of Social fraternities Transfer of property, 86.5 and sororities, [27, 28, 53]; 86.14(a) Transition Plans Voluntary youth service organizations, [27, Content of plans, 86.17(b) 28, 53]; 86.14(c) Different from Adjustment period, [78]; YMCA, YWCA and others, [27, 28, 53]; 86.41(d) 86.14(b) Submission of plans, 86.17(a)

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APPENDIX A TO PART 86—GUIDELINES such activities, the activities must be FOR ELIMINATING DISCRIMINATION offered separately, in time or location, AND DENIAL OF SERVICES ON THE from the programs or services funded BASIS OF RACE, COLOR, NATIONAL with direct financial assistance from ORIGIN, SEX, AND HANDICAP IN VO- the Department, and participation CATIONAL EDUCATION PROGRAMS must be voluntary for beneficiaries of [NOTE] the programs or services funded with such assistance. NOTE: For the text of these guidelines, see 45 CFR Part 80, Appendix B. (d) A religious organization that participates in the Department-funded [44 FR 17168, Mar. 21, 1979] programs or services will retain its independence from Federal, State, and PART 87—EQUAL TREATMENT FOR local governments, and may continue FAITH-BASED ORGANIZATIONS to carry out its mission, including the definition, practice, and expression of Sec. its religious beliefs, provided that it 87.1 Discretionary grants does not use direct financial assistance 87.2 Formula and block grants from the Department to support any AUTHORITY: 5 U.S.C. 301. inherently religious activities, such as SOURCE: 69 FR 42593, July 16, 2004, unless worship, religious instruction, or pros- otherwise noted. elytization. Among other things, a faith-based organization may use space § 87.1 Discretionary grants. in its facilities to provide programs or (a) This section is not applicable to services funded with financial assist- the programs governed by the Chari- ance from the Department without re- table Choice regulations found at 42 moving religious art, icons, scriptures, CFR Part 54a. or other religious symbols. In addition, (b) Religious organizations are eligi- a religious organization that receives ble, on the same basis as any other or- financial assistance from the Depart- ganization, to participate in any De- ment retains its authority over its in- partment program for which they are ternal governance, and it may retain otherwise eligible. Neither the Depart- religious terms in its organization’s ment nor any State or local govern- name, select its board members on a ment and other intermediate organiza- religious basis, and include religious tions receiving funds under any De- references in its organization’s mission partment program shall, in the selec- statements and other governing docu- tion of service providers, discriminate ments in accordance with all program for or against an organization on the requirements, statutes, and other ap- basis of the organization’s religious plicable requirements governing the character or affiliation. As used in this conduct of Department-funded activi- section, ‘‘program’’ refers to activities ties. supported by discretionary grants (e) An organization that participates under which recipients are selected in programs funded by direct financial through a competitive process. As used assistance from the Department shall in this section, the term ‘‘recipient’’ not, in providing services, discriminate means an organization receiving finan- against a program beneficiary or pro- cial assistance from an HHS awarding spective program beneficiary on the agency to carry out a project or pro- basis of religion or religious belief. gram and includes the term ‘‘grantee’’ (f) No grant document, agreement, as used in 45 CFR Parts 74, 92, and 96. covenant, memorandum of under- (c) Organizations that receive direct standing, policy, or regulation that is financial assistance from the Depart- used by the Department or a State or ment under any Department program local government in administering fi- may not engage in inherently religious nancial assistance from the Depart- activities, such as worship, religious ment shall require only religious orga- instruction, or proselytization, as part nizations to provide assurances that of the programs or services funded with they will not use monies or property direct financial assistance from the De- for inherently religious activities. Any partment. If an organization conducts restrictions on the use of grant funds

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shall apply equally to religious and any solicitation that requires an orga- non-religious organizations. All organi- nization to maintain tax-exempt status zations that participate in Department will expressly state the statutory au- programs, including organizations with thority for requiring such status. Re- religious character or affiliations, cipients should consult with the appro- must carry out eligible activities in ac- priate Department program office to cordance with all program require- determine the scope of any applicable ments and other applicable require- requirements. In Department programs ments governing the conduct of De- in which an applicant must show that partment-funded activities, including it is a nonprofit organization, the ap- those prohibiting the use of direct fi- plicant may do so by any of the fol- nancial assistance from the Depart- lowing means: ment to engage in inherently religious (1) Proof that the Internal Revenue activities. No grant document, agree- Service currently recognizes the appli- ment, covenant, memorandum of un- cant as an organization to which con- derstanding, policy, or regulation that tributions are tax deductible under sec- is used by the Department or a State tion 501(c)(3) of the Internal Revenue or local government in administering Code; financial assistance from the Depart- (2) A statement from a State or other ment shall disqualify religious organi- governmental taxing body or the State zations from participating in the De- secretary of State certifying that: partment’s programs because such or- (i) The organization is a nonprofit organizations are motivated or influ- ganization operating within the State; enced by religious faith to provide so- and cial services, or because of their religious character or affiliation. (ii) No part of its net earnings may (g) A religious organization’s exemp- benefit any private shareholder or indi- tion from the Federal prohibition on vidual; employment discrimination on the (3) A certified copy of the applicant’s basis of religion, set forth in section certificate of incorporation or similar 702(a) of the Civil Rights Act of 1964, 42 document that clearly establishes the U.S.C. 2000e–1, is not forfeited when the nonprofit status of the applicant; or organization receives direct or indirect (4) Any item described in paragraphs financial assistance from the Depart- (h)(1) through (3) of this section if that ment. Some Department programs, item applies to a State or national par- however, contain independent statu- ent organization, together with a tory provisions requiring that all re- statement by the State or parent orga- cipients agree not to discriminate in nization that the applicant is a local employment on the basis of religion. nonprofit affiliate. Accordingly, recipients should consult (i) If a grantee contributes its own with the appropriate Department pro- funds in excess of those funds required gram office if they have questions by a matching or grant agreement to about the scope of any applicable re- supplement Department-supported ac- quirement. tivities, the grantee has the option to (h) In general, the Department does segregate those additional funds or not require that a recipient, including commingle them with the Federal a religious organization, obtain tax-ex- award funds. If the funds are commin- empt status under section 501(c)(3) of gled, the provisions of this section the Internal Revenue Code to be eligi- shall apply to all of the commingled ble for funding under Department pro- funds in the same manner, and to the grams. Many grant programs, however, same extent, as the provisions apply to do require an organization to be a the Federal funds. With respect to the ‘‘nonprofit organization’’ in order to be matching funds, the provisions of this eligible for funding. Funding announce- section apply irrespective of whether ments and other grant application so- such funds are commingled with Fed- licitations that require organizations eral funds or segregated. to have nonprofit status will specifi- (j) To the extent otherwise permitted cally so indicate in the eligibility sec- by Federal law, the restrictions on in- tion of the solicitation. In addition, herently religious activities set forth

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in this section do not apply where De- tivities must be offered separately, in partment funds are provided to reli- time or location, from the programs or gious organizations as a result of a services funded with direct financial genuine and independent private choice assistance from the Department, and of a beneficiary or through other indi- participation must be voluntary for rect funding mechanisms, provided the beneficiaries of the programs or serv- religious organizations otherwise sat- ices funded with such assistance. isfy the requirements of the program. (d) A religious organization that par- A religious organization may receive ticipates in the Department-funded such funds as the result of a bene- programs or services will retain its ficiary’s genuine and independent independence from Federal, State, and choice if, for example, a beneficiary re- local governments, and may continue deems a voucher, coupon, or certifi- to carry out its mission, including the cate, allowing the beneficiary to direct definition, practice, and expression of where funds are to be paid, or through its religious beliefs, provided that it a similar funding mechanism provided does not use direct financial assistance to that beneficiary and designed to from the Department to support any give that beneficiary a genuine and inherently religious activities, such as independent choice among providers. worship, religious instruction, or pros- § 87.2 Formula and block grants. elytization. Among other things, a faith-based organization that receives (a) This section is not applicable to financial assistance from the Depart- the programs governed by the Chari- ment may use space in its facilities, table Choice regulations found at 42 without removing religious art, icons, CFR Part 54 and 45 CFR Parts 96, 260, scriptures, or other religious symbols. and 1050. In addition, a religious organization (b) Religious organizations are eligi- that receives financial assistance from ble, on the same basis as any other or- the Department retains its authority ganization, to participate in any De- over its internal governance and it partment program for which they are may retain religious terms in its orga- otherwise eligible. Neither the Depart- nization’s name, select its board mem- ment nor any State or local govern- bers on a religious basis, and include ment receiving funds under any De- religious references in its organiza- partment program nor any intermediate organization with the same tion’s mission statements and other duties as a governmental entity under governing documents in accordance this part shall, in the selection of serv- with all program requirements, stat- ice providers, discriminate for or utes, and other applicable require- against an organization on the basis of ments governing the conduct of De- the organization’s religious character partment-funded activities. or affiliation. As used in this section, (e) An organization that participates ‘‘program’’ refers to activities sup- in programs funded by direct financial ported by formula or block grants. As assistance from the Department shall used in this section, the term ‘‘recipi- not, in providing services, discriminate ent’’ means an organization receiving against a program beneficiary or pro- financial assistance from an HHS spective program beneficiary on the awarding agency to carry out a project basis of religion or religious belief. or program and includes the term (f) No grant document, agreement, ‘‘grantee’’ as used in 45 CFR Parts 74, covenant, memorandum of under- 92, and 96. standing, policy, or regulation that is (c) Organizations that receive direct used by the Department or a State or financial assistance from the Depart- local government in administering fi- ment may not engage in inherently re- nancial assistance from the Depart- ligious activities, such as worship, reli- ment shall require only religious orga- gious instruction, or proselytization, nizations to provide assurances that as part of the programs or services they will not use monies or property funded with direct financial assistance for inherently religious activities. Any from the Department. If an organiza- restrictions on the use of grant funds tion conducts such activities, the ac- shall apply equally to religious and

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non-religious organizations. All organi- for requiring such status. Grantees zations that participate in Department should consult with the appropriate programs, including organizations with Department program office to deter- religious character or affiliations, mine the scope of any applicable re- must carry out eligible activities in ac- quirements. In Department programs cordance with all program require- in which an applicant must show that ments and other applicable require- it is a nonprofit organization, the ap- ments governing the conduct of De- plicant may do so by any of the fol- partment-funded activities, including lowing means: those prohibiting the use of direct fi- (1) Proof that the Internal Revenue nancial assistance to engage in inher- Service currently recognizes the appli- ently religious activities. No grant doc- cant as an organization to which con- ument, agreement, covenant, memo- tributions are tax deductible under sec- randum of understanding, policy, or tion 501(c)(3) of the Internal Revenue regulation that is used by the Depart- Code; ment or a State or local government in (2) A statement from a State or other administering financial assistance governmental taxing body or the State from the Department shall disqualify secretary of State certifying that: religious organizations from partici- (i) The organization is a nonprofit or- pating in the Department’s programs ganization operating within the State; because such organizations are moti- and vated or influenced by religious faith (ii) No part of its net earnings may to provide social services, or because of benefit any private shareholder or indi- their religious character or affiliation. vidual; (g) A religious organization’s exemp- (3) A certified copy of the applicant’s tion from the Federal prohibition on certificate of incorporation or similar employment discrimination on the document that clearly establishes the basis of religion, set forth in section nonprofit status of the applicant; or 702(a) of the Civil Rights Act of 1964, 42 (4) Any item described in paragraphs U.S.C. 2000e–1, is not forfeited when the (h)(1) through (3) of this section if that religious organization receives direct item applies to a State or national par- or indirect financial assistance from ent organization, together with a the Department. Some Department statement by the State or parent orga- programs, however, contain inde- nization that the applicant is a local pendent statutory provisions requiring nonprofit affiliate. that all recipients agree not to dis- (i) If a State or local government criminate in employment on the basis contributes its own funds in excess of of religion. Accordingly, grantees those funds required by a matching or should consult with the appropriate grant agreement to supplement De- Department program office if they partment-supported activities, the have questions about the scope of any State or local government has the op- applicable requirement. tion to segregate those additional (h) In general, the Department does funds or commingle them with the Fed- not require that a recipient, including eral award funds. If the funds are com- a religious organization, obtain tax-ex- mingled, the provisions of this section empt status under section 501(c)(3) of shall apply to all of the commingled the Internal Revenue Code to be eligi- funds in the same manner, and to the ble for funding under Department pro- same extent, as the provisions apply to grams. Many grant programs, however, the Federal funds. With respect to do require an organization to be a matching funds, the provisions of this ‘‘nonprofit organization’’ in order to be section apply irrespective of whether eligible for funding. Individual solicita- such funds are commingled with Fed- tions that require organizations to eral funds or segregated. have nonprofit status will specifically (j) To the extent otherwise permitted so indicate in the eligibility section of by Federal law, the restrictions on in- a solicitation. In addition, any solicita- herently religious activities set forth tion that requires an organization to in this section do not apply where De- maintain tax-exempt status will ex- partment funds are provided to reli- pressly state the statutory authority gious organizations as a result of a

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genuine and independent private choice Subpart D—Investigation, Conciliation and of a beneficiary or through other indi- Enforcement Procedures rect funding mechanisms, provided the 90.41 What is the purpose of this subpart? religious organizations otherwise sat- 90.42 What responsibilities do recipients and isfy the requirements of the program. agencies have generally to ensure com- A religious organization may receive pliance with the Act? such funds as the result of a bene- 90.43 What specific responsibilities do agen- ficiary’s genuine and independent cies and recipients have to ensure com- choice if, for example, a beneficiary re- pliance with the Act? 90.44 Compliance reviews. deems a voucher, coupon, or certifi- 90.45 Information requirements. cate, allowing the beneficiary to direct 90.46 Prohibition against intimidation or where funds are to be paid, or through retaliation. a similar funding mechanism provided 90.47 What further provisions must an agen- to that beneficiary and designed to cy make in order to enforce its regula- give that beneficiary a choice among tions after an investigation indicates that a violation of the Act has been com- providers. mitted? 90.48 Alternate funds disbursal procedure. PART 90—NONDISCRIMINATION 90.49 Remedial and affirmative action by recipients. ON THE BASIS OF AGE IN PRO- 90.50 Exhaustion of administrative rem- GRAMS OR ACTIVITIES RECEIV- edies. ING FEDERAL FINANCIAL ASSIST- ANCE Subpart E—Future Review of Age Discrimination Regulations Subpart A—General 90.61 Review of general regulations. 90.62 Review of agency regulations. Sec. AUTHORITY: Age Discrimination Act of 1975, 90.1 What is the purpose of the Age Dis- as amended, 42 U.S.C. 6101 et seq. crimination Act of 1975? 90.2 What is the purpose of these regula- SOURCE: 44 FR 33776, June 12, 1979, unless tions? otherwise noted. 90.3 What programs or activities does the Age Discrimination Act of 1975 cover? Subpart A—General 90.4 How are the terms in the regulations defined? § 90.1 What is the purpose of the Age Discrimination Act of 1975? Subpart B—What is Age Discrimination? The Age Discrimination Act of 1975, STANDARDS FOR DETERMINING as amended, is designed to prohibit dis- DISCRIMINATORY PRACTICES crimination on the basis of age in programs or activities receiving Federal 90.11 Purpose of this subpart. financial assistance. The Act also per- 90.12 Rules against age discrimination. mits federally assisted programs or ac- 90.13 Definitions of normal operation and tivities, and recipients of Federal statutory objective. funds, to continue to use certain age 90.14 Exceptions to the rules against age discrimination. Normal operation or distinctions and factors other than age statutory objective of any program or ac- which meet the requirements of the tivity. Act and these regulations. 90.15 Exceptions to the rules against age [44 FR 33776, June 12, 1979, as amended at 70 discrimination. Reasonable factors other FR 24321, May 9, 2005] than age. 90.16 Burden of proof. § 90.2 What is the purpose of these regulations? Subpart C—What are the Responsibilities of (a) The purpose of these regulations the Federal Agencies? is to state general, government-wide 90.31 Issuance of regulations. rules for the implementation of the 90.32 Review of agency policies and adminis- Age Discrimination Act of 1975, as trative practices. amended, and to guide each agency in 90.33 Interagency cooperation. the preparation of agency-specific age 90.34 Agency reports. discrimination regulations.

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(b) These regulations apply to each ple, children, adult, older persons, but Federal agency which provides Federal not student). financial assistance to any program or Agency means a Federal department activity. or agency that is empowered to extend financial assistance. § 90.3 What programs or activities does Federal financial assistance means any the Age Discrimination Act of 1975 cover? grant, entitlement, loan, cooperative agreement, contract (other than a pro- (a) The Age Discrimination Act of curement contract or a contract of in- 1975 applies to any program or activity surance or guaranty), or any other ar- receiving Federal financial assistance, rangement by which the agency pro- including programs or activities re- vides or otherwise makes available as- ceiving funds under the State and sistance in the form of: Local Fiscal Assistance Act of 1972 (31 U.S.C. 1221 et seq.). (a) Funds; (b) The Age Discrimination Act of (b) Services of Federal personnel; or 1975 does not apply to: (c) Real and personal property or any (1) An age distinction contained in interest in or use of property, includ- that part of a Federal, State or local ing: statute or ordinance adopted by an (1) Transfers or leases of property for elected, general purpose legislative less than fair market value or for re- body which: duced consideration; and (i) Provides any benefits or assist- (2) Proceeds from a subsequent trans- ance to persons based on age; or fer or lease of property if the Federal (ii) Establishes criteria for participa- share of its fair market value is not re- tion in age-related terms; or turned to the Federal Government. (iii) Describes intended beneficiaries Program or activity means all of the or target groups in age-related terms. operations of— (2) Any employment practice of any (a)(1) A department, agency, special employer, employment agency, labor purpose district, or other instrumen- organization, or any labor-manage- tality of a State or of a local government joint apprenticeship training pro- ment; or gram, except for any program or activ- (2) The entity of such State or local ity receiving Federal financial assist- government that distributes Federal fi- ance for public service employment nancial assistance and each such de- under the Comprehensive Employment partment or agency (and each other and Training Act of 1974 (CETA), (29 State or local government entity) to U.S.C. 801 et seq.). which the assistance is extended, in the § 90.4 How are the terms in these regu- case of assistance to a State or local lations defined? government; (b)(1) A college, university, or other As used in these regulations, the postsecondary institution, or a public term: system of higher education; or Act means the Age Discrimination Act of 1975, as amended, (Title III of (2) A local educational agency (as de- Pub. L. 94–135). fined in 20 U.S.C. 7801), system of voca- Action means any act, activity, pol- tional education, or other school sys- icy, rule, standard, or method of ad- tem; ministration; or the use of any policy, (c)(1) An entire corporation, partner- rule, standard, or method of adminis- ship, or other private organization, or tration. an entire sole proprietorship— Age means how old a person is, or the (i) If assistance is extended to such number of elapsed years form the date corporation, partnership, private orga- of a person’s birth. nization, or sole proprietorship as a Age distinction means any action whole; or using age or an age-related term. (ii) Which is principally engaged in Age-related term means a word or the business of providing education, words which necessarily imply a par- health care, housing, social services, or ticular age or range of ages (for exam- parks and recreation; or

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(2) The entire plant or other com- to discrimination under, any program parable, geographically separate facil- or activity receiving Federal financial ity to which Federal financial assist- assistance. ance is extended, in the case of any (b) Specific rules: A recipient may not, other corporation, partnership, private in any program or activity receiving organization, or sole proprietorship; or Federal financial assistance, directly (d) Any other entity which is estab- or through contractual, licensing, or lished by two or more of the entities other arrangements use age distinc- described in paragraph (a), (b), or (c) of tions or take any other actions which this definition; any part of which is ex- have the effect, on the basis of age, of: tended Federal financial assistance. (1) Excluding individuals from, deny- Recipient means any State or its po- ing them the benefits of, or subjecting litical subdivision, any instrumen- them to discrimination under, a pro- tality of a State or its political sub-di- gram or activity receiving Federal fi- vision, any public or private agency, nancial assistance, or institution, organization, or other enti- (2) Denying or limiting individuals in ty, or any person to which Federal fi- their opportunity to participate in any nancial assistance is extended, directly program or activity receiving Federal or through another recipient. Recipient financial assistance. includes any successor, assignee, or (c) The specific forms of age discrimi- transferee, but excludes the ultimate nation listed in paragraph (b) of this beneficiary of the assistance. section do not necessarily constitute a Secretary means the Secretary of the complete list. Department of Health and Human Services. § 90.13 Definitions of normal operation United States means the fifty States, and statutory objective. the District of Columbia, Puerto Rico, For purposes of §§ 90.14, and 90.15, the the Virgin Islands, American Samoa, terms normal operation and statutory ob- Guam, Wake Island, the Canal Zone, jective shall have the following mean- the Trust Territory of the Pacific Is- ing: lands, the Northern Marianas, and the (a) Normal operation means the oper- territories and possessions of the ation of a program or activity without United States. significant changes that would impair (42 U.S.C. 6107) its ability to meet its objectives. (b) Statutory objective means any pur- [44 FR 33776, June 12, 1979, as amended at 70 pose of a program or activity expressly FR 24321, May 9, 2005] stated in any Federal statute, State statute, or local statute or ordinance Subpart B—What is Age adopted by an elected, general purpose Discrimination? legislative body.

STANDARDS FOR DETERMINING § 90.14 Exceptions to the rules against DISCRIMINATORY PRACTICES age discrimination. Normal operation or statutory objective of any § 90.11 Purpose of this subpart. program or activity. The purpose of this subpart is to set A recipient is permitted to take an forth the prohibitions against age dis- action, otherwise prohibited by § 90.12, crimination and the exceptions to if the action reasonably takes into ac- those prohibitions. count age as a factor necessary to the normal operation or the achievement § 90.12 Rules against age discrimina- of any statutory objective of a program tion. or activity. An action reasonably takes The rules stated in this section are into account age as a factor necessary limited by the exceptions contained in to the normal operation or the achieve- §§ 90.14, and 90.15 of these regulations. ment of any statutory objective of a (a) General rule: No person in the program or activity, if: United states shall, on the basis of age, (a) Age is used as a measure or ap- be excluded from participation in, be proximation of one or more other char- denied the benefits of, or be subjected acteristics; and

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(b) The other characteristic(s) must (c) Each agency shall submit its final be measured or approximated in order agency regulations to HHS for review for the normal operation of the pro- no later than 120 days after publication gram or activity to continue, or to of proposed agency age discrimination achieve any statutory objective of the regulations. program or activity; and (d) Final agency age discrimination (c) The other characteristic(s) can be regulations shall be consistent with reasonably measured or approximated these general, government-wide age by the use of age; and discrimination regulations and shall (d) The other characteristic(s) are not be published until the Secretary impractical to measure directly on an approves them. individual basis. (e) Each agency shall include in its regulations a provision governing the § 90.15 Exceptions to the rules against operation of an alternate funds dis- age discrimination. Reasonable fac- bursal procedure as described in § 90.48 tors other than age. of these regulations. A recipient is permitted to take an (f) Each agency shall publish an ap- action otherwise prohibited by § 90.12 pendix to its final age discrimination which is based on a factor other than regulations containing a list of each age, even though that action may have age distinction provided in a Federal a disproportionate effect on persons of statute or in regulations affecting fi- different ages. An action may be based nancial assistance administered by the on a factor other than age only if the agency. factor bears a direct and substantial relationship to the normal operation of § 90.32 Review of agency policies and the program or activity or to the administrative practices. achievement of a statutory objective. (a) Each agency shall conduct a review of age distinctions it imposes on § 90.16 Burden of proof. its recipients by regulations, policies, The burden of proving that an age and administrative practices. The pur- distinction or other action falls within pose of this review is to identify how the exceptions outlined in §§ 90.14 and age distinctions are used by each Fed- 90.15 is on the recipient of Federal fi- eral agency and whether those age dis- nancial assistance. tinctions are permissible under the Act and implementing regulations. Subpart C—What are the Respon- (b) No later than 12 months from the sibilities of the Federal Agen- date the agency published its final reg- cies? ulations, the agency shall publish, for public comment, a report in the FED- § 90.31 Issuance of regulations. ERAL REGISTER containing: (a) The head of each agency which ex- (1) The results of the review contends Federal financial assistance to ducted under paragraph (a) of this sec- any program or activity shall publish tion; proposed and final age discrimination (2) A list of the age distinctions con- regulations in the FEDERAL REGISTER tained in regulations which are to be to: continued; (1) Carry out the provisions of sec- (3) The justification under the re- tion 303 of the Age Discrimination Act quirements of the Act and these regu- of 1975; and lations for each age distinction to be (2) Provide for appropriate investiga- continued; tive, conciliation, and enforcement (4) A list of the age distinctions not procedures. contained in regulations but which will (b) Each agency shall publish its pro- be adopted by regulation under the Ad- posed agency age discrimination regu- ministrative Procedure Act using the lations no later than 90 days after the notice and comment procedures speci- publication date of the final general, fied in 5 U.S.C. 553; and government-wide age discrimination (5) A list of the age distinctions to be regulations. eliminated.

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(c) Beginning with the effective date Federal financial assistance from the of an agency’s final regulations, the agency; and agency may not impose a new age dis- (e) Contains whatever other data the tinction unless the age distinction is Secretary may require. adopted by regulation under the Ad- ministrative Procedure Act using the [44 FR 33776, June 12, 1979, as amended at 70 notice and comment procedures speci- FR 24321, May 9, 2005] fied in 5 U.S.C. 553. (d) Beginning 12 months after the Subpart D—Investigation, Concil- publication of its age discrimination iation and Enforcement Pro- regulations, an agency may not con- cedures tinue an existing age distinction, unless the age distinction has already § 90.41 What is the purpose of this sub- been adopted by regulation or is adopt- part? ed by regulation under the Administra- This subpart sets forth requirements tive Procedure Act using the notice for the establishment of compliance, and comment procedures specified in 5 investigation, conciliation, and en- U.S.C. 553. forcement procedures by agencies § 90.33 Interagency cooperation. which extend Federal financial assistance. Where two or more agencies provide Federal financial assistance to a recipi- § 90.42 What responsibilities do recipient or class of recipients, the Secretary ents and agencies have generally to may designate one of the agencies as ensure compliance with the Act? the sole agency for all compliance and (a) A recipient has primary responsi- enforcement purposes with respect to bility to ensure that its programs or those recipients, except for the order- activities are in compliance with the ing of termination of funds and the no- Age Discrimination Act and shall take tification of the appropriate commit- steps to eliminate violations of the tees of Congress. Act. A recipient also has responsibility § 90.34 Agency reports. to maintain records, provide information, and to afford access to its records Each agency shall submit to the Sec- to an agency to the extent required to retary not later than December 31 of determine whether it is in compliance each year, beginning in 1979, a report with the Act. which: (b) An agency has responsibility to (a) Describes in detail the steps attempt to secure recipient compliance taken during the preceding fiscal year with the Act by voluntary means. This to carry out the Act; and may include the use of the services of (b) Contains data on the frequency, appropriate Federal, State, local, or type, and resolution of complaints and private organizations. An agency also on any compliance reviews, sufficient has the responsibility to enforce the to permit analysis of the agency’s Age Discrimination Act when a recipi- progress in reducing age discrimina- ent fails to eliminate violations of the tion in programs or activities receiving Act. Federal financial assistance from the agency; and [44 FR 33776, June 12, 1979, as amended at 70 (c) Contains data directly relevant to FR 24322, May 9, 2005] the extent of any pattern or practice of age discrimination which the agency § 90.43 What specific responsibilities has identified in any programs or ac- do agencies and recipients have to tivities receiving Federal financial as- ensure compliance with the Act? sistance from the agency and to (a) Written notice, technical assistance, progress toward eliminating it; and and educational materials. Each agency (d) Contains evaluative or interpreta- shall: (1) Provide written notice to tive information which the agency de- each recipient of its obligations under termines is useful in analyzing agency the Act. The notice shall include a re- progress in reducing age discrimina- quirement that where the recipient inition in programs or activities receiving tially receiving funds makes the funds

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available to a sub-recipient, the recipi- plaints which fall within the coverage ent must notify the sub-recipient of its of the Act to a mediation agency des- obligations under the Act. ignated by the Secretary. (2) Provide technical assistance, (i) The referring agency shall require where necessary, to recipients to aid the participation of the recipient and them in complying with the Act. the complainant in the mediation proc- (3) Make available educational mate- ess, although both parties need not rials setting forth the rights and obli- meet with the mediator at the same gations of beneficiaries and recipients time. under the Act. (ii) If the complainant and recipient (b) Self-evaluation. (1) Each agency reach a mutually satisfactory resolu- shall require each recipient employing tion of the complaint during the medi- the equivalent of 15 or more full time ation period, they shall reduce the employees to complete a written self- agreement to writing. The mediator evaluation of its compliance under the shall send a copy of the settlement to Act within 18 months of the effective the referring agency. No further action date of the agency regulations. shall be taken based on that complaint (2) Each recipient’s self-evaluation unless it appears that the complainant shall identify and justify each age dis- or the recipient is failing to comply tinction imposed by the recipient. with the agreement. (3) Each recipient shall take correc- (iii) Not more than 60 days after the tive and remedial action whenever a agency receives the complaint, the me- self-evaluation indicates a violation of diator shall return a still unresolved the Act. complaint to the referring agency for (4) Each recipient shall make the initial investigation. The mediator self-evaluation available on request to may return a complaint at any time the agency and to the public for a pe- before the end of the 60 day period if it riod of 3 years following its comple- appears that the complaint cannot be tion. resolved through mediation. (c) Complaints—(1) Receipt of com- (iv) The mediator shall protect the plaints. Each agency shall establish a confidentiality of all information ob- complaint processing procedure which tained in the course of the mediation includes the following: process. No mediator shall testify in (i) A procedure for the filing of com- any adjudicative proceeding, produce plaints with the agency; any document, or otherwise disclose (ii) A review of complaints to assure any information obtained in the course that they fall within the coverage of of the mediation process without prior the Act and contain all information approval of the head of the agency ap- necessary for further processing; pointing the mediator. (iii) Notice to the complainant and (4) Federal initial investigation. Each the recipient of their rights and obliga- agency shall investigate complaints tions under the complaint procedure, unresolved after mediation or reopened including the right to have a represent- because of a violation of the mediation ative at all stages of the complaint agreement. As part of the initial inves- procedure; and tigation, the agency shall use informal (iv) Notice to the complainant and fact finding methods including joint or the recipient (or their representatives) individual discussions with the com- of their right to contact the agency for plainant and the recipient to establish information and assistance regarding the facts, and, if possible, resolve the the complaint resolution process. complaint to the mutual satisfaction of (2) Prompt resolution of complaints. the parties. The agency may seek the Each agency shall establish procedures assistance of any involved State agen- for the prompt resolution of com- cy. plaints. These procedures shall require (5) Formal investigation, conciliation, each recipient and complainant to par- and hearing. If the agency cannot re- ticipate actively in efforts toward solve the complaint during the early speedy resolution of the complaint. stages of the investigation, it shall: (3) Mediation of complaints. Each (i) Complete the investigation of the agency shall promptly refer all com- complaint.

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(ii) Attempt to achieve voluntary § 90.47 What further provisions must compliance satisfactory to the agency, an agency make in order to enforce if the investigation indicates a viola- its regulations after an investigation. tion indicates that a violation of the Act has been committed? (iii) Arrange for enforcement as described in § 90.47, if necessary. (a) Each agency shall provide for enforcement of its regulations through: [44 FR 33776, June 12, 1979, as amended at 70 (1) Termination of a recipient’s Fed- FR 24322, May 9, 2005] eral financial assistance under the pro- § 90.44 Compliance reviews. gram or activity involved where the recipient has violated the Act or the (a) Each agency shall provide in its agency’s regulations. The determina- regulations that it may conduct com- tion of the recipient’s violation may be pliance reviews, pre-award reviews, and made only after a recipient has had an other similar procedures which permit opportunity for a hearing on the record the agency to investigate, and correct, before an administrative law judge. violations of the Act without regard to (2) Any other means authorized by its procedures for handling complaints. law including but not limited to: (b) If a compliance review or pre- (i) Referral to the Department of Jus- award review indicates a violation of tice for proceedings to enforce any the Act, the agency shall attempt to rights of the United States or obliga- achieve voluntary compliance with the tions of the recipient created by the Act. If voluntary compliance cannot be Act or the agency’s regulations. achieved, the agency shall arrange for (ii) Use of any requirement of or re- enforcement as described in § 90.47. ferral to any Federal, State, or local government agency which will have the § 90.45 Information requirements. effect of correcting a violation of the Each agency shall provide in its regu- Act or implementing regulations. lations a requirement that the recipi- (b) Any termination under paragraph ent: (a)(1) shall be limited to the particular recipient and particular program or ac- (a) Provide to the agency informa- tivity receiving Federal financial as- tion necessary to determine whether sistance or portion thereof found to be the recipient is in compliance with the in violation of the Act or agency regu- Act; and lations. No termination shall be based (b) Permit reasonable access by the in whole or in part on a finding with agency to the books, records, accounts, respect to any program or activity and other recipient facilities and which does not receive Federal finan- sources of information to the extent cial assistance. necessary to determine whether a re- (c) No action under paragraph (a) of cipient is in compliance with the Act. this section may be taken until: (1) The head of the agency involved § 90.46 Prohibition against intimida- has advised the recipient of its failure tion or retaliation. to comply with the Act or the agency’s Each agency shall provide in its regu- regulations and has determined that lations that recipients may not engage voluntary compliance cannot be ob- in acts of intimidation or retaliation tained. against any person who: (2) Thirty days have elapsed after the (a) Attempts to assert a right pro- head of the agency involved has sent a tected by the Act; or written report of the circumstances (b) Cooperates in any mediation, in- and grounds of the action to the com- vestigation, hearing, or other part of mittees of the Congress having legisla- the agency’s investigation, concilia- tive jurisdiction over the program or tion, and enforcement process. 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

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recipient when termination pro- criminated, both recipients may be re- ceedings under paragraph (a)(1) of this quired to take remedial action. section are initiated. (b) Even in the absence of a finding of (1) New Federal financial assistance discrimination, a recipient may take includes all assistance administered by affirmative action to overcome the ef- or through the agency for which an ap- fects of conditions that resulted in lim- plication or approval, including re- ited participation in the recipient’s newal or continuation of existing ac- program or activity on the basis of age. tivities, or authorization of new activi- (c) If a recipient operating a program ties, is required during the deferral pe- or activity which serves the elderly or riod. New Federal financial assistance children in addition to persons of other does not include assistance approved ages, provides special benefits to the prior to the beginning of termination elderly or to children the provision of proceedings or to increases in funding those benefits shall be presumed to be as a result of changed computation of voluntary affirmative action provided formula awards. that it does not have the effect of ex- (2) A deferral may not begin until the cluding otherwise eligible persons from recipient has received a notice of op- participation in the program or activ- portunity for a hearing under para- ity. graph (a)(1). A deferral may not continue for more than 60 days unless a [44 FR 33776, June 12, 1979, as amended at 70 FR 24322, May 9, 2005] hearing has begun within that time or the time for beginning the hearing has § 90.50 Exhaustion of administrative been extended by mutual consent of remedies. the recipient and the agency. A defer- (a) The agency shall provide in its ral may not continue for more than 30 regulations that a complainant may days after the close of the hearing, un- file a civil action following the exhaus- less the hearing results in a finding tion of adminstrative remedies under against the recipient. the Act. Administrative remedies are [44 FR 33776, June 12, 1979, as amended at 70 exhausted if: FR 24322, May 9, 2005] (1) 180 days have elapsed since the complainant filed the complaint and § 90.48 Alternate funds disbursal pro- the agency has made no finding with cedure. regard to the complaint; or When an agency withholds funds (2) The agency issues any finding in from a recipient under its regulations favor of the recipient. issued under § 90.31, the head of the (b) If either of the conditions set agency may disburse the withheld forth in § 90.50(a) is satisfied the agency funds so directly to any public or non- shall: profit private organization or agency, (1) Promptly advise the complainant or State or political subdivision of the of this fact; and State. These alternate recipients must (2) Advise the complainant of his or demonstrate the ability to comply with her right, under section 305(e) of the the agency’s regulations issued under Act, to bring a civil action for injunc- this Act and to achieve the goals of the tive relief that will effect the purposes Federal statute authorizing the Fed- of the Act; and eral financial assistance. (3) Inform the complainant: [44 FR 33776, June 12, 1979, as amended at 70 (i) That a civil action can only be FR 24322, May 9, 2005] brought in a United States district court for the district in which the re- § 90.49 Remedial and affirmative ac- cipient is found or transacts business; tion by recipients. (ii) That a complainant prevailing in (a) Where a recipient is found to have a civil action has the right to be discriminated on the basis of age, the awarded the costs of the action, includ- recipient shall take any remedial ac- ing reasonable attorney’s fees, but that tion which the agency may require to these costs must be demanded in the overcome the effects of the discrimina- complaint; tion. If another recipient exercises con- (iii) That before commencing the ac- trol over the recipient that has dis- tion the complainant shall give 30 days

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notice by registered mail to the Sec- 91.3 To what programs or activities do these retary, the Attorney General of the regulations apply? United States, the head of the granting 91.4 Definition of terms used in these regu- agency, and the recipient; lations. (iv) That the notice shall state: the Subpart B—Standards for Determining Age alleged violation of the Act; the relief Discrimination requested; the court in which the action will be brought; and whether or 91.11 Rules against age discrimination. not attorney’s fees are demanded in the 91.12 Definitions of normal operation and event the complainant prevails; and statutory objective. (v) That no action shall be brought if 91.13 Exceptions to the rules against age discrimination: Normal operation or the same alleged violation of the Act statutory objective of any program or ac- by the same recipient is the subject of tivity. a pending action in any court of the 91.14 Exceptions to the rules against age United States. discrimination: Reasonable factors other than age. 91.15 Burden of proof. Subpart E—Future Review of Age 91.16 Affirmative action by recipient. Discrimination Regulations 91.17 Special benefits for children and the elderly. § 90.61 Review of general regulations. 91.18 Age distinctions contained in HHS The Secretary shall review the effec- regulations. tiveness of these regulations in secur- Subpart C—Duties of HHS Recipients ing compliance with the Act. As part of this review, 30 months after the effec- 91.31 General responsibilities. tive date of these regulations, the Sec- 91.32 Notice to subrecipients and bene- retary shall publish a notice of oppor- ficiaries. tunity for public comment on the effec- 91.33 Assurance of compliance and recipient tiveness of the regulations. The Sec- assessment of age distinctions. retary will assess the comments and 91.34 Information requirements. publish the results of the review and Subpart D—Investigation, Conciliation, and assessment in the FEDERAL REGISTER. Enforcement Procedures § 90.62 Review of agency regulations. 91.41 Compliance reviews. Each agency shall review the effec- 91.42 Complaints. 91.43 Mediation. tiveness of its regulations in securing 91.44 Investigation. compliance with the Act. As part of 91.45 Prohibition against intimidation or this review, 30 months after the effec- retaliation. tive date of its regulations, each agen- 91.46 Compliance procedure. cy shall publish a notice of opportunity 91.47 Hearings, decisions, post-termination for public comment on the effective- proceedings. ness of the agency regulations. Each 91.48 Remedial action by recipient. agency shall assess the comments and 91.49 Alternate funds disbursal procedure. publish the results of the review in the 91.50 Exhaustion of administrative remedies. FEDERAL REGISTER. AUTHORITY: Age Discrimination Act of 1975, as amended, 42 U.S.C. 6101 et seq. (45 CFR PART 91—NONDISCRIMINATION part 90). ON THE BASIS OF AGE IN PRO- SOURCE: 47 FR 57858, Dec. 28, 1982, unless GRAMS OR ACTIVITIES RECEIV- otherwise noted. ING FEDERAL FINANCIAL ASSIST- ANCE FROM HHS Subpart A—General Subpart A—General § 91.1 What is the purpose of the Age Discrimination Act of 1975? Sec. 91.1 What is the purpose of the Age Dis- The Age Discrimination Act of 1975, crimination Act of 1975? as amended, is designed to prohibit dis- 91.2 What is the purpose of HHS’ age discrimination on the basis of age in pro- crimination regulations? grams or activities receiving Federal

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financial assistance. The Act also per- ance for public service employment mits federally assisted programs or ac- under the Comprehensive Employment tivities, and recipients of Federal and Training Act (CETA), (29 U.S.C. 801 funds, to continue to use certain age et seq.) distinctions and factors other than age which meet the requirements of the [47 FR 57858, Dec. 28, 1982, as amended at 70 Act and these regulations. FR 24322, May 9, 2005] [47 FR 57858, Dec. 28, 1982, as amended at 70 § 91.4 Definition of terms used in these FR 24322, May 9, 2005] regulations. § 91.2 What is the purpose of HHS’ age As used in these regulations, the discrimination regulations? term: The purpose of these regulations is to Act means the Age Discrimination set out HHS’ policies and procedures Act of 1975, as amended, (Title III of under the Age Discrimination Act of Pub. L. 94–135). 1975 and the general age discrimination Action means any act, activity, pol- regulations at 45 CFR part 90.1 The Act icy, rule, standard, or method of ad- and the general regulations prohibit ministration; or the use of any policy, discrimination on the basis of age in rule, standard, or method of adminis- programs or activities receiving Fed- tration. eral financial assistance. The Act and Age means how old a person is, or the the general regulations permit feder- number of years from the date of a per- ally assisted programs or activities, son’s birth. and recipients of Federal funds, to con- Age distinction means any action tinue to use age distinctions and fac- using age or an age-related term. tors other than age which meet the re- Age-related term means a word or quirements of the Act and its imple- words which necessarily imply a par- menting regulations. ticular age or range of ages (for exam- [47 FR 57858, Dec. 28, 1982, as amended at 70 ple, children, adult, older persons, but FR 24322, May 9, 2005] not student). Agency means a Federal department § 91.3 To what programs or activities or agency that is empowered to extend do these regulations apply? financial assistance. (a) The Act and these regulations Federal financial assistance means any apply to each HHS recipient and to grant, entitlement, loan, cooperative each program or activity operated by agreement, contract (other than a pro- the recipient which receives Federal fi- curement contract or a contract of in- nancial assistance provided by HHS. surance or guaranty), or any other ar- (b) The Act and these regulations do rangement by which the agency pro- not apply to: vides or otherwise makes available as- (1) An age distinction contained in sistance in the form of: that part of a Federal, State, or local (a) Funds; or statute or ordinance adopted by an (b) Services of Federal personnel; or elected, general purpose legislative (c) Real and personal property or any body which: (i) Provides any benefits or assist- interest in or use of property, includ- ance to persons based on age; or ing: (ii) Establishes criteria for participa- (1) Transfers or leases of property for tion in age-related terms; or less than fair market value or for re- (iii) Describes intended beneficiaries duced consideration; and or target groups in age-related terms. (2) Proceeds from a subsequent trans- (2) Any employment practice of any fer or lease of property if the Federal employer, employment agency, labor share of its fair market value is not reorganization, or any labor-manage- turned to the Federal Government. ment joint apprenticeship training pro- HHS means the United States De- gram, except for any program or activ- partment of Health and Human Serv- ity receiving Federal financial assist- ices. Program or activity means all of the 1 Published at 44 FR 33768, June 12, 1979. operations of—

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(a)(1) A department, agency, special generally regarded as a recipient of purpose district, or other instrumen- Federal financial assistance and has all tality of a State or of a local govern- the duties of a recipient in these regu- ment; or lations. (2) The entity of such State or local United States means the fifty States, government that distributes Federal fi- the District of Columbia, Puerto Rico, nancial assistance and each such de- the Virgin Islands, American Samoa, partment or agency (and each other Guam, Wake Island, the Canal Zone, State or local government entity) to the Trust Territory of the Pacific Is- which the assistance is extended, in the lands, the Northern Marianas, and the case of assistance to a State or local territories and possessions of the government; United States. (b)(1) A college, university, or other postsecondary institution, or a public (Authority: 42 U.S.C. 6107) system of higher education; or [47 FR 57858, Dec. 28, 1982, as amended at 70 (2) A local educational agency (as de- FR 24322, May 9, 2005] fined in 20 U.S.C. 7801), system of vocational education, or other school system; Subpart B—Standards for (c)(1) An entire corporation, partner- Determining Age Discrimination ship, or other private organization, or an entire sole proprietorship— § 91.11 Rules against age discrimina- (i) If assistance is extended to such tion. corporation, partnership, private orga- The rules stated in this section are nization, or sole proprietorship as a limited by the exceptions contained in whole; or §§ 91.13 and 91.14 of these regulations. (ii) Which is principally engaged in (a) General rule: No person in the the business of providing education, United States shall, on the basis of age, health care, housing, social services, or be excluded from participation in, be parks and recreation; or denied the benefits of, or be subjected (2) The entire plant or other com- to discrimination under, any program parable, geographically separate facil- or activity receiving Federal financial ity to which Federal financial assist- assistance. ance is extended, in the case of any other corporation, partnership, private (b) Specific rules: A recipient may organization, or sole proprietorship; or not, in any program or activity receiv- (d) Any other entity which is estab- ing Federal financial assistance, di- lished by two or more of the entities rectly or through contractual licens- described in paragraph (a), (b), or (c) of ing, or other arrangements, use age this definition; any part of which is ex- distinctions or take any other actions tended Federal financial assistance. which have the effect, on the basis of Recipient means any State or its po- age, of: litical subdivision, any instrumen- (1) Excluding individuals from, deny- tality of a State or its political sub- ing them the benefits of, or subjecting division, any public or private agency, them to discrimination under, a pro- institution, organization, or other enti- gram or activity receiving Federal fi- ty, or any person to which Federal financial assistance; or nancial assistance is extended, directly (2) Denying or limiting individuals in or through another recipient. Recipient their opportunity to participate in any includes any successor, assignee, or program or activity receiving Federal transferee, but excludes the ultimate financial assistance. beneficiary of the assistance. (c) The specific forms of age discrimi- Secretary means the Secretary of Health and Human Services, or his or nation listed in paragraph (b) of this her designee. section do not necessarily constitute a Subrecipient means any of the entities complete list. in the definition of recipient to which a recipient extends or passes on Federal financial assistance. A subrecipient is

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§ 91.12 Definitions of normal operation relationship to the normal operation of and statutory objective. the program or activity or to the For purposes of §§ 91.13 and 91.14, the achievement of a statutory objective. terms normal operation and statutory objective shall have the following mean- § 91.15 Burden of proof. ing: The burden of proving that an age (a) Normal operation means the oper- distinction or other action falls within ation of a program or activity without the exceptions outlined in §§ 91.13 and significant changes that would impair 91.14 is on the recipient of Federal fi- its ability to meet its objectives. nancial assistance. (b) Statutory objective means any purpose of a program or activity expressly § 91.16 Affirmative action by recipient. stated in any Federal statute, State Even in the absence of a finding of statute, or local statute or ordinance discrimination, a recipient may take adopted by an elected, general purpose affirmative action to overcome the ef- legislative body. fects of conditions that resulted in lim- § 91.13 Exceptions to the rules against ited participation in the recipient’s age discrimination: Normal oper- program or activity on the basis of age. ation or statutory objective of any program or activity. § 91.17 Special benefits for children and the elderly. A recipient is permitted to take an action, otherwise prohibited by § 91.11, If a recipient operating a program or if the action reasonably takes into ac- activity provides special benefits to count age as a factor necessary to the the elderly or to children, such use of normal operation or the achievement age distinctions shall be presumed to of any statutory objective of a program be necessary to the normal operation or activity. An action reasonably takes of the program or activity, notwith- into account age as a factor necessary standing the provisions of § 91.13. to the normal operation or the achieve- [47 FR 57858, Dec. 28, 1982, as amended at 70 ment of any statutory objective of a FR 24322, May 9, 2005] program or activity, if: (a) Age is used as a measure or ap- § 91.18 Age distinctions contained in proximation of one or more other char- HHS regulations. acteristics; and (b) The other characteristic(s) must Any age distinctions contained in a be measured or approximated in order rule or regulation issued by HHS shall for the normal operation of the pro- be presumed to be necessary to the gram or activity to continue, or to achievement of a statutory objective of achieve any statutory objective of the the program or activity to which the program or activity; and rule or regulation applies, notwith- (c) The other characteristic(s) can be standing the provisions of § 91.13. reasonably measured or approximated [47 FR 57858, Dec. 28, 1982, as amended at 70 by the use of age; and FR 24322, May 9, 2005] (d) The other characteristic(s) are impractical to measure directly on an Subpart C—Duties of HHS individual basis. Recipients § 91.14 Exceptions to the rules against age discrimination: Reasonable fac- § 91.31 General responsibilities. tors other than age. Each HHS recipient has primary re- A recipient is permitted to take an sponsibility to ensure that its pro- action otherwise prohibited by § 91.11 grams or activities are in compliance which is based on a factor other than with the Act and these regulations, and age, even though that action may have shall take steps to eliminate violations a disproportionate effect on persons of of the Act. A recipient also has respon- different ages. An action may be based sibility to maintain records, provide on a factor other than age only if the information, and to afford HHS access factor bears a direct and substantial to its records to the extent HHS finds

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necessary to determine whether the re- termines are necessary to ascertain cipient is in compliance with the Act whether the recipient is complying and these regulations. with the Act and these regulations. (c) Permit reasonable access by HHS [47 FR 57858, Dec. 28, 1982, as amended at 70 FR 24322, May 9, 2005] to the books, records, accounts, and other recipient facilities and sources of § 91.32 Notice to subrecipients and information to the extent HHS deter- beneficiaries. mines is necessary to ascertain wheth- (a) Where a recipient passes on Fed- er the recipient is complying with the eral financial assistance from HHS to Act and these regulations. subrecipients, the recipient shall provide the subrecipients written notice of Subpart D—Investigation, Concil- their obligations under the Act and iation, and Enforcement Pro- these regulations. cedures (b) Each recipient shall make necessary information about the Act and § 91.41 Compliance reviews. these regulations available to its bene- (a) HHS may conduct compliance re- ficiaries in order to inform them about views and pre-award reviews or use the protections against discrimination other similar procedures that will per- provided by the Act and these regula- mit it to investigate and correct violations. tions of the Act and these regulations. [47 FR 57858, Dec. 28, 1982, as amended at 70 HHS may conduct these reviews even FR 24322, May 9, 2005] in the absence of a complaint against a recipient. The reviews may be as com- § 91.33 Assurance of compliance and prehensive as necessary to determine recipient assessment of age distinc- whether a violation of the Act and tions. these regulations has occurred. (a) Each recipient of Federal finan- (b) If a compliance review or pre- cial assistance from HHS shall sign a award review indicates a violation of written assurance as specified by HHS the Act or these regulations, HHS will that it will comply with the Act and attempt to achieve voluntary compli- these regulations. ance with the Act. If voluntary compli- (b) Recipient assessment of age distinc- ance cannot be achieved, HHS will ar- tions. (1) As part of a compliance review range for enforcement as described in under § 91.41 or complaint investigation § 91.46. under § 91.44, HHS may require a recipient employing the equivalent of 15 or § 91.42 Complaints. more employees to complete a written (a) Any person, individually or as a self-evaluation, in a manner specified member of a class or on behalf of oth- by the responsible Department official, ers, may file a complaint with HHS, al- of any age distinction imposed in its leging discrimination prohibited by the program or activity receiving Federal Act or these regulations based on an financial assistance from HHS to assess action occurring on or after July 1, the recipient’s compliance with the 1979. A complainant shall file a com- Act. plaint within 180 days from the date (2) Whenever an assessment indicates the complainant first had knowledge of a violation of the Act and the HHS reg- the alleged act of discrimination. How- ulations, the recipient shall take cor- ever, for good cause shown, HHS may rective action. extend this time limit. (b) HHS will consider the date a com- § 91.34 Information requirements. plaint is filed to be the date upon Each recipient shall: which the complaint is sufficent to be (a) Keep records in a form and con- processed. taining information which HHS deter- (c) HHS will attempt to facilitate the mines may be necessary to ascertain filing of complaints wherever possible, whether the recipient is complying including taking the following meas- with the Act and these regulations. ures: (b) Provide to HHS, upon request, in- (1) Accepting as a sufficient com- formation and reports which HHS de- plaint, any written statement which

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identifies the parties involved and the any information obtained in the course date the complainant first had knowl- of the mediation process without prior edge of the alleged violation, describes approval of the head of the mediation generally the action or practice com- agency. plained of, and is signed by the com- (e) The mediation will proceed for a plainant. maximum of 60 days after a complaint (2) Freely permitting a complainant is filed with HHS. Mediation ends if: to add information to the complaint to (1) 60 days elapse from the time the meet the requirements of a sufficient complaint is filed; or complaint. (2) Prior to the end of that 60-day pe- (3) Notifying the complainant and riod, an agreement is reached; or the recipient of their rights and obliga- (3) Prior to the end of that 60-day pe- tions under the complaint procedure, riod, the mediator determines that an including the right to have a represent- agreement cannot be reached. ative at all stages of the complaint This 60-day period may be extended by procedure. the mediator, with the concurrence of (4) Notifying the complainant and HHS, for not more than 30 days if the the recipient (or their representatives) mediator determines that agreement of their right to contact HHS for infor- will likely be reached during such ex- mation and assistance regarding the tended period. complaint resolution process. (d) HHS will return to the complain- (f) The mediator shall return unre- ant any complaint outside the jurisdic- solved complaints to HHS. tion of these regulations, and will state § 91.44 Investigation. the reason(s) why it is outside the jurisdiction of these regulations. (a) Informal investigation. (1) HHS will investigate complaints that are unre- § 91.43 Mediation. solved after mediation or are reopened (a) HHS will promptly refer to a me- because of a violation of a mediation diation agency designated by the Sec- agreement. retary all sufficient complaints that: (2) As part of the initial investigation (1) Fall within the jurisdiction of the HHS will use informal fact finding Act and these regulations, unless the methods, including joint or separate age distinction complained of is clearly discussions with the complainant and within an exception; and, recipient, to establish the fact and, if (2) Contain all information necessary possible, settle the complaint on terms for further processing. that are mutually agreeable to the par- (b) Both the complainant and the re- ties. HHS may seek the assistance of cipient shall participate in the medi- any involved State agency. ation process to the extent necessary (3) HHS will put any agreement in to reach an agreement or make an in- writing and have it signed by the par- formed judgment that an agreement is ties and an authorized official at HHS. not possible. (4) The settlement shall not affect (c) If the complainant and the recipi- the operation of any other enforcement ent reach an agreement, the mediator effort of HHS, including compliance re- shall prepare a written statement of views and investigation of other com- the agreement and have the complain- plaints which may involve the recipi- ant and the recipient sign it. The medi- ent. ator shall send a copy of the agreement (5) The settlement is not a finding of to HHS. HHS will take no further ac- discrimination against a recipient. tion on the complaint unless the com- (b) Formal investigation. If HHS can- plainant or the recipient fails to com- not resolve the complaint through in- ply with the agreement. formal investigation, it will begin to (d) The mediator shall protect the develop formal findings through fur- confidentiality of all information ob- ther investigation of the complaint. If tained in the course of the mediation the investigation indicates a violation process. No mediator shall testify in of these regulations HHS will attempt any adjudicative proceeding, produce to obtain voluntary compliance. If HHS any document, or otherwise disclose cannot obtain voluntary compliance it

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will begin enforcement as described in determined that voluntary compliance § 91.46. cannot be obtained. [47 FR 57858, Dec. 28, 1982, as amended at 70 (2) Thirty days have elapsed after the FR 24322, May 9, 2005] Secretary has sent a written report of the circumstances and grounds of the § 91.45 Prohibition against intimida- action to the committees of the Con- tion or retaliation. gress having legislative jurisdiction A recipient may not engage in acts of over the program or activity involved. intimidation or retaliation against any The Secretary will file a report when- person who: ever any action is taken under para- (a) Attempts to assert a right pro- graph (a). tected by the Act or these regulations; (d) HHS also may defer granting new or Federal financial assistance from HHS (b) Cooperates in any mediation, in- to a recipient when a hearing under vestigation, hearing, or other part of § 91.46(a)(1) is initiated. HHS’ investigation, conciliation, and (1) New Federal financial assistance enforcement process. from HHS includes all assistance for which HHS requires an application or § 91.46 Compliance procedure. approval, including renewal or continu- (a) HHS may enforce the Act and ation of existing activities, or author- these regulations through: ization of new activities, during the de- (1) Termination of a recipient’s Fed- ferral period. New Federal financial as- eral financial assistance from HHS sistance from HHS does not include in- under the program or activity involved creases in funding as a result of where the recipient has violated the changed computation of formula Act or these regulations. The deter- awards or assistance approved prior to mination of the recipient’s violation the beginning of a hearing under may be made only after a recipient has § 91.46(a)(1). had an opportunity for a hearing on the record before an administrative law (2) HHS will not begin a deferral judge. until the recipient has received a no- (2) Any other means authorized by tice of an opportunity for a hearing law including but not limited to: under § 91.46(a)(1). HHS will not con- (i) Referral to the Department of Jus- tinue a deferral for more than 60 days tice for proceedings to enforce any unless a hearing has begun within that rights of the United States or obliga- time or the time for beginning the tions of the recipient created by the hearing has been extended by mutual Act or these regulations. consent of the recipient and the Sec- (ii) Use of any requirement of or re- retary. HHS will not continue a defer- ferral to any Federal, State, or local ral for more than 30 days after the government agency that will have the close of the hearing, unless the hearing effect of correcting a violation of the results in a finding against the recipi- Act or these regulations. ent. (b) HHS will limit any termination (3) HHS will limit any deferral to the under § 91.46(a)(1) to the particular re- particular recipient and particular pro- cipient and particular program or ac- gram or activity or part of such pro- tivity or part of such program or activ- gram or activity HHS finds in violation ity HHS finds in violation of these reg- of these regulations. HHS will not base ulations. HHS will not base any part of any part of a deferral on a finding with a termination on a finding with respect respect to any program or activity of to any program or activity of the re- the recipient which does not, and cipient which does not receive Federal would not in connection with the new financial assistance from HHS. funds, receive Federal financial assist- (c) HHS will take no action under paragraph (a) until: ance from HHS. (1) The Secretary has advised the re- [47 FR 57858, Dec. 28, 1982, as amended at 70 cipient of its failure to comply with FR 24322, May 9, 2005] the Act and these regulations and has

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§ 91.47 Hearings, decisions, post-termi- (3) Inform the complainant: nation proceedings. (i) That the complainant may bring a Certain HHS procedural provisions civil action only in a United States dis- applicable to Title VI of the Civil trict court for the district in which the Rights Act of 1964 apply to HHS en- recipient is found or transacts busi- forcement of these regulations. They ness; are found at 45 CFR 80.9 through 80.11 (ii) That a complainant prevailing in and 45 CFR Part 81. a civil action has the right to be awarded the costs of the action, includ- § 91.48 Remedial action by recipient. ing reasonable attorney’s fees, but that the complainant must demand these Where HHS finds a recipient has dis- costs in the complaint; criminated on the basis of age, the re- (iii) That before commencing the ac- cipient shall take any remedial action tion the complainant shall give 30 days that HHS may require to overcome the notice by registered mail to the Sec- effects of the discrimination. If an- retary, the Attorney General of the other recipient exercises control over United States, and the recipient; the recipient that has discriminated, (iv) That the notice must state: the HHS may require both recipients to alleged violation of the Act; the relief take remedial action. requested; the court in which the com- § 91.49 Alternate funds disbursal pro- plainant is bringing the action; and, cedure. whether or not attorney’s fees are de- (a) When HHS withholds funds from a manded in the event the complainant recipient under these regulations, the prevails; and Secretary may disburse the withheld (v) That the complainant may not funds directly to an alternate recipi- bring an action if the same alleged vio- ent: any public or non-profit private lation of the Act by the same recipient organization or agency, or State or po- is the subject of a pending action in litical subdivision of the State. any court of the United States. (b) The Secretary will require any alternate recipient to demonstrate: PART 92—UNIFORM ADMINISTRA- (1) The ability to comply with these TIVE REQUIREMENTS FOR GRANTS regulations; and AND COOPERATIVE AGREE- (2) The ability to achieve the goals of MENTS TO STATE, LOCAL, AND the Federal statute authorizing the TRIBAL GOVERNMENTS Federal financial assistance. [47 FR 57858, Dec. 28, 1982, as amended at 70 Subpart A—General FR 24322, May 9, 2005] Sec. § 91.50 Exhaustion of administrative 92.1 Purpose and scope of this part. remedies. 92.2 Scope of subpart. 92.3 Definitions. (a) A complainant may file a civil ac- 92.4 Applicability. tion following the exhaustion of admin- 92.5 Effect on other issuances. istrative remedies under the Act. Ad- 92.6 Additions and exceptions. ministrative remedies are exhausted if: (1) 180 days have elapsed since the Subpart B—Pre-Award Requirements complainant filed the complaint and 92.10 Forms for applying for grants. HHS has made no finding with regard 92.11 State plans. to the complaint; or 92.12 Special grant or subgrant conditions (2) HHS issues any finding in favor of for ‘‘high-risk’’ grantees. the recipient. 92.13 Participation by faith-based organiza- (b) If HHS fails to make a finding tions. within 180 days or issues a finding in 92.14 Compliance with Part 87. favor of the recipient, HHS shall: Subpart C—Post-Award Requirements (1) Promptly advise the complainant of this fact; and FINANCIAL ADMINISTRATION (2) Advise the complainant of his or 92.20 Standards for financial management her right to bring a civil action for in- systems. junctive relief; and 92.21 Payment.

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92.22 Allowable costs. performed by employees, contractors, 92.23 Period of availability of funds. subgrantees, subcontractors, and other 92.24 Matching or cost sharing. payees; and (3) other amounts becom- 92.25 Program income. 92.26 Non-Federal audit. ing owed under programs for which no current services or performance is re- CHANGES, PROPERTY, AND SUBAWARDS quired, such as annuities, insurance 92.30 Changes. claims, and other benefit payments. 92.31 Real property. Accrued income means the sum of: (1) 92.32 Equipment. Earnings during a given period from 92.33 Supplies. services performed by the grantee and 92.34 Copyrights. goods and other tangible property de- 92.35 Subawards to debarred and suspended livered to purchasers, and (2) amounts parties. 92.36 Procurement. becoming owed to the grantee for 92.37 Subgrants. which no current services or performance is required by the grantee. REPORTS, RECORDS RETENTION, AND Acquisition cost of an item of pur- ENFORCEMENT chased equipment means the net in- 92.40 Monitoring and reporting program voice unit price of the property includ- performance. ing the cost of modifications, attach- 92.41 Financial reporting. ments, accessories, or auxiliary appa- 92.42 Retention and access requirements for records. ratus necessary to make the property 92.43 Enforcement. usable for the purpose for which it was 92.44 Termination for convenience. acquired. Other charges such as the cost of installation, transportation, Subpart D—After-the-Grant Requirements taxes, duty or protective in-transit in- 92.50 Closeout. surance, shall be included or excluded 92.51 Later disallowances and adjustments. from the unit acquisition cost in ac- 92.52 Collection of amounts due. cordance with the grantee’s regular accounting practices. AUTHORITY: 5 U.S.C. 301. Administrative requirements mean SOURCE: 53 FR 8079, 8087, Mar. 11, 1988, un- those matters common to grants in less otherwise noted. general, such as financial management, EDITORIAL NOTE: For additional informa- kinds and frequency of reports, and re- tion, see related documents published at 49 tention of records. These are distin- FR 24958, June 18, 1984, 52 FR 20178, May 29, guished from programmatic require- 1987, and 53 FR 8028, March 11, 1988. ments, which concern matters that can be treated only on a program-by-pro- Subpart A—General gram or grant-by-grant basis, such as kinds of activities that can be sup- § 92.1 Purpose and scope of this part. ported by grants under a particular This part establishes uniform admin- program. istrative rules for Federal grants and Awarding agency means (1) with re- cooperative agreements and subawards spect to a grant, the Federal agency, to State, local and Indian tribal gov- and (2) with respect to a subgrant, the ernments. party that awarded the subgrant. Cash contributions means the grant- § 92.2 Scope of subpart. ee’s cash outlay, including the outlay This subpart contains general rules of money contributed to the grantee or pertaining to this part and procedures subgrantee by other public agencies for control of exceptions from this and institutions, and private organiza- part. tions and individuals. When authorized by Federal legislation, Federal funds § 92.3 Definitions. received from other assistance agree- As used in this part: ments may be considered as grantee or Accrued expenditures mean the subgrantee cash contributions. charges incurred by the grantee during Contract means (except as used in the a given period requiring the provision definitions for grant and subgrant in of funds for: (1) Goods and other tan- this section and except where qualified gible property received; (2) services by Federal) a procurement contract

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under a grant or subgrant, and means a Grantee means the government to procurement subcontract under a con- which a grant is awarded and which is tract. accountable for the use of the funds Cost sharing or matching means the provided. The grantee is the entire value of the third party in-kind con- legal entity even if only a particular tributions and the portion of the costs component of the entity is designated of a federally assisted project or pro- in the grant award document. gram not borne by the Federal Govern- Local government means a county, ment. municipality, city, town, township, Cost-type contract means a contract or local public authority (including any subcontract under a grant in which the public and Indian housing agency contractor or subcontractor is paid on under the United States Housing Act of the basis of the costs it incurs, with or 1937) school district, special district, without a fee. intrastate district, council of govern- Equipment means tangible, non- ments (whether or not incorporated as expendable, personal property having a a nonprofit corporation under state useful life of more than one year and law), any other regional or interstate an acquisition cost of $5,000 or more government entity, or any agency or per unit. A grantee may use its own instrumentality of a local government. definition of equipment provided that Obligations means the amounts of or- such definition would at least include ders placed, contracts and subgrants all equipment defined above. awarded, goods and services received, Expenditure report means: (1) For non- and similar transactions during a given construction grants, the SF–269 ‘‘Fi- period that will require payment by nancial Status Report’’ (or other equiv- the grantee during the same or a future alent report); (2) for construction period. grants, the SF–271 ‘‘Outlay Report and OMB means the United States Office Request for Reimbursement’’ (or other of Management and Budget. equivalent report). Federally recognized Indian tribal gov- Outlays (expenditures) mean charges ernment means the governing body or a made to the project or program. They governmental agency of any Indian may be reported on a cash or accrual tribe, band, nation, or other organized basis. For reports prepared on a cash group or community (including any basis, outlays are the sum of actual Native village as defined in section 3 of cash disbursement for direct charges the Alaska Native Claims Settlement for goods and services, the amount of Act, 85 Stat 688) certified by the Sec- indirect expense incurred, the value of retary of the Interior as eligible for the in-kind contributions applied, and the special programs and services provided amount of cash advances and payments by him through the Bureau of Indian made to contractors and subgrantees. Affairs. For reports prepared on an accrued ex- Government means a State or local penditure basis, outlays are the sum of government or a federally recognized actual cash disbursements, the amount Indian tribal government. of indirect expense incurred, the value Grant means an award of financial as- of inkind contributions applied, and sistance, including cooperative agree- the new increase (or decrease) in the ments, in the form of money, or prop- amounts owed by the grantee for goods erty in lieu of money, by the Federal and other property received, for serv- Government to an eligible grantee. The ices performed by employees, contrac- term does not include technical assist- tors, subgrantees, subcontractors, and ance which provides services instead of other payees, and other amounts be- money, or other assistance in the form coming owed under programs for which of revenue sharing, loans, loan guaran- no current services or performance are tees, interest subsidies, insurance, or required, such as annuities, insurance direct appropriations. Also, the term claims, and other benefit payments. does not include assistance, such as a Percentage of completion method refers fellowship or other lump sum award, to a system under which payments are which the grantee is not required to ac- made for construction work according count for. to the percentage of completion of the

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work, rather than to the grantee’s cost pating in grant transactions for a pe- incurred. riod, pending completion of an inves- Prior approval means documentation tigation and such legal or debarment evidencing consent prior to incurring proceedings as may ensue. specific cost. Termination means permanent with- Real property means land, including drawal of the authority to obligate pre- land improvements, structures and ap- viously-awarded grant funds before purtenances thereto, excluding mov- that authority would otherwise expire. able machinery and equipment. It also means the voluntary relinquish- Share, when referring to the awarding ment of that authority by the grantee agency’s portion of real property, or subgrantee. ‘‘Termination’’ does not equipment or supplies, means the same include: (1) Withdrawal of funds award- percentage as the awarding agency’s ed on the basis of the grantee’s under- portion of the acquiring party’s total estimate of the unobligated balance in costs under the grant to which the ac- a prior period; (2) Withdrawal of the quisition costs under the grant to unobligated balance as of the expira- which the acquisition cost of the prop- tion of a grant; (3) Refusal to extend a erty was charged. Only costs are to be grant r award additional funds, to counted—not the value of third-party make a competing or noncompeting in-kind contributions. continuation, renewal, extension, or State means any of the several States supplemental award; or (4) voiding of a of the United States, the District of grant upon determination that the Columbia, the Commonwealth of Puer- award was obtained fraudulently, or to Rico, any territory or possession of was otherwise illegal or invalid from the United States, or any agency or in- inception. strumentality of a State exclusive of Terms of a grant or subgrant mean all local governments. The term does not requirements of the grant or subgrant, include any public and Indian housing whether in statute, regulations, or the agency under United States Housing award document. Act of 1937. Third party in-kind contributions mean Subgrant means an award of financial property or services which benefit a assistance in the form of money, or federally assisted project or program property in lieu of money, made under and which are contributed by non-Fed- a grant by a grantee to an eligible sub- eral third parties without charge to the grantee. The term includes financial grantee, or a cost-type contractor assistance when provided by contrac- under the grant agreement. tual legal agreement, but does not include procurement purchases, nor does Unliquidated obligations for reports it include any form of assistance which prepared on a cash basis mean the is excluded from the definition of grant amount of obligations incurred by the in this part. grantee that has not been paid. For re- Subgrantee means the government or ports prepared on an accrued expendi- other legal entity to which a subgrant ture basis, they represent the amount is awarded and which is accountable to of obligations incurred by the grantee the grantee for the use of the funds for which an outlay has not been re- provided. corded. Supplies means all tangible personal Unobligated balance means the por- property other than equipment as de- tion of the funds authorized by the fined in this part. Federal agency that has not been obli- Suspension means depending on the gated by the grantee and is determined context, either (1) temporary with- by deducting the cumulative obliga- drawal of the authority to obligate tions from the cumulative funds au- grant funds pending corrective action thorized. by the grantee or subgrantee or a decision to terminate the grant, or (2) an § 92.4 Applicability. action taken by a suspending official in (a) General. Subparts A through D of accordance with agency regulations this part apply to all grants and sub- implementing E.O. 12549 to imme- grants to governments, except where diately exclude a person from partici- inconsistent with Federal statutes or

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with regulations authorized in accord- regulations published in the FEDERAL ance with the exception provision of REGISTER. § 92.6, or: (b) Exceptions for classes of grants or (1) Grants and subgrants to State and grantees may be authorized only by local institutions of higher education OMB. or State and local hospitals. (c) Exceptions on a case-by-case basis (2) The block grants authorized by and for subgrantees may be authorized the Omnibus Budget Reconciliation by the affected Federal agencies. Act of 1981 (Community Services; Pre- ventive Health and Health Services; Al- Subpart B—Pre-Award cohol, Drug Abuse, and Mental Health Requirements Services; Maternal and Child Health Services; Social Services; Low-Income § 92.10 Forms for applying for grants. Home Energy Assistance; States’ Pro- (a) Scope. (1) This section prescribes gram of Community Development forms and instructions to be used by Block Grants for Small Cities; and Ele- governmental organizations (except mentary and Secondary Education hospitals and institutions of higher other than programs administered by education operated by a government) the Secretary of Education under Title in applying for grants. This section is V, Subtitle D, Chapter 2, Section 583— not applicable, however, to formula the Secretary’s discretionary grant grant programs which do not require program) and Titles I-III of the Job applicants to apply for funds on a Training Partnership Act of 1982 and project basis. under the Public Health Services Act (2) This section applies only to appli- (Section 1921), Alcohol and Drug Abuse cations to Federal agencies for grants, Treatment and Rehabilitation Block and is not required to be applied by Grant and Part C of Title V, Mental grantees in dealing with applicants for Health Service for the Homeless Block subgrants. However, grantees are en- Grant). couraged to avoid more detailed or bur- (3) Grants to local education agencies densome application requirements for under 20 U.S.C. 236 through 241–1(a), subgrants. and 242 through 244 (portions of the Im- (b) Authorized forms and instructions pact Aid program), except for 20 U.S.C. for governmental organizations. (1) In ap- 238(d)(2)(c) and 240(f) (Entitlement In- plying for grants, applicants shall only crease for Handicapped Children); and use standard application forms or those (4) Payments under the Veterans Ad- prescribed by the granting agency with ministration’s State Home Per Diem the approval of OMB under the Paper- Program (38 U.S.C. 641(a)). work Reduction Act of 1980. (b) [Reserved] (2) Applicants are not required to [53 FR 8079, 8087, Mar. 11, 1988, as amended at submit more than the original and two 65 FR 33632, May 24, 2000; 68 FR 52844, Sept. copies of preapplications or applica- 8, 2003] tions. (3) Applicants must follow all appli- § 92.5 Effect on other issuances. cable instructions that bear OMB All other grants administration pro- clearance numbers. Federal agencies visions of codified program regula- may specify and describe the programs, tions, program manuals, handbooks functions, or activities that will be and other nonregulatory materials used to plan, budget, and evaluate the which are inconsistent with this part work under a grant. Other supple- are superseded, except to the extent mentary instructions may be issued they are required by statute, or au- only with the approval of OMB to the thorized in accordance with the excep- extent required under the Paperwork tion provision in § 92.6. Reduction Act of 1980. For any standard form, except the SF–424 facesheet, § 92.6 Additions and exceptions. Federal agencies may shade out or in- (a) For classes of grants and grantees struct the applicant to disregard any subject to this part, Federal agencies line item that is not needed. may not impose additional administra- (4) When a grantee applies for additive requirements except in codified tional funding (such as a continuation

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or supplemental award) or amends a (1) Has a history of unsatisfactory previously submitted application, only performance, or the affected pages need be submitted. (2) Is not financially stable, or Previously submitted pages with infor- (3) Has a management system which mation that is still current need not be does not meet the management stand- resubmitted. ards set forth in this part, or (4) Has not conformed to terms and § 92.11 State plans. conditions of previous awards, or (a) Scope. The statutes for some pro- (5) Is otherwise not responsible; and grams require States to submit plans if the awarding agency determines that an award will be made, special condi- before receiving grants. Under regulations and/or restrictions shall cor- tions implementing Executive Order respond to the high risk condition and 12372, ‘‘Intergovernmental Review of shall be included in the award. Federal Programs,’’ States are allowed (b) Special conditions or restrictions to simplify, consolidate and substitute may include: plans. This section contains additional (1) Payment on a reimbursement provisions for plans that are subject to basis; regulations implementing the Execu- (2) Withholding authority to proceed tive order. to the next phase until receipt of evi- (b) Requirements. A State need meet dence of acceptable performance within only Federal administrative or pro- a given funding period; grammatic requirements for a plan (3) Requiring additional, more de- that are in statutes or codified regula- tailed financial reports; tions. (4) Additional project monitoring; (c) Assurances. In each plan the State (5) Requiring the grantee or sub- will include an assurance that the grantee to obtain technical or manage- State shall comply with all applicable ment assistance; or Federal statutes and regulations in ef- (6) Establishing additional prior ap- fect with respect to the periods for provals. which it receives grant funding. For (c) If an awarding agency decides to this assurance and other assurances re- impose such conditions, the awarding quired in the plan, the State may: official will notify the grantee or sub- (1) Cite by number the statutory or grantee as early as possible, in writing, regulatory provisions requiring the as- of: surances and affirm that it gives the (1) The nature of the special condi- assurances required by those provi- tions/restrictions; sions, (2) The reason(s) for imposing them; (2) Repeat the assurance language in (3) The corrective actions which must the statutes or regulations, or be taken before they will be removed (3) Develop its own language to the and the time allowed for completing extent permitted by law. the corrective actions and (d) Amendments. A State will amend a (4) The method of requesting recon- plan whenever necessary to reflect: (1) sideration of the conditions/restric- New or revised Federal statutes or reg- tions imposed. ulations or (2) a material change in any § 92.13 Participation by faith-based or- State law, organization, policy, or ganizations. State agency operation. The State will obtain approval for the amendment and The funds provided under this part its effective date but need submit for shall be administered in compliance approval only the amended portions of with the standards set forth in part 87 the plan. (Equal Treatment for Faith-based Or- ganizations) of this chapter. § 92.12 Special grant or subgrant con- [69 FR 42592, July 16, 2004] ditions for ‘‘high-risk’’ grantees. (a) A grantee or subgrantee may be § 92.14 Compliance with Part 87. considered ‘‘high risk’’ if an awarding The funds provided under this part agency determines that a grantee or shall be administered in compliance subgrantee: with the standards set forth in part 87

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(Equal Treatment for Faith-based Or- ductivity data, including the develop- ganizations) of this chapter. ment of unit cost information whenever appropriate or specifically re- [69 FR 42592, July 16, 2004] quired in the grant or subgrant agreement. If unit cost data are required, es- Subpart C—Post-Award timates based on available documenta- Requirements tion will be accepted whenever possible. FINANCIAL ADMINISTRATION (5) Allowable cost. Applicable OMB § 92.20 Standards for financial man- cost principles, agency program regula- agement systems. tions, and the terms of grant and (a) A State must expand and account subgrant agreements will be followed for grant funds in accordance with in determining the reasonableness, al- State laws and procedures for expend- lowability, and allocability of costs. ing and accounting for its own funds. (6) Source documentation. Accounting Fiscal control and accounting proce- records must be supported by such dures of the State, as well as its sub- source documentation as cancelled grantees and cost-type contractors, checks, paid bills, payrolls, time and must be sufficient to— attendance records, contract and (1) Permit preparation of reports re- subgrant award documents, etc. quired by this part and the statutes au- (7) Cash management. Procedures for thorizing the grant, and minimizing the time elapsing between (2) Permit the tracing of funds to a the transfer of funds from the U.S. level of expenditures adequate to es- Treasury and disbursement by grantees tablish that such funds have not been and subgrantees must be followed used in violation of the restrictions whenever advance payment procedures and prohibitions of applicable statutes. are used. Grantees must establish rea- (b) The financial management sys- sonable procedures to ensure the re- tems of other grantees and subgrantees ceipt of reports on subgrantees’ cash must meet the following standards: balances and cash disbursements in (1) Financial reporting. Accurate, cur- sufficient time to enable them to pre- rent, and complete disclosure of the fi- pare complete and accurate cash trans- nancial results of financially assisted actions reports to the awarding agen- activities must be made in accordance cy. When advances are made by letter- with the financial reporting require- of-credit or electronic transfer of funds ments of the grant or subgrant. methods, the grantee must make (2) Accounting records. Grantees and drawdowns as close as possible to the subgrantees must maintain records time of making disbursements. Grant- which adequately identify the source ees must monitor cash drawdowns by and application of funds provided for fi- their subgrantees to assure that they nancially-assisted activities. These conform substantially to the same records must contain information per- standards of timing and amount as taining to grant or subgrant awards apply to advances to the grantees. and authorizations, obligations, unobli- (c) An awarding agency may review gated balances, assets, liabilities, out- the adequacy of the financial manage- lays or expenditures, and income. ment system of any applicant for fi- (3) Internal control. Effective control nancial assistance as part of a and accountability must be maintained preaward review or at any time subse- for all grant and subgrant cash, real quent to award. and personal property, and other assets. Grantees and subgrantees must § 92.21 Payment. adequately safeguard all such property (a) Scope. This section prescribes the and must assure that it is used solely basic standard and the methods under for authorized purposes. which a Federal agency will make pay- (4) Budget control. Actual expendi- ments to grantees, and grantees will tures or outlays must be compared make payments to subgrantees and with budgeted amounts for each grant contractors. or subgrant. Financial information (b) Basic standard. Methods and pro- must be related to performance or procedures for payment shall minimize

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the time elapsing between the transfer questing additional cash payments for of funds and disbursement by the the same activity. grantee or subgrantee, in accordance (2) Except as provided in paragraph with Treasury regulations at 31 CFR (f)(1) of this section, grantees and sub- Part 205. grantees shall disburse program in- (c) Advances. Grantees and sub- come, rebates, refunds, contract settle- grantees shall be paid in advance, pro- ments, audit recoveries and interest vided they maintain or demonstrate earned on such funds before requesting the willingness and ability to maintain additional cash payments. procedures to minimize the time elaps- (g) Withholding payments. (1) Unless ing between the transfer of the funds otherwise required by Federal statute, and their disbursement by the grantee awarding agencies shall not withhold or subgrantee. payments for proper charges incurred (d) Reimbursement. Reimbursement by grantees or subgrantees unless— shall be the preferred method when the (i) The grantee or subgrantee has requirements in paragraph (c) of this failed to comply with grant award con- section are not met. Grantees and sub- ditions or grantees may also be paid by reim- (ii) The grantee or subgrantee is in- bursement for any construction grant. debted to the United States. Except as otherwise specified in regula- (2) Cash withheld for failure to com- tion, Federal agencies shall not use the ply with grant award condition, but percentage of completion method to without suspension of the grant, shall pay construction grants. The grantee be released to the grantee upon subse- or subgrantee may use that method to quent compliance. When a grant is sus- pay its construction contractor, and if pended, payment adjustments will be it does, the awarding agency’s pay- made in accordance with § 92.43(c). ments to the grantee or subgrantee (3) A Federal agency shall not make will be based on the grantee’s or sub- payment to grantees for amounts that grantee’s actual rate of disbursement. are withheld by grantees or sub- (e) Working capital advances. If a grantees from payment to contractors grantee cannot meet the criteria for to assure satisfactory completion of advance payments described in para- work. Payments shall be made by the graph (c) of this section, and the Fed- Federal agency when the grantees or eral agency has determined that reim- subgrantees actually disburse the with- bursement is not feasible because the held funds to the contractors or to es- grantee lacks sufficient working cap- crow accounts established to assure ital, the awarding agency may provide satisfactory completion of work. cash or a working capital advance (h) Cash depositories. (1) Consistent basis. Under this procedure the award- with the national goal of expanding the ing agency shall advance cash to the opportunities for minority business en- grantee to cover its estimated dis- terprises, grantees and subgrantees are bursement needs for an initial period encouraged to use minority banks (a generally geared to the grantee’s dis- bank which is owned at least 50 percent bursing cycle. Thereafter, the awarding by minority group members). A list of agency shall reimburse the grantee for minority owned banks can be obtained its actual cash disbursements. The from the Minority Business Develop- working capital advance method of ment Agency, Department of Com- payment shall not be used by grantees merce, Washington, DC 20230. or subgrantees if the reason for using (2) A grantee or subgrantee shall such method is the unwillingness or in- maintain a separate bank account only ability of the grantee to provide timely when required by Federal-State agree- advances to the subgrantee to meet the ment. subgrantee’s actual cash disburse- (i) Interest earned on advances. Except ments. for interest earned on advances of (f) Effect of program income, refunds, funds exempt under the Intergovern- and audit recoveries on payment. (1) mental Cooperation Act (31 U.S.C. 6501 Grantees and subgrantees shall dis- et seq.) and the Indian Self-Determina- burse repayments to and interest tion Act (23 U.S.C. 450), grantees and earned on a revolving fund before re- subgrantees shall promptly, but at

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least quarterly, remit interest earned riod (or as specified in a program regu- on advances to the Federal agency. The lation) to coincide with the submission grantee or subgrantee may keep inter- of the annual Financial Status Report est amounts up to $100 per year for ad- (SF–269). The Federal agency may ex- ministrative expenses. tend this deadline at the request of the grantee. § 92.22 Allowable costs. (a) Limitation on use of funds. Grant § 92.24 Matching or cost sharing. funds may be used only for: (a) Basic rule: Costs and contributions (1) The allowable costs of the grant- acceptable. With the qualifications and ees, subgrantees and cost-type contrac- exceptions listed in paragraph (b) of tors, including allowable costs in the this section, a matching or cost shar- form of payments to fixed-price con- ing requirement may be satisfied by ei- tractors; and ther or both of the following: (2) Reasonable fees or profit to cost- (1) Allowable costs incurred by the type contractors but not any fee or grantee, subgrantee or a cost-type con- profit (or other increment above allow- tractor under the assistance agreeable costs) to the grantee or sub- ment. This includes allowable costs grantee. borne by non-Federal grants or by oth- (b) Applicable cost principles. For each ers cash donations from non-Federal kind of organization, there is a set of third parties. Federal principles for determining allowable costs. Allowable costs will be (2) The value of third party in-kind determined in accordance with the cost contributions applicable to the period principles applicable to the organiza- to which the cost sharing or matching tion incurring the costs. The following requirements applies. chart lists the kinds of organizations (b) Qualifications and exceptions—(1) and the applicable cost principles. Costs borne by other Federal grant agreements. Except as provided by Federal For the costs of a— Use the principles in— statute, a cost sharing or matching re- State, local or Indian tribal OMB Circular A–87. quirement may not be met by costs government. borne by another Federal grant. This Private nonprofit organization OMB Circular A–122. prohibition does not apply to income other than an (1) institution earned by a grantee or subgrantee from of higher education, (2) hospital, or (3) organization a contract awarded under another Fed- named in OMB Circular A– eral grant. 122 as not subject to that (2) General revenue sharing. For the circular. Educational institutions...... OMB Circular A–21. purpose of this section, general revenue For-profit organization other 48 CFR Part 31. Contract sharing funds distributed under 31 than a hospital and an or- Cost Principles and Proce- U.S.C. 6702 are not considered Federal ganization named in OBM dures, or uniform cost ac- Circular A–122 as not sub- counting standards that grant funds. ject to that circular. comply with cost principles (3) Cost or contributions counted to- acceptable to the Federal wards other Federal costs-sharing require- agency. ments. Neither costs nor the values of third party in-kind contributions may § 92.23 Period of availability of funds. count towards satisfying a cost sharing (a) General. Where a funding period is or matching requirement of a grant specified, a grantee may charge to the agreement if they have been or will be award only costs resulting from obliga- counted towards satisfying a cost shar- tions of the funding period unless caring or matching requirement of an- ryover of unobligated balances is per- other Federal grant agreement, a Fed- mitted, in which case the carryover eral procurement contract, or any balances may be charged for costs re- other award of Federal funds. sulting from obligations of the subse- (4) Costs financed by program income. quent funding period. Costs financed by program income, as (b) Liquidation of obligations. A grant- defined in § 92.25, shall not count to- ee must liquidate all obligations in- wards satisfying a cost sharing or curred under the award not later than matching requirement unless they are 90 days after the end of the funding pe- expressly permitted in the terms of the

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assistance agreement. (This use of gen- (B) A cost savings to the grantee or eral program income is described in subgrantee. § 92.25(g).) (iv) The values placed on third party (5) Services or property financed by in- in-kind contributions for cost sharing come earned by contractors. Contractors or matching purposes will conform to under a grant may earn income from the rules in the succeeding sections of the activities carried out under the this part. If a third party in-kind con- contract in addition to the amounts tribution is a type not treated in those earned from the party awarding the sections, the value placed upon it shall contract. No costs of services or prop- be fair and reasonable. erty supported by this income may (c) Valuation of donated services—(1) count toward satisfying a cost sharing Volunteer services. Unpaid services pro- or matching requirement unless other vided to a grantee or subgrantee by in- provisions of the grant agreement ex- dividuals will be valued at rates con- pressly permit this kind of income to sistent with those ordinarily paid for be used to meet the requirement. similar work in the grantee’s or sub- (6) Records. Costs and third party in- grantee’s organization. If the grantee kind contributions counting towards or subgrantee does not have employees satisfying a cost sharing or matching performing similar work, the rates will requirement must be verifiable from be consistent with those ordinarily the records of grantees and subgrantee paid by other employers for similar or cost-type contractors. These records work in the same labor market. In ei- must show how the value placed on ther case, a reasonable amount for third party in-kind contributions was fringe benefits may be included in the derived. To the extent feasible, volun- valuation. teer services will be supported by the (2) Employees of other organizations. same methods that the organization When an employer other than a grant- uses to support the allocability of reg- ee, subgrantee, or cost-type contractor ular personnel costs. furnishes free of charge the services of (7) Special standards for third party in- an employee in the employee’s normal kind contributions. (i) Third party in- line of work, the services will be valued kind contributions count towards sat- at the employee’s regular rate of pay isfying a cost sharing or matching re- exclusive of the employee’s fringe ben- quirement only where, if the party re- efits and overhead costs. If the services ceiving the contributions were to pay are in a different line of work, para- for them, the payments would be allow- graph (c)(1) of this section applies. able costs. (d) Valuation of third party donated (ii) Some third party in-kind con- supplies and loaned equipment or space. tributions are goods and services that, (1) If a third party donates supplies, if the grantee, subgrantee, or con- the contribution will be valued at the tractor receiving the contribution had market value of the supplies at the to pay for them, the payments would time of donation. have been an indirect costs. Costs shar- (2) If a third party donates the use of ing or matching credit for such con- equipment or space in a building but tributions shall be given only if the retains title, the contribution will be grantee, subgrantee, or contractor has valued at the fair rental rate of the established, along with its regular indi- equipment or space. rect cost rate, a special rate for allo- (e) Valuation of third party donated cating to individual projects or pro- equipment, buildings, and land. If a third grams the value of the contributions. party donates equipment, buildings, or (iii) A third party in-kind contribu- land, and title passes to a grantee or tion to a fixed-price contract may subgrantee, the treatment of the do- count towards satisfying a cost sharing nated property will depend upon the or matching requirement only if it re- purpose of the grant or subgrant, as sults in: follows: (A) An increase in the services or (1) Awards for capital expenditures. If property provided under the contract the purpose of the grant or subgrant is (without additional cost to the grantee to assist the grantee or subgrantee in or subgrantee) or the acquisition of property, the market

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value of that property at the time of (g) Appraisal of real property. In some donation may be counted as cost shar- cases under paragraphs (d), (e) and (f) ing or matching, of this section, it will be necessary to (2) Other awards. If assisting in the establish the market value of land or a acquisition of property is not the pur- building or the fair rental rate of land pose of the grant or subgrant, para- or of space in a building. In these cases, graphs (e)(2) (i) and (ii) of this section the Federal agency may require the apply: market value or fair rental value be set (i) If approval is obtained from the by an independent appraiser, and that awarding agency, the market value at the value or rate be certified by the the time of donation of the donated grantee. This requirement will also be equipment or buildings and the fair imposed by the grantee on subgrantees. rental rate of the donated land may be § 92.25 Program income. counted as cost sharing or matching. In the case of a subgrant, the terms of (a) General. Grantees are encouraged the grant agreement may require that to earn income to defray program the approval be obtained from the Fed- costs. Program income includes income eral agency as well as the grantee. In from fees for services performed, from all cases, the approval may be given the use or rental of real or personal only if a purchase of the equipment or property acquired with grant funds, rental of the land would be approved as from the sale of commodities or items an allowable direct cost. If any part of fabricated under a grant agreement, the donated property was acquired and from payments of principal and in- with Federal funds, only the non-fed- terest on loans made with grant funds. eral share of the property may be Except as otherwise provided in regula- counted as cost-sharing or matching. tions of the Federal agency, program income does not include interest on (ii) If approval is not obtained under grant funds, rebates, credits, discounts, paragraph (e)(2)(i) of this section, no refunds, etc. and interest earned on amount may be counted for donated any of them. land, and only depreciation or use al- (b) Definition of program income. Pro- lowances may be counted for donated gram income means gross income re- equipment and buildings. The deprecia- ceived by the grantee or subgrantee dition or use allowances for this property rectly generated by a grant supported are not treated as third party in-kind activity, or earned only as a result of contributions. Instead, they are treat- the grant agreement during the grant ed as costs incurred by the grantee or period. ‘‘During the grant period’’ is subgrantee. They are computed and al- the time between the effective date of located (usually as indirect costs) in the award and the ending date of the accordance with the cost principles award reflected in the final financial specified in § 92.22, in the same way as report. depreciation or use allowances for pur- (c) Cost of generating program income. chased equipment and buildings. The If authorized by Federal regulations or amount of depreciation or use allow- the grant agreement, costs incident to ances for donated equipment and build- the generation of program income may ings is based on the property’s market be deducted from gross income to de- value at the time it was donated. termine program income. (f) Valuation of grantee or subgrantee (d) Governmental revenues. Taxes, spe- donated real property for construction/ac- cial assessments, levies, fines, and quisition. If a grantee or subgrantee do- other such revenues raised by a grantee nates real property for a construction or subgrantee are not program income or facilities acquisition project, the unless the revenues are specifically current market value of that property identified in the grant agreement or may be counted as cost sharing or Federal agency regulations as program matching. If any part of the donated income. property was acquired with Federal (e) Royalties. Income from royalties funds, only the non-federal share of the and license fees for copyrighted mate- property may be counted as cost shar- rial, patents, and inventions developed ing or matching. by a grantee or subgrantee is program

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income only if the revenues are specifi- agreement or the Federal agency regu- cally identified in the grant agreement lations provide otherwise. or Federal agency regulations as program income. (See § 92.34.) § 92.26 Non-Federal audit. (f) Property. Proceeds from the sale of (a) Basic rule. Grantees and sub- real property or equipment will be han- grantees are responsible for obtaining dled in accordance with the require- audits in accordance with the Single ments of §§ 92.31 and 92.32. Audit Act Amendments of 1996 (31 (g) Use of program income. Program U.S.C. 7501–7507) and revised OMB Cir- income shall be deducted from outlays cular A–133, ‘‘Audits of States, Local which may be both Federal and non- Governments, and Non-Profit Organi- Federal as described below, unless the zations.’’ The audits shall be made by Federal agency regulations or the an independent auditor in accordance grant agreement specify another alter- with generally accepted government native (or a combination of the alter- auditing standards covering financial natives). In specifying alternatives, the audits. Federal agency may distinguish be- (b) Subgrantees. State or local govern- tween income earned by the grantee ments, as those terms are defined for and income earned by subgrantees and purposes of the Single Audit Act between the sources, kinds, or amounts Amendments of 1996, that provide Fed- of income. When Federal agencies au- eral awards to a subgrantee, which ex- thorize the alternatives in paragraphs pends $300,000 or more (or other (g) (2) and (3) of this section, program amount as specified by OMB) in Fed- income in excess of any limits stipu- eral awards in a fiscal year, shall: lated shall also be deducted from out- (1) Determine whether State or local lays. subgrantees have met the audit requirements of the Act and whether sub- (1) Deduction. Ordinarily program in- grantees covered by OMB Circular A– come shall be deducted from total al- 110, ‘‘Uniform Administrative Require- lowable costs to determine the net al- ments for Grants and Agreements with lowable costs. Program income shall be Institutions of Higher Education, Hos- used for current costs unless the Fed- pitals, and Other Non-Profit Organiza- eral agency authorizes otherwise. Pro- tions,’’ have met the audit require- gram income which the grantee did not ments of the Act. Commercial contrac- anticipate at the time of the award tors (private for-profit and private and shall be used to reduce the Federal governmental organizations) providing agency and grantee contributions rath- goods and services to State and local er than to increase the funds com- governments are not required to have a mitted to the project. single audit performed. State and local (2) Addition. When authorized, pro- governments should use their own program income may be added to the cedures to ensure that the contractor funds committed to the grant agree- has complied with laws and regulations ment by the Federal agency and the affecting the expenditure of Federal grantee. The program income shall be funds; used for the purposes and under the (2) Determine whether the sub- conditions of the grant agreement. grantee spent Federal assistance funds (3) Cost sharing or matching. When au- provided in accordance with applicable thorized, program income may be used laws and regulations. This may be ac- to meet the cost sharing or matching complished by reviewing an audit of requirement of the grant agreement. the subgrantee made in accordance The amount of the Federal grant award with the Act, Circular A–110, or remains the same. through other means (e.g., program re- (h) Income after the award period. views) if the subgrantee has not had There are no Federal requirements gov- such an audit; erning the disposition of program in- (3) Ensure that appropriate correc- come earned after the end of the award tive action is taken within six months period (i.e., until the ending date of the after receipt of the audit report in in- final financial report, see paragraph (a) stance of noncompliance with Federal of this section), unless the terms of the laws and regulations;

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(4) Consider whether subgrantee au- among separately budgeted programs, dits necessitate adjustment of the projects, functions, or activities which grantee’s own records; and exceed or are expected to exceed ten (5) Require each subgrantee to permit percent of the current total approved independent auditors to have access to budget, whenever the awarding agen- the records and financial statements. cy’s share exceeds $100,000. (c) Auditor selection. In arranging for (iii) Transfer of funds allotted for audit services, § 92.36 shall be followed. training allowances (i.e., from direct [53 FR 8079, 8087, Mar. 11, 1988, as amended at payments to trainees to other expense 62 FR 45939, 45945, Aug. 29, 1997] categories). (2) Construction projects. Grantees and CHANGES, PROPERTY, AND SUBAWARDS subgrantees shall obtain prior written approval for any budget revision which § 92.30 Changes. would result in the need for additional (a) General. Grantees and subgrantees funds. are permitted to rebudget within the (3) Combined construction and non- approved direct cost budget to meet construction projects. When a grant or unanticipated requirements and may subgrant provides funding for both con- make limited program changes to the struction and nonconstruction activi- approved project. However, unless ties, the grantee or subgrantee must waived by the awarding agency, certain obtain prior written approval from the types of post-award changes in budgets awarding agency before making any and projects shall require the prior fund or budget transfer from non- written approval of the awarding agen- construction to construction or vice cy. versa. (1) Approvals shall not be valid un- (d) Programmatic changes. Grantees or less they are in writing, and signed by subgrantees must obtain the prior ap- at least one of the following officials of proval of the awarding agency when- the Department of Health and Human ever any of the following actions is an- Services (HHS): ticipated: (i) The responsible Grants Officer or (1) Any revision of the scope or objec- his or her designee; tives of the project (regardless of (ii) The head of the HHS Operating or whether there is an associated budget Staff Division that awarded the grant; revision requiring prior approval). or (2) Need to extend the period of avail- (iii) The head of the Regional Office ability of funds. of the HHS Operating or Staff Division (3) Changes in key persons in cases that awarded the grant. where specified in an application or a (b) Relation to cost principles. The ap- grant award. In research projects, a plicable cost principles (see § 92.22) con- change in the project director or prin- tain requirements for prior approval of cipal investigator shall always require certain types of costs. Except where approval unless waived by the award- waived, those requirements apply to all ing agency. grants and subgrants even if para- (4) Under nonconstruction projects, graphs (c) through (f) of this section do contracting out, subgranting (if au- not. thorized by law) or otherwise obtaining (c) Budget changes—(1) Nonconstruc- the services of a third party to perform tion projects. Except as stated in other activities which are central to the pur- regulations or an award document, poses of the award. This approval re- grantees or subgrantees shall obtain quirement is in addition to the ap- the prior approval of the awarding proval requirements of § 92.36 but does agency whenever any of the following not apply to the procurement of equip- changes is anticipated under a non- ment, supplies, and general support construction award: services. (i) Any revision which would result (5) Providing medical care to individ- in the need for additional funding. uals under research grants. (ii) Unless waived by the awarding (e) Additional prior approval require- agency, cumulative transfers among di- ments. The awarding agency may not rect cost categories, or, if applicable, require prior approval for any budget

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revision which is not described in para- purchase to the fair market value of graph (c) of this section. the property. However, in those situa- (f) Requesting prior approval. (1) A re- tions where a grantee or subgrantee is quest for prior approval of any budget disposing of real property acquired revision will be in the same budget for- with grant funds and acquiring replace- mal the grantee used in its application ment real property under the same pro- and shall be accompanied by a nar- gram, the net proceeds from the dis- rative justification for the proposed re- position may be used as an offset to the vision. cost of the replacement property. (2) A request for a prior approval (2) Sale of property. Sell the property under the applicable Federal cost prin- and compensate the awarding agency. ciples (see § 92.22) may be made by let- The amount due to the awarding agen- ter. cy will be calculated by applying the (3) A request by a subgrantee for awarding agency’s percentage of par- prior approval will be addressed in ticipation in the cost of the original writing to the grantee. The grantee purchase to the proceeds of the sale will promptly review such request and after deduction of any actual and rea- shall approve or disapprove the request sonable selling and fixing-up expenses. in writing. A grantee will not approve If the grant is still active, the net pro- any budget or project revision which is ceeds from sale may be offset against inconsistent with the purpose or terms the original cost of the property. When and conditions of the Federal grant to a grantee or subgrantee is directed to the grantee. If the revision, requested sell property, sales procedures shall be by the subgrantee would result in a followed that provide for competition change to the grantee’s approved to the extent practicable and result in project which requires Federal prior the highest possible return. approval, the grantee will obtain the (3) Transfer of title. Transfer title to Federal agency’s approval before ap- the awarding agency or to a third- proving the subgrantee’s request. party designated/approved by the [53 FR 8079, 8087, Mar. 11, 1988, as amended at awarding agency. The grantee or sub- 53 FR 8079, Mar. 11, 1988] grantee shall be paid an amount calculated by applying the grantee or sub- § 92.31 Real property. grantee’s percentage of participation (a) Title. Subject to the obligations in the purchase of the real property to and conditions set forth in this section, the current fair market value of the title to real property acquired under a property. grant or subgrant will vest upon acquisition in the grantee or subgrantee re- § 92.32 Equipment. spectively. (a) Title. Subject to the obligations (b) Use. Except as otherwise provided and conditions set forth in this section, by Federal statutes, real property will title to equipment acquired under a be used for the originally authorized grant or subgrant will vest upon acqui- purposes as long as needed for that pur- sition in the grantee or subgrantee re- poses, and the grantee or subgrantee spectively. shall not dispose of or encumber its (b) States. A State will use, manage, title or other interests. and dispose of equipment acquired (c) Disposition. When real property is under a grant by the State in accord- no longer needed for the originally au- ance with State laws and procedures. thorized purpose, the grantee or sub- Other grantees and subgrantees will grantee will request disposition in- follow paragraphs (c) through (e) of structions from the awarding agency. this section. The instructions will provide for one of (c) Use. (1) Equipment shall be used the following alternatives: by the grantee or subgrantee in the (1) Retention of title. Retain title after program or project for which it was ac- compensating the awarding agency. quired as long as needed, whether or The amount paid to the awarding agen- not the project or program continues cy will be computed by applying the to be supported by Federal funds. When awarding agency’s percentage of par- no longer needed for the original pro- ticipation in the cost of the original gram or project, the equipment may be

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used in other activities currently or (4) Adequate maintenance procedures previously supported by a Federal must be developed to keep the property agency. in good condition. (2) The grantee or subgrantee shall (5) If the grantee or subgrantee is au- also make equipment available for use thorized or required to sell the prop- on other projects or programs cur- erty, proper sales procedures must be rently or previously supported by the established to ensure the highest pos- Federal Government, providing such sible return. use will not interfere with the work on (e) Disposition. When original or re- the projects or program for which it placement equipment acquired under a was originally acquired. First pref- grant or subgrant is no longer needed erence for other use shall be given to for the original project or program or other programs or projects supported for other activities currently or pre- by the awarding agency. User fees viously supported by a Federal agency, should be considered if appropriate. disposition of the equipment will be (3) Notwithstanding the encourage- made as follows: ment in § 92.25(a) to earn program in- (1) Items of equipment with a current come, the grantee or subgrantee must per-unit fair market value of less than not use equipment acquired with grant $5,000 may be retained, sold or other- funds to provide services for a fee to wise disposed of with no further obliga- compete unfairly with private compa- tion to the awarding agency. nies that provide equivalent services, (2) Items of equipment with a current unless specifically permitted or con- per unit fair market value in excess of templated by Federal statute. $5,000 may be retained or sold and the (4) When acquiring replacement awarding agency shall have a right to equipment, the grantee or subgrantee an amount calculated by multiplying may use the equipment to be replaced the current market value or proceeds as a trade-in or sell the property and from sale by the awarding agency’s use the proceeds to offset the cost of share of the equipment. the replacement property, subject to (3) In cases where a grantee or sub- the approval of the awarding agency. grantee fails to take appropriate dis- (d) Management requirements. Proce- position actions, the awarding agency dures for managing equipment (includ- may direct the grantee or subgrantee ing replacement equipment), whether to take excess and disposition actions. acquired in whole or in part with grant (f) Federal equipment. In the event a funds, until disposition takes place grantee or subgrantee is provided fed- will, as a minimum, meet the following erally-owned equipment: requirements: (1) Title will remain vested in the (1) Property records must be main- Federal Government. tained that include a description of the (2) Grantees or subgrantees will man- property, a serial number or other age the equipment in accordance with identification number, the source of Federal agency rules and procedures, property, who holds title, the acquisi- and submit an annual inventory list- tion date, and cost of the property, per- ing. centage of Federal participation in the (3) When the equipment is no longer cost of the property, the location, use needed, the grantee or subgrantee will and condition of the property, and any request disposition instructions from ultimate disposition data including the the Federal agency. date of disposal and sale price of the (g) Right to transfer title. The Federal property. awarding agency may reserve the right (2) A physical inventory of the prop- to transfer title to the Federal Govern- erty must be taken and the results rec- ment or a third part named by the onciled with the property records at awarding agency when such a third least once every two years. party is otherwise eligible under exist- (3) A control system must be devel- ing statutes. Such transfers shall be oped to ensure adequate safeguards to subject to the following standards: prevent loss, damage, or theft of the (1) The property shall be identified in property. Any loss, damage, or theft the grant or otherwise made known to shall be investigated. the grantee in writing.

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(2) The Federal awarding agency § 92.36 Procurement. shall issue disposition instruction (a) States. When procuring property within 120 calendar days after the end and services under a grant, a State will of the Federal support of the project follow the same policies and procedures for which it was acquired. If the Fed- it uses for procurements from its non- eral awarding agency fails to issue dis- Federal funds. The State will ensure position instructions within the 120 that every purchase order or other con- calendar-day period the grantee shall tract includes any clauses required by follow § 92.32(e). Federal statutes and executive orders (3) When title to equipment is trans- and their implementing regulations. ferred, the grantee shall be paid an Other grantees and subgrantees will amount calculated by applying the per- follow paragraphs (b) through (i) in centage of participation in the pur- this section. chase to the current fair market value (b) Procurement standards. (1) Grant- of the property. ees and subgrantees will use their own procurement procedures which reflect § 92.33 Supplies. applicable State and local laws and (a) Title. Title to supplies acquired regulations, provided that the procure- under a grant or subgrant will vest, ments conform to applicable Federal upon acquisition, in the grantee or sub- law and the standards identified in this grantee respectively. section. (b) Disposition. If there is a residual (2) Grantees and subgrantees will inventory of unused supplies exceeding maintain a contract administration $5,000 in total aggregate fair market system which ensures that contractors value upon termination or completion perform in accordance with the terms, of the award, and if the supplies are conditions, and specifications of their not needed for any other federally contracts or purchase orders. sponsored programs or projects, the (3) Grantees and subgrantees will grantee or subgrantee shall com- maintain a written code of standards of pensate the awarding agency for its conduct governing the performance of share. their employees engaged in the award and administration of contracts. No § 92.34 Copyrights. employee, officer or agent of the grantee or subgrantee shall participate in se- The Federal awarding agency re- lection, or in the award or administra- serves a royalty-free, nonexclusive, and tion of a contract supported by Federal irrevocable license to reproduce, pub- funds if a conflict of interest, real or lish or otherwise use, and to authorize apparent, would be involved. Such a others to use, for Federal Government conflict would arise when: purposes: (i) The employee, officer or agent, (a) The copyright in any work devel- (ii) Any member of his immediate oped under a grant, subgrant, or con- family, tract under a grant or subgrant; and (iii) His or her partner, or (b) Any rights of copyright to which (iv) An organization which employs, a grantee, subgrantee or a contractor or is about to employ, any of the purchases ownership with grant sup- above, has a financial or other interest port. in the firm selected for award. The grantee’s or subgrantee’s officers, em- § 92.35 Subawards to debarred and ployees or agents will neither solicit suspended parties. nor accept gratuities, favors or any- Grantees and subgrantees must not thing of monetary value from contrac- make any award or permit any award tors, potential contractors, or parties (subgrant or contract) at any tier to to subagreements. Grantee and sub- any party which is debarred or sus- grantees may set minimum rules where pended or is otherwise excluded from or the financial interest is not substantial ineligible for participation in Federal or the gift is an unsolicited item of assistance programs under Executive nominal intrinsic value. To the extent Order 12549, ‘‘Debarment and Suspen- permitted by State or local law or reg- sion.’’ ulations, such standards or conduct

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will provide for penalties, sanctions, or procurement, selection of contract other disciplinary actions for viola- type, contractor selection or rejection, tions of such standards by the grant- and the basis for the contract price. ee’s and subgrantee’s officers, employ- (10) Grantees and subgrantees will ees, or agents, or by contractors or use time and material type contracts their agents. The awarding agency may only— in regulation provide additional prohi- (i) After a determination that no bitions relative to real, apparent, or other contract is suitable, and potential conflicts of interest. (ii) If the contract includes a ceiling (4) Grantee and subgrantee proce- price that the contractor exceeds at its dures will provide for a review of pro- own risk. posed procurements to avoid purchase (11) Grantees and subgrantees alone of unnecessary or duplicative items. will be responsible, in accordance with Consideration should be given to con- good administrative practice and sound solidating or breaking out procure- business judgment, for the settlement ments to obtain a more economical of all contractual and administrative purchase. Where appropriate, an anal- issues arising out of procurements. ysis will be made of lease versus pur- These issues include, but are not lim- chase alternatives, and any other ap- ited to source evaluation, protests, dis- propriate analysis to determine the putes, and claims. These standards do most economical approach. not relieve the grantee or subgrantee (5) To foster greater economy and ef- of any contractual responsibilities ficiency, grantees and subgrantees are under its contracts. Federal agencies encouraged to enter into State and will not substitute their judgment for local intergovernmental agreements that of the grantee or subgrantee un- for procurement or use of common less the matter is primarily a Federal goods and services. concern. Violations of law will be re- (6) Grantees and subgrantees are en- ferred to the local, State, or Federal couraged to use Federal excess and sur- authority having proper jurisdiction. plus property in lieu of purchasing new (12) Grantees and subgrantees will equipment and property whenever such have protest procedures to handle and use is feasible and reduces project resolve disputes relating to their pro- costs. curements and shall in all instances (7) Grantees and subgrantees are en- disclose information regarding the pro- couraged to use value engineering test to the awarding agency. A clauses in contracts for construction protestor must exhaust all administra- projects of sufficient size to offer rea- tive remedies with the grantee and sub- sonable opportunities for cost reduc- grantee before pursuing a protest with tions. Value engineering is a system- the Federal agency. Reviews of pro- atic and creative anaylsis of each contests by the Federal agency will be lim- tract item or task to ensure that its es- ited to: sential function is provided at the (i) Violations of Federal law or regu- overall lower cost. lations and the standards of this sec- (8) Grantees and subgrantees will tion (violations of State or local law make awards only to responsible con- will be under the jurisdiction of State tractors possessing the ability to per- or local authorities) and form successfully under the terms and (ii) Violations of the grantee’s or sub- conditions of a proposed procurement. grantee’s protest procedures for failure Consideration will be given to such to review a complaint or protest. Pro- matters as contractor integrity, com- tests received by the Federal agency pliance with public policy, record of other than those specified above will be past performance, and financial and referred to the grantee or subgrantee. technical resources. (c) Competition. (1) All procurement (9) Grantees and subgrantees will transactions will be conducted in a maintain records sufficient to detail manner providing full and open com- the significant history of a procure- petition consistent with the standards ment. These records will include, but of § 92.36. Some of the situations con- are not necessarily limited to the fol- sidered to be restrictive of competition lowing: rationale for the method of include but are not limited to:

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(i) Placing unreasonable require- or equal’’ description may be used as a ments on firms in order for them to means to define the performance or qualify to do business, other salient requirements of a pro- (ii) Requiring unnecessary experience curement. The specific features of the and excessive bonding, named brand which must be met by (iii) Noncompetitive pricing practices offerors shall be clearly stated; and between firms or between affiliated (ii) Identify all requirements which companies, the offerors must fulfill and all other (iv) Noncompetitive awards to con- factors to be used in evaluating bids or sultants that are on retainer contracts, proposals. (v) Organizational conflicts of inter- (4) Grantees and subgrantees will en- est, sure that all prequalified lists of per- (vi) Specifying only a ‘‘brand name’’ sons, firms, or products which are used product instead of allowing ‘‘an equal’’ in acquiring goods and services are cur- product to be offered and describing rent and include enough qualified the performance of other relevant resources to ensure maximum open and quirements of the procurement, and free competition. Also, grantees and (vii) Any arbitrary action in the pro- subgrantees will not preclude potential curement process. bidders from qualifying during the so- (2) Grantees and subgrantees will licitation period. conduct procurements in a manner (d) Methods of procurement to be fol- that prohibits the use of statutorily or lowed—(1) Procurement by small purchase administratively imposed in-State or procedures. Small purchase procedures local geographical preferences in the are those relatively simple and infor- evaluation of bids or proposals, except mal procurement methods for securing in those cases where applicable Federal services, supplies, or other property statutes expressly mandate or encour- that do not cost more than the sim- age geographic preference. Nothing in plified acquisition threshold fixed at 41 this section preempts State licensing U.S.C. 403(11) (currently set at $100,000). laws. When contracting for architec- If small purchase procedures are used, tural and engineering (A/E) services, price or rate quotations shall be ob- geographic location may be a selection tained from an adequate number of criteria provided its application leaves qualified sources. an appropriate number of qualified (2) Procurement by sealed bids (for- firms, given the nature and size of the mal advertising). Bids are publicly so- project, to compete for the contract. licited and a firm-fixed-price contract (3) Grantees will have written selec- (lump sum or unit price) is awarded to tion procedures for procurement trans- the responsible bidder whose bid, con- actions. These procedures will ensure forming with all the material terms that all solicitations: and conditions of the invitation for (i) Incorporate a clear and accurate bids, is the lowest in price. The sealed description of the technical require- bid method is the preferred method for ments for the material, product, or procuring construction, if the condi- service to be procured. Such descriptions in § 92.36(d)(2)(i) apply. tion shall not, in competitive procure- (i) In order for sealed bidding to be ments, contain features which unduly feasible, the following conditions restrict competition. The description should be present: may include a statement of the quali- (A) A complete, adequate, and real- tative nature of the material, product istic specification or purchase descrip- or service to be procured, and when tion is available; necessary, shall set forth those min- (B) Two or more responsible bidders imum essential characteristics and are willing and able to compete effec- standards to which it must conform if tively and for the business; and it is to satisfy its intended use. De- (C) The procurement lends itself to a tailed product specifications should be firm fixed price contract and the selec- avoided if at all possible. When it is tion of the successful bidder can be impractical or uneconomical to make a made principally on the basis of price. clear and accurate description of the (ii) If sealed bids are used, the fol- technical requirements, a ‘‘brand name lowing requirements apply:

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(A) The invitation for bids will be sional services whereby competitors’ publicly advertised and bids shall be qualifications are evaluated and the solicited from an adequate number of most qualified competitor is selected, known suppliers, providing them suffi- subject to negotiation of fair and rea- cient time prior to the date set for sonable compensation. The method, opening the bids; where price is not used as a selection (B) The invitation for bids, which factor, can only be used in procure- will include any specifications and per- ment of A/E professional services. It tinent attachments, shall define the cannot be used to purchase other types items or services in order for the bidder of services though A/E firms are a po- to properly respond; tential source to perform the proposed (C) All bids will be publicly opened at effort. the time and place prescribed in the in- (4) Procurement by noncompetitive vitation for bids; proposals is procurement through solic- (D) A firm fixed-price contract award itation of a proposal from only one will be made in writing to the lowest source, or after solicitation of a num- responsive and responsible bidder. ber of sources, competition is deter- Where specified in bidding documents, mined inadequate. factors such as discounts, transpor- (i) Procurement by noncompetitive tation cost, and life cycle costs shall be considered in determining which bid is proposals may be used only when the lowest. Payment discounts will only be award of a contract is infeasible under used to determine the low bid when small purchase procedures, sealed bids prior experience indicates that such or competitive proposals and one of the discounts are usually taken advantage following circumstances applies: of; and (A) The item is available only from a (E) Any or all bids may be rejected if single source; there is a sound documented reason. (B) The public exigency or emergency (3) Procurement by competitive pro- for the requirement will not permit a posals. The technique of competitive delay resulting from competitive solic- proposals is normally conducted with itation; more than one source submitting an (C) The awarding agency authorizes offer, and either a fixed-price or cost- noncompetitive proposals; or reimbursement type contract is award- (D) After solicitation of a number of ed. It is generally used when conditions sources, competition is determined in- are not appropriate for the use of adequate. sealed bids. If this method is used, the (ii) Cost analysis, i.e., verifying the following requirements apply: proposed cost data, the projections of (i) Requests for proposals will be pub- the data, and the evaluation of the spe- licized and identify all evaluation fac- cific elements of costs and profits, is tors and their relative importance. Any required. response to publicized requests for pro- (iii) Grantees and subgrantees may posals shall be honored to the max- be required to submit the proposed pro- imum extent practical; curement to the awarding agency for (ii) Proposals will be solicited from pre-award review in accordance with an adequate number of qualified paragraph (g) of this section. sources; (iii) Grantees and subgrantees will (e) Contracting with small and minority have a method for conducting tech- firms, women’s business enterprise and nical evaluations of the proposals re- labor surplus area firms. (1) The grantee ceived and for selecting awardees; and subgrantee will take all necessary (iv) Awards will be made to the re- affirmative steps to assure that minor- sponsible firm whose proposal is most ity firms, women’s business enter- advantageous to the program, with prises, and labor surplus area firms are price and other factors considered; and used when possible. (v) Grantees and subgrantees may (2) Affirmative steps shall include: use competitive proposal procedures (i) Placing qualified small and minor- for qualifications-based procurement of ity businesses and women’s business architectural/engineering (A/E) profes- enterprises on solicitation lists;

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(ii) Assuring that small and minority To establish a fair and reasonable prof- businesses, and women’s business en- it, consideration will be given to the terprises are solicited whenever they complexity of the work to be per- are potential sources; formed, the risk borne by the con- (iii) Dividing total requirements, tractor, the contractor’s investment, when economically feasible, into small- the amount of subcontracting, the er tasks or quantities to permit max- quality of its record of past perform- imum participation by small and mi- ance, and industry profit rates in the nority business, and women’s business surrounding geographical area for enterprises; similar work. (iv) Establishing delivery schedules, (3) Costs or prices based on estimated where the requirement permits, which costs for contracts under grants will be encourage participation by small and allowable only to the extent that costs minority business, and women’s busi- incurred or cost estimates included in ness enterprises; negotiated prices are consistent with (v) Using the services and assistance Federal cost principles (see § 92.22). of the Small Business Administration, Grantees may reference their own cost and the Minority Business Develop- principles that comply with the appli- ment Agency of the Department of cable Federal cost principles. Commerce; and (4) The cost plus a percentage of cost (vi) Requiring the prime contractor, and percentage of construction cost if subcontracts are to be let, to take methods of contracting shall not be the affirmative steps listed in para- used. graphs (e)(2) (i) through (v) of this sec- (g) Awarding agency review. (1) Grant- tion. ees and subgrantees must make avail- (f) Contract cost and price. (1) Grant- able, upon request of the awarding ees and subgrantees must perform a agency, technical specifications on pro- cost or price analysis in connection posed procurements where the award- with every procurement action including agency believes such review is ing contract modifications. The method and degree of analysis is dependent needed to ensure that the item and/or on the facts surrounding the particular service specified is the one being pro- procurement situation, but as a start- posed for purchase. This review gen- ing point, grantees must make inde- erally will take place prior to the time pendent estimates before receiving bids the specification is incorporated into a or proposals. A cost analysis must be solicitation document. However, if the performed when the offeror is required grantee or subgrantee desires to have to submit the elements of his esti- the review accomplished after a solici- mated cost, e.g., under professional, tation has been developed, the award- consulting, and architectural engineering agency may still review the speci- ing services contracts. A cost analysis fications, with such review usually lim- will be necessary when adequate price ited to the technical aspects of the pro- competition is lacking, and for sole posed purchase. source procurements, including con- (2) Grantees and subgrantees must on tract modifications or change orders, request make available for awarding unless price resonableness can be es- agency pre-award review procurement tablished on the basis of a catalog or documents, such as requests for pro- market price of a commercial product posals or invitations for bids, inde- sold in substantial quantities to the pendent cost estimates, etc. when: general public or based on prices set by (i) A grantee’s or subgrantee’s pro- law or regulation. A price analysis will curement procedures or operation fails be used in all other instances to deter- to comply with the procurement stand- mine the reasonableness of the pro- ards in this section; or posed contract price. (ii) The procurement is expected to (2) Grantees and subgrantees will ne- exceed the simplified acquisition gotiate profit as a separate element of threshold and is to be awarded without the price for each contract in which competition or only one bid or offer is there is no price competition and in all received in response to a solicitation; cases where cost analysis is performed. or

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(iii) The procurement, which is ex- The ‘‘bid guarantee’’ shall consist of a pected to exceed the simplified acquisi- firm commitment such as a bid bond, tion threshold, specifies a ‘‘brand certified check, or other negotiable in- name’’ product; or strument accompanying a bid as assur- (iv) The proposed award is more than ance that the bidder will, upon accept- the simplified acquisition threshold ance of his bid, execute such contrac- and is to be awarded to other than the tual documents as may be required apparent low bidder under a sealed bid within the time specified. procurement; or (2) A performance bond on the part of (v) A proposed contract modification the contractor for 100 percent of the con- changes the scope of a contract or in- tract price. A ‘‘performance bond’’ is creases the contract amount by more one executed in connection with a con- than the simplified acquisition thresh- tract to secure fulfillment of all the old. contractor’s obligations under such (3) A grantee or subgrantee will be contract. exempt from the pre-award review in (3) A payment bond on the part of the paragraph (g)(2) of this section if the contractor for 100 percent of the contract awarding agency determines that its price. A ‘‘payment bond’’ is one exe- procurement systems comply with the cuted in connection with a contract to standards of this section. assure payment as required by law of (i) A grantee or subgrantee may re- all persons supplying labor and mate- quest that its procurement system be rial in the execution of the work pro- reviewed by the awarding agency to de- vided for in the contract. termine whether its system meets (i) Contract provisions. A grantee’s these standards in order for its system and subgrantee’s contracts must con- to be certified. Generally, these retain provisions in paragraph (i) of this views shall occur where there is a con- section. Federal agencies are permitted tinuous high-dollar funding, and third- to require changes, remedies, changed party contracts are awarded on a reg- conditions, access and records reten- ular basis. (ii) A grantee or subgrantee may self- tion, suspension of work, and other certify its procurement system. Such clauses approved by the Office of Fed- self-certification shall not limit the eral Procurement Policy. awarding agency’s right to survey the (1) Administrative, contractual, or system. Under a self-certification pro- legal remedies in instances where con- cedure, awarding agencies may wish to tractors violate or breach contract rely on written assurances from the terms, and provide for such sanctions grantee or subgrantee that it is com- and penalties as may be appropriate. plying with these standards. A grantee (Contracts more than the simplified ac- or subgrantee will cite specific proce- quisition threshold) dures, regulations, standards, etc., as (2) Termination for cause and for being in compliance with these require- convenience by the grantee or sub- ments and have its system available grantee including the manner by which for review. it will be effected and the basis for set- (h) Bonding requirements. For con- tlement. (All contracts in excess of struction or facility improvement con- $10,000) tracts or subcontracts exceeding the (3) Compliance with Executive Order simplified acquisition threshold, the 11246 of September 24, 1965, entitled awarding agency may accept the bond- ‘‘Equal Employment Opportunity,’’ as ing policy and requirements of the amended by Executive Order 11375 of grantee or subgrantee provided the October 13, 1967, and as supplemented awarding agency has made a deter- in Department of Labor regulations (41 mination that the awarding agency’s CFR chapter 60). (All construction con- interest is adequately protected. If tracts awarded in excess of $10,000 by such a determination has not been grantees and their contractors or sub- made, the minimum requirements shall grantees) be as follows: (4) Compliance with the Copeland (1) A bid guarantee from each bidder ‘‘Anti-Kickback’’ Act (18 U.S.C. 874) as equivalent to five percent of the bid price. supplemented in Department of Labor

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regulations (29 CFR Part 3). (All con- contained in the state energy conserva- tracts and subgrants for construction tion plan issued in compliance with the or repair) Energy Policy and Conservation Act (5) Compliance with the Davis-Bacon (Pub. L. 94–163, 89 Stat. 871). Act (40 U.S.C. 276a to 276a–7) as supplemented by Department of Labor regu- [53 FR 8079, 8087, Mar. 11, 1988, as amended at 60 FR 19639, 19645, Apr. 19, 1995] lations (29 CFR Part 5). (Construction contracts in excess of $2000 awarded by § 92.37 Subgrants. grantees and subgrantees when required by Federal grant program legis- (a) States. States shall follow state lation) law and procedures when awarding and (6) Compliance with Sections 103 and administering subgrants (whether on a 107 of the Contract Work Hours and cost reimbursement or fixed amount Safety Standards Act (40 U.S.C. 327–330) basis) of financial assistance to local as supplemented by Department of and Indian tribal governments. States Labor regulations (29 CFR Part 5). shall: (Construction contracts awarded by (1) Ensure that every subgrant in- grantees and subgrantees in excess of cludes any clauses required by Federal $2000, and in excess of $2500 for other statute and executive orders and their contracts which involve the employ- implementing regulations; ment of mechanics or laborers) (2) Ensure that subgrantees are (7) Notice of awarding agency re- aware of requirements imposed upon quirements and regulations pertaining them by Federal statute and regula- to reporting. tion; (8) Notice of awarding agency re- (3) Ensure that a provision for com- quirements and regulations pertaining pliance with § 92.42 is placed in every to patent rights with respect to any cost reimbursement subgrant; and discovery or invention which arises or (4) Conform any advances of grant is developed in the course of or under funds to subgrantees substantially to such contract. the same standards of timing and (9) Awarding agency requirements amount that apply to cash advances by and regulations pertaining to copy- Federal agencies. rights and rights in data. (b) All other grantees. All other grant- (10) Access by the grantee, the sub- ees shall follow the provisions of this grantee, the Federal grantor agency, part which are applicable to awarding the Comptroller General of the United agencies when awarding and admin- States, or any of their duly authorized istering subgrants (whether on a cost representatives to any books, docu- reimbursement or fixed amount basis) ments, papers, and records of the con- of financial assistance to local and In- tractor which are directly pertinent to dian tribal governments. Grantees that specific contract for the purpose shall: of making audit, examination, excerpts, and transcriptions. (1) Ensure that every subgrant in- (11) Retention of all required records cludes a provision for compliance with for three years after grantees or sub- this part; grantees make final payments and all (2) Ensure that every subgrant in- other pending matters are closed. cludes any clauses required by Federal (12) Compliance with all applicable statute and executive orders and their standards, orders, or requirements implementing regulations; and issued under section 306 of the Clean (3) Ensure that subgrantees are Air Act (42 U.S.C. 1857(h)), section 508 aware of requirements imposed upon of the Clean Water Act (33 U.S.C. 1368), them by Federal statutes and regula- Executive Order 11738, and Environ- tions. mental Protection Agency regulations (c) Exceptions. By their own terms, (40 CFR part 15). (Contracts, sub- certain provisions of this part do not contracts, and subgrants of amounts in apply to the award and administration excess of $100,000) of subgrants: (13) Mandatory standards and policies (1) Section 92.10; relating to energy efficiency which are (2) Section 92.11;

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(3) The letter-of-credit procedures may be required if that information specified in Treasury Regulations at 31 will be useful. CFR Part 205, cited in § 92.21; and (ii) The reasons for slippage if estab- (4) Section 92.50. lished objectives were not met. (iii) Additional pertinent information REPORTS, RECORDS RETENTION, AND including, when appropriate, analysis ENFORCEMENT and explanation of cost overruns or § 92.40 Monitoring and reporting pro- high unit costs. gram performance. (3) Grantees will not be required to submit more than the original and two (a) Monitoring by grantees. Grantees copies of performance reports. are responsible for managing the day- to-day operations of grant and (4) Grantees will adhere to the stand- subgrant supported activities. Grantees ards in this section in prescribing per- must monitor grant and subgrant sup- formance reporting requirements for ported activities to assure compliance subgrantees. with applicable Federal requirements (c) Construction performance reports. and that performance goals are being For the most part, on-site technical in- achieved. Grantee monitoring must spections and certified percentage-of- cover each program, function or activ- completion data are relied on heavily ity. by Federal agencies to monitor (b) Nonconstruction performance re- progress under construction grants and ports. The Federal agency may, if it de- subgrants. The Federal agency will re- cides that performance information quire additional formal performance available from subsequent applications reports only when considered nec- contains sufficient information to essary, and never more frequently than meet its programmatic needs, require quarterly. the grantee to submit a performance (d) Significant developments. Events report only upon expiration or termi- may occur between the scheduled per- nation of grant support. Unless waived formance reporting dates which have by the Federal agency this report will significant impact upon the grant or be due on the same date as the final Fi- subgrant supported activity. In such nancial Status Report. cases, the grantee must inform the (1) Grantees shall submit annual per- Federal agency as soon as the following formance reports unless the awarding types of conditions become known: agency requires quarterly or semi-an- (1) Problems, delays, or adverse con- nual reports. However, performance re- ditions which will materially impair ports will not be required more fre- the ability to meet the objective of the quently than quarterly. Annual reports award. This disclosure must include a shall be due 90 days after the grant statement of the action taken, or con- year, quarterly or semi-annual reports templated, and any assistance needed shall be due 30 days after the reporting to resolve the situation. period. The final performance report (2) Favorable developments which en- will be due 90 days after the expiration able meeting time schedules and objec- or termination of grant support. If a tives sooner or at less cost than antici- justified request is submitted by a grantee, the Federal agency may ex- pated or producing more beneficial re- tend the due date for any performance sults than originally planned. report. Additionally, requirements for (e) Federal agencies may make site unnecessary performance reports may visits as warranted by program needs. be waived by the Federal agency. (f) Waivers, extensions. (1) Federal (2) Performance reports will contain, agencies may waive any performance for each grant, brief information on the report required by this part if not need- following: ed. (i) A comparison of actual accom- (2) The grantee may waive any per- plishments to the objectives estab- formance report from a subgrantee lished for the period. Where the output when not needed. The grantee may ex- of the project can be quantified, a com- tend the due date for any performance putation of the cost per unit of output report from a subgrantee if the grantee

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will still be able to meet its perform- construction grants and for construc- ance reporting obligations to the Fed- tion grants when required in accord- eral agency. ance with § 92.41(e)(2)(iii). (2) Accounting basis. Each grantee will § 92.41 Financial reporting. report program outlays and program (a) General. (1) Except as provided in income on a cash or accrual basis as paragraphs (a) (2) and (5) of this sec- prescribed by the awarding agency. If tion, grantees will use only the forms the Federal agency requires accrual in- specified in paragraphs (a) through (e) formation and the grantee’s accounting of this section, and such supple- records are not normally kept on the mentary or other forms as may from accural basis, the grantee shall not be time to time be authorized by OMB, required to convert its accounting sys- for: tem but shall develop such accrual in- (i) Submitting financial reports to formation through and analysis of the Federal agencies, or documentation on hand. (ii) Requesting advances or reim- (3) Frequency. The Federal agency bursements when letters of credit are may prescribe the frequency of the re- not used. port for each project or program. How- (2) Grantees need not apply the forms ever, the report will not be required prescribed in this section in dealing more frequently than quarterly. If the with their subgrantees. However, Federal agency does not specify the grantees shall not impose more burden- frequency of the report, it will be sub- some requirements on subgrantees. mitted annually. A final report will be (3) Grantees shall follow all applica- required upon expiration or termi- ble standard and supplemental Federal nation of grant support. agency instructions approved by OMB (4) Due date. When reports are re- to the extend required under the Paper- quired on a quarterly or semiannual work Reduction Act of 1980 for use in basis, they will be due 30 days after the connection with forms specified in reporting period. When required on an paragraphs (b) through (e) of this sec- annual basis, they will be due 90 days tion. Federal agencies may issue sub- after the grant year. Final reports will stantive supplementary instructions be due 90 days after the expiration or only with the approval of OMB. Federal termination of grant support. agencies may shade out or instruct the grantee to disregard any line item that (c) Federal Cash Transactions Report— the Federal agency finds unnecessary (1) Form. (i) For grants paid by letter or for its decisionmaking purposes. credit, Treasury check advances or (4) Grantees will not be required to electronic transfer of funds, the grant- submit more than the original and two ee will submit the Standard Form 272, copies of forms required under this Federal Cash Transactions Report, and part. when necessary, its continuation sheet, (5) Federal agencies may provide Standard Form 272a, unless the terms computer outputs to grantees to expe- of the award exempt the grantee from dite or contribute to the accuracy of this requirement. reporting. Federal agencies may accept (ii) These reports will be used by the the required information from grantees Federal agency to monitor cash ad- in machine usable format or computer vanced to grantees and to obtain dis- printouts instead of prescribed forms. bursement or outlay information for (6) Federal agencies may waive any each grant from grantees. The format report required by this section if not of the report may be adapted as appro- needed. priate when reporting is to be accom- (7) Federal agencies may extend the plished with the assistance of auto- due date of any financial report upon matic data processing equipment pro- receiving a justified request from a vided that the information to be subgrantee. mitted is not changed in substance. (b) Financial Status Report—(1) Form. (2) Forecasts of Federal cash require- Grantees will use Standard Form 269 or ments. Forecasts of Federal cash re- 269A, Financial Status Report, to requirements may be required in the port the status of funds for all non- ‘‘Remarks’’ section of the report.

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(3) Cash in hands of subgrantees. When vance. (i) When a construction grant is considered necessary and feasible by paid by letter of credit, electronic the Federal agency, grantees may be funds transfer or Treasury check ad- required to report the amount of cash vances, the grantee will report its out- advances in excess of three days’ needs lays to the Federal agency using in the hands of their subgrantees or Standard Form 271, Outlay Report and contractors and to provide short nar- Request for Reimbursement for Con- rative explanations of actions taken by struction Programs. The Federal agen- the grantee to reduce the excess bal- cy will provide any necessary special ances. instruction. However, frequency and (4) Frequency and due date. Grantees due date shall be governed by § 92.41(b) must submit the report no later than 15 (3) and (4). working days following the end of each (ii) When a construction grant is paid quarter. However, where an advance ei- by Treasury check advances based on ther by letter of credit or electronic periodic requests from the grantee, the transfer of funds is authorized at an advances will be requested on the form annualized rate of one million dollars specified in § 92.41(d). or more, the Federal agency may re- (iii) The Federal agency may sub- quire the report to be submitted within stitute the Financial Status Report 15 working days following the end f specified in § 92.41(b) for the Outlay Re- each month. port and Request for Reimbursement (d) Request for advance or reimburse- for Construction Programs. ment—(1) Advance payments. Requests (3) Accounting basis. The accounting for Treasury check advance payments basis for the Outlay Report and Re- will be submitted on Standard Form quest for Reimbursement for Construc- 270, Request for Advance or Reimburse- tion Programs shall be governed by ment. (This form will not be used for § 92.41(b)(2). drawdowns under a letter of credit, electronic funds transfer or when § 92.42 Retention and access require- Treasury check advance payments are ments for records. made to the grantee automatically on (a) Applicability. (1) This section ap- a predetermined basis.) plies to all financial and programmatic (2) Reimbursements. Requests for reim- records, supporting documents, statis- bursement under nonconstruction tical records, and other records of grants will also be submitted on Stand- grantees or subgrantees which are: ard Form 270. (For reimbursement re- (i) Required to be maintained by the quests under construction grants, see terms of this part, program regulations paragraph (e)(1) of this section.) or the grant agreement, or (3) The frequency for submitting pay- (ii) Otherwise reasonably considered ment requests is treated in § 92.41(b)(3). as pertinent to program regulations or (e) Outlay report and request for reim- the grant agreement. bursement for construction programs—(1) (2) This section does not apply to Grants that support construction activi- records maintained by contractors or ties paid by reimbursement method. (i) subcontractors. For a requirement to Requests for reimbursement under con- place a provision concerning records in struction grants will be submitted on certain kinds of contracts, see Standard Form 271, Outlay Report and § 92.36(i)(10). Request for Reimbursement for Con- (b) Length of retention period. (1) Ex- struction Programs. Federal agencies cept as otherwise provided, records may, however, prescribe the Request must be retained for three years from for Advance or Reimbursement form, the starting date specified in paragraph specified in § 92.41(d), instead of this (c) of this section. form. (2) If any litigation, claim, negotia- (ii) The frequency for submitting re- tion, audit or other action involving imbursement requests is treated in the records has been started before the § 92.41(b)(3). expiration of the 3-year period, the (2) Grants that support construction ac- records must be retained until comple- tivities paid by letter of credit, electronic tion of the action and resolution of all funds transfer or Treasury check ad- issues which arise from it, or until the

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end of the regular 3-year period, which- usage chargeback rates or composite ever is later. fringe benefit rates). (3) To avoid duplicate recordkeeping, (i) If submitted for negotiation. If the awarding agencies may make special proposal, plan, or other computation is arrangements with grantees and sub- required to be submitted to the Federal grantees to retain any records which Government (or to the grantee) to form are continuously needed for joint use. the basis for negotiation of the rate, The awarding agency will request then the 3-year retention period for its transfer of records to its custody when supporting records starts from the date it determines that the records possess of such submission. long-term retention value. When the (ii) If not submitted for negotiation. If records are transferred to or main- the proposal, plan, or other computa- tained by the Federal agency, the 3- tion is not required to be submitted to year retention requirement is not ap- the Federal Government (or to the plicable to the grantee or subgrantee. (c) Starting date of retention period—(1) grantee) for negotiation purposes, then General. When grant support is contin- the 3-year retention period for the pro- ued or renewed at annual or other in- posal plan, or computation and its sup- tervals, the retention period for the porting records starts from end of the records of each funding period starts on fiscal year (or other accounting period) the day the grantee or subgrantee sub- covered by the proposal, plan, or other mits to the awarding agency its single computation. or last expenditure report for that pe- (d) Substitution of microfilm. Copies riod. However, if grant support is con- made by microfilming, photocopying, tinued or renewed quarterly, the reten- or similar methods may be substituted tion period for each year’s records for the original records. starts on the day the grantee submits (e) Access to records—(1) Records of its expenditure report for the last quar- grantees and subgrantees. The awarding ter of the Federal fiscal year. In all agency and the Comptroller General of other cases, the retention period starts the United States, or any of their au- on the day the grantee submits its thorized representatives, shall have the final expenditure report. If an expendi- right of access to any pertinent books, ture report has been waived, the reten- documents, papers, or other records of tion period starts on the day the report grantees and subgrantees which are would have been due. pertinent to the grant, in order to (2) Real property and equipment make audits, examinations, excerpts, records. The retention period for real and transcripts. property and equipment records starts (2) Expiration of right of access. The from the date of the disposition or re- rights of access in this section must placement or transfer at the direction not be limited to the required reten- of the awarding agency. tion period but shall last as long as the (3) Records for income transactions records are retained. In some after grant or subgrant support. (f) Restrictions on public access. The cases grantees must report income Federal Freedom of Information Act (5 after the period of grant support. U.S.C. 552) does not apply to records Where there is such a requirement, the unless required by Federal, State, or retention period for the records per- local law, grantees and subgrantees are taining to the earning of the income not required to permit public access to starts from the end of the grantee’s fiscal year in which the income is earned. their records. (4) Indirect cost rate proposals, cost al- § 92.43 Enforcement. locations plans, etc. This paragraph applies to the following types of docu- (a) Remedies for noncompliance. If a ments, and their supporting records: grantee or subgrantee materially fails indirect cost rate computations or pro- to comply with any term of an award, posals, cost allocation plans, and any whether stated in a Federal statute or similar accounting computations of regulation, an assurance, in a State the rate at which a particular group of plan or application, a notice of award, costs is chargeable (such as computer or elsewhere, the awarding agency may

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take one or more of the following ac- being subject to ‘‘Debarment and Sus- tions, as appropriate in the cir- pension’’ under E.O. 12549 (see § 92.35). cumstances: (1) Temporarily withhold cash pay- § 92.44 Termination for convenience. ments pending correction of the defi- Except as provided in § 92.43 awards ciency by the grantee or subgrantee or may be terminated in whole or in part more severe enforcement action by the only as follows: awarding agency, (a) By the awarding agency with the (2) Disallow (that is, deny both use of consent of the grantee or subgrantee in funds and matching credit for) all or which case the two parties shall agree part of the cost of the activity or ac- upon the termination conditions, in- tion not in compliance, cluding the effective date and in the (3) Wholly or partly suspend or ter- case of partial termination, the portion minate the current award for the to be terminated, or grantee’s or subgrantee’s program, (b) By the grantee or subgrantee (4) Withhold further awards for the upon written notification to the award- program, or ing agency, setting forth the reasons (5) Take other remedies that may be for such termination, the effective legally available. date, and in the case of partial termi- (b) Hearings, appeals. In taking an en- nation, the portion to be terminated. forcement action, the awarding agency However, if, in the case of a partial ter- will provide the grantee or subgrantee mination, the awarding agency deter- an opportunity for such hearing, ap- mines that the remaining portion of peal, or other administrative pro- the award will not accomplish the pur- ceeding to which the grantee or sub- poses for which the award was made, grantee is entitled under any statute the awarding agency may terminate or regulation applicable to the action the award in its entirety under either involved. § 92.43 or paragraph (a) of this section. (c) Effects of suspension and termination. Costs of grantee or subgrantee Subpart D—After-the-Grant resulting from obligations incurred by Requirements the grantee or subgrantee during a suspension or after termination of an § 92.50 Closeout. award are not allowable unless the awarding agency expressly authorizes (a) General. The Federal agency will them in the notice of suspension or ter- close out the award when it determines mination or subsequently. Other grant- that all applicable administrative ac- ee or subgrantee costs during suspen- tions and all required work of the sion or after termination which are grant has been completed. necessary and not reasonably avoidable (b) Reports. Within 90 days after the are allowable if: expiration or termination of the grant, (1) The costs result from obligations the grantee must submit all financial, which were properly incurred by the performance, and other reports re- grantee or subgrantee before the effec- quired as a condition of the grant. tive date of suspension or termination, Upon request by the grantee, Federal are not in anticipation of it, and, in the agencies may extend this timeframe. case of a termination, are These may include but are not limited noncancellable, and, to: (2) The costs would be allowable if (1) Final performance or progress re- the award were not suspended or export. pired normally at the end of the fund- (2) Financial Status Report (SF 269) or ing period in which the termination Outlay Report and Request for Reim- takes effect. bursement for Construction Programs (d) Relationship to debarment and sus- (SF–271) (as applicable). pension. The enforcement remedies (3) Final request for payment (SF–270) identified in this section, including (if applicable). suspension and termination, do not (4) Invention disclosure (if applicable). preclude grantee or subgrantee from (5) Federally-owned property report:

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In accordance with § 92.32(f), a grantee CFR Ch. II). The date from which inter- must submit an inventory of all feder- est is computed is not extended by liti- ally owned property (as distinct from gation or the filing of any form of ap- property acquired with grant funds) for peal. which it is accountable and request disposition instructions from the Federal PART 93—NEW RESTRICTIONS ON agency of property no longer needed. LOBBYING (c) Cost adjustment. The Federal agency will, within 90 days after receipt of Subpart A—General reports in paragraph (b) of this section, make upward or downward adjust- Sec. ments to the allowable costs. 93.100 Conditions on use of funds. (d) Cash adjustments. (1) The Federal 93.105 Definitions. 93.110 Certification and disclosure. agency will make prompt payment to the grantee for allowable reimbursable Subpart B—Activities by Own Employees costs. (2) The grantee must immediately re- 93.200 Agency and legislative liaison. fund to the Federal agency any balance 93.205 Professional and technical services. of unobligated (unencumbered) cash 93.210 Reporting. advanced that is not authorized to be Subpart C—Activities by Other than Own retained for use on other grants. Employees § 92.51 Later disallowances and adjust- 93.300 Professional and technical services. ments. The closeout of a grant does not af- Subpart D—Penalties and Enforcement fect: 93.400 Penalties. (a) The Federal agency’s right to dis- 93.405 Penalty procedures. allow costs and recover funds on the 93.410 Enforcement. basis of a later audit or other review; (b) The grantee’s obligation to return Subpart E—Exemptions any funds due as a result of later re- 93.500 Secretary of Defense. funds, corrections, or other transactions; Subpart F—Agency Reports (c) Records retention as required in § 92.42; 93.600 Semi-annual compilation. (d) Property management require- 93.605 Inspector General report. ments in §§ 92.31 and 92.32; and APPENDIX A TO PART 93—CERTIFICATION RE- (e) Audit requirements in § 92.26. GARDING LOBBYING APPENDIX B TO PART 93—DISCLOSURE FORM TO REPORT LOBBYING § 92.52 Collection of amounts due. AUTHORITY: Section 319, Public Law 101–121 (a) Any funds paid to a grantee in ex- (31 U.S.C. 1352); (5 U.S.C. 301). cess of the amount to which the grantee is finally determined to be entitled CROSS REFERENCE: See also Office of Man- under the terms of the award con- agement and Budget notice published at 54 FR 52306, December 20, 1989. stitute a debt to the Federal Govern- ment. If not paid within a reasonable SOURCE: 55 FR 6754, Feb. 26, 1990, unless period after demand, the Federal agen- otherwise noted. cy may reduce the debt by: (1) Making an adminstrative offset Subpart A—General against other requests for reimbursements, § 93.100 Conditions on use of funds. (2) Withholding advance payments (a) No appropriated funds may be ex- otherwise due to the grantee, or pended by the recipient of a Federal (3) Other action permitted by law. contract, grant, loan, or cooperative (b) Except where otherwise provided ageement to pay any person for influ- by statutes or regulations, the Federal encing or attempting to influence an agency will charge interest on an over- officer or employee of any agency, a due debt in accordance with the Fed- Member of Congress, an officer or em- eral Claims Collection Standards (4 ployee of Congress, or an employee of a

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Member of Congress in connection with § 93.105 Definitions. any of the following covered Federal For purposes of this part: actions: the awarding of any Federal (a) Agency, as defined in 5 U.S.C. contract, the making of any Federal 552(f), includes Federal executive de- grant, the making of any Federal loan, partments and agencies as well as inde- the entering into of any cooperative pendent regulatory commissions and agreement, and the extension, continu- Government corporations, as defined in ation, renewal, amendment, or modi- 31 U.S.C. 9101(1). fication of any Federal contract, grant, (b) Covered Federal action means any loan, or cooperative agreement. of the following Federal actions: (b) Each person who requests or receives from an agency a Federal con- (1) The awarding of any Federal contract, grant, loan, or cooperative tract; agreement shall file with that agency a (2) The making of any Federal grant; certification, set forth in Appendix A (3) The making of any Federal loan; to this part, that the person has not (4) The entering into of any coopera- made, and will not make, any payment tive agreement; and, prohibited by paragraph (a) of this sec- (5) The extension, continuation, re- tion. newal, amendment, or modification of (c) Each person who requests or re- any Federal contract, grant, loan, or ceives from an agency a Federal con- cooperative agreement. tract, grant, loan, or a cooperative Covered Federal action does not in- agreement shall file with that agency a clude receiving from an agency a com- disclosure form, set forth in Appendix mitment providing for the United B to this part, if such person has made States to insure or guarantee a loan. or has agreed to make any payment Loan guarantees and loan insurance using nonappropriated funds (to in- are addressed independently within clude profits from any covered Federal this part. action), which would be prohibited (c) Federal contract means an acquisi- under paragraph (a) of this section if tion contract awarded by an agency, paid for with appropriated funds. including those subject to the Federal (d) Each person who requests or re- Acquisition Regulation (FAR), and any ceives from an agency a commitment other acquisition contract for real or providing for the United States to in- personal property or services not sub- sure or guarantee a loan shall file with ject to the FAR. that agency a statement, set forth in (d) Federal cooperative agreement Appendix A to this part, whether that means a cooperative agreement en- person has made or has agreed to make tered into by an agency. any payment to influence or attempt (e) Federal grant means an award of to influence an officer or employee of financial assistance in the form of any agency, a Member of Congress, an money, or property in lieu of money, officer or employee of Congress, or an by the Federal Government or a direct employee of a Member of Congress in appropriation made by law to any per- connection with that loan insurance or son. The term does not include tech- guarantee. nical assistance which provides serv- (e) Each person who requests or re- ices instead of money, or other assist- ceives from an agency a commitment ance in the form of revenue sharing, providing for the United States to in- loans, loan guarantees, loan insurance, sure or guarantee a loan shall file with interest subsidies, insurance, or direct that agency a disclosure form, set forth United States cash assistance to an in- in Appendix B to this part, if that per- dividual. son has made or has agreed to make (f) Federal loan means a loan made by any payment to influence or attempt an agency. The term does not include to influence an officer or employee of loan guarantee or loan insurance. any agency, a Member of Congress, an (g) Indian tribe and tribal organization officer or employee of Congress, or an have the meaning provided in section 4 employee of a Member of Congress in of the Indian Self-Determination and connection with that loan insurance or Education Assistance Act (25 U.S.C. guarantee. 450B). Alaskan Natives are included

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under the definitions of Indian tribes in nished to, not funded by, or not fur- that Act. nished in cooperation with the Federal (h) Influencing or attempting to influ- Government. ence means making, with the intent to (n) Reasonable payment means, with influence, any communication to or ap- respect to professional and other tech- pearance before an officer or employee nical services, a payment in an amount or any agency, a Member of Congress, that is consistent with the amount nor- an officer or employee of Congress, or mally paid for such services in the pri- an employee of a Member of Congress vate sector. in connection with any covered Federal (o) Recipient includes all contractors, action. subcontractors at any tier, and sub- (i) Loan guarantee and loan insurance grantees at any tier of the recipient of means an agency’s guarantee or insur- funds received in connection with a ance of a loan made by a person. Federal contract, grant, loan, or coop- (j) Local government means a unit of erative agreement. The term excludes government in a State and, if char- an Indian tribe, tribal organization, or tered, established, or otherwise recog- any other Indian organization with re- nized by a State for the performance of spect to expenditures specifically per- a governmental duty, including a local mitted by other Federal law. public authority, a special district, an (p) Regularly employed means, with intrastate district, a council of govern- respect to an officer or employee of a ments, a sponsor group representative person requesting or receiving a Fed- organization, and any other instrumen- eral contract, grant, loan, or coopera- tality of a local government. tive agreement or a commitment pro- (k) Officer or employee of an agency in- viding for the United States to insure cludes the following individuals who or guarantee a loan, an officer or em- are employed by an agency: ployee who is employed by such person (1) An individual who is appointed to for at least 130 working days within a position in the Government under one year immediately preceding the title 5, U.S. Code, including a position under a temporary appointment; date of the submission that initiates (2) A member of the uniformed serv- agency consideration of such person for ices as defined in section 101(3), title 37, receipt of such contract, grant, loan, U.S. Code; cooperative agreement, loan insurance (3) A special Government employee commitment, or loan guarantee com- as defined in section 202, title 18, U.S. mitment. An officer or employee who is Code; and, employed by such person for less than (4) An individual who is a member of 130 working days within one year im- a Federal advisory committee, as de- mediately preceding the date of the fined by the Federal Advisory Com- submission that initiates agency con- mittee Act, title 5, U.S. Code appendix sideration of such person shall be con- 2. sidered to be regularly employed as (l) Person means an individual, cor- soon as he or she is employed by such poration, company, association, au- person for 130 working days. thority, firm, partnership, society, (q) State means a State of the United State, and local government, regard- States, the District of Columbia, the less of whether such entity is operated Commonwealth of Puerto Rico, a terri- for profit or not for profit. This term tory or possession of the United States, excludes an Indian tribe, tribal organi- an agency or instrumentality of a zation, or any other Indian organiza- State, and a multi-State, regional, or tion with respect to expenditures spe- interstate entity having governmental cifically permitted by other Federal duties and powers. law. (m) Reasonable compensation means, § 93.110 Certification and disclosure. with respect to a regularly employed (a) Each person shall file a certifi- officer or employee of any person, com- cation, and a disclosure form, if re- pensation that is consistent with the quired, with each submission that ini- normal compensation for such officer tiates agency consideration of such or employee for work that is not fur- person for:

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(1) Award of a Federal contract, shall file a certification, and a disclo- grant, or cooperative agreement ex- sure form, if required, to the next tier ceeding $100,000; or above. (2) An award of a Federal loan or a (e) All disclosure forms, but not cer- commitment providing for the United tifications, shall be forwarded from States to insure or guarantee a loan tier to tier until received by the person exceeding $150,000. referred to in paragraphs (a) or (b) of (b) Each person shall file a certifi- this section. That person shall forward cation, and a disclosure form, if re- all disclosure forms to the agency. quired, upon receipt by such person of: (f) Any certification or disclosure (1) A Federal contract, grant, or co- form filed under paragraph (e) of this operative agreement exceeding $100,000; section shall be treated as a material or representation of fact upon which all (2) A Federal loan or a commitment receiving tiers shall rely. All liability providing for the United States to in- arising from an erroneous representa- sure or guarantee a loan exceeding tion shall be borne solely by the tier $150,000, filing that representation and shall not unless such person previously filed a be shared by any tier to which the er- certification, and a disclosure form, if roneous representation is forwarded. required, under paragraph (a) of this Submitting an erroneous certification section. or disclosure constitutes a failure to (c) Each person shall file a disclosure file the required certification or disclo- form at the end of each calendar quar- sure, respectively. If a person fails to ter in which there occurs any event file a required certification or disclo- that requires disclosure or that materi- sure, the United States may pursue all ally affects the accuracy of the infor- available remedies, including those au- mation contained in any disclosure thorized by section 1352, title 31, U.S. form previously filed by such person Code. under paragraphs (a) or (b) of this sec- (g) For awards and commitments in tion. An event that materially affects process prior to December 23, 1989, but the accuracy of the information re- not made before that date, certifi- ported includes: cations shall be required at award or (1) A cumulative increase of $25,000 or commitment, covering activities oc- more in the amount paid or expected to curring between December 23, 1989, and be paid for influencing or attempting the date of award or commitment. to influence a covered Federal action; However, for awards and commitments or in process prior to the December 23, (2) A change in the person(s) or indi- 1989 effective date of these provisions, vidual(s) influencing or attempting to but not made before December 23, 1989, influence a covered Federal action; or, disclosure forms shall not be required at time of award or commitment but (3) A change in the officer(s), em- shall be filed within 30 days. ployee(s), or Member(s) contacted to influence or attempt to influence a (h) No reporting is required for an ac- covered Federal action. tivity paid for with appropriated funds if that activity is allowable under ei- (d) Any person who requests or re- ther Subpart B or C. ceives from a person referred to in paragraphs (a) or (b) of this section: (1) A subcontract exceeding $100,000 Subpart B—Activities by Own at any tier under a Federal contract; Employees (2) A subgrant, contract, or subcontract exceeding $100,000 at any tier § 93.200 Agency and legislative liaison. under a Federal grant; (a) The prohibition on the use of ap- (3) A contract or subcontract exceed- propriated funds, in § 93.100 (a), does ing $100,000 at any tier under a Federal not apply in the case of a payment of loan exceeding $150,000; or, reasonable compensation made to an (4) A contract or subcontract exceed- officer or employee of a person requesting $100,000 at any tier under a Federal ing or receiving a Federal contract, cooperative agreement, grant, loan, or cooperative agreement

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if the payment is for agency and legis- eral contract, grant, loan, or coopera- lative liaison activities not directly re- tive agreement if payment is for pro- lated to a covered Federal action. fessional or technical services rendered (b) For purposes of paragraph (a) of directly in the preparation, submis- this section, providing any information sion, or negotiation of any bid, pro- specifically requested by an agency or posal, or application for that Federal Congress is allowable at any time. contract, grant, loan, or cooperative (c) For purposes of paragraph (a) of agreement or for meeting requirements this section, the following agency and imposed by or pursuant to law as a legislative liaison activities are allow- condition for receiving that Federal able at any time only where they are contract, grant, loan, or cooperative not related to a specific solicitation for agreement. any covered Federal action: (b) For purposes of paragraph (a) of (1) Discussing with an agency (in- this section, professional and technical cluding individual demonstrations) the services shall be limited to advice and qualities and characteristics of the per- analysis directly applying any profes- son’s products or services, conditions sional or technical discipline. For ex- or terms of sale, and service capabili- ample, drafting of a legal document ac- ties; and, companying a bid or proposal by a law- (2) Technical discussions and other yer is allowable. Similarly, technical activities regarding the application or advice provided by an engineer on the adaptation of the person’s products or performance or operational capability services for an agency’s use. of a piece of equipment rendered di- (d) For purposes of paragraph (a) of rectly in the negotiation of a contract this section, the following agencies and is allowable. However, communications legislative liaison activities are allow- with the intent to influence made by a able only where they are prior to for- professional (such as a licensed lawyer) mal solicitation of any covered Federal or a technical person (such as a li- action: censed accountant) are not allowable (1) Providing any information not under this section unless they provide specifically requested but necessary for advice and analysis directly applying an agency to make an informed deci- their professional or technical exper- sion about initiation of a covered Fed- tise and unless the advice or analysis is eral action; rendered directly and solely in the (2) Technical discussions regarding preparation, submission or negotiation the preparation of an unsolicited proof a covered Federal action. Thus, for posal prior to its official submission; example, communications with the in- and, tent to influence made by a lawyer (3) Capability presentations by per- that do not provide legal advice or sons seeking awards from an agency analysis directly and solely related to pursuant to the provisions of the Small the legal aspects of his or her client’s Business Act, as amended by Public proposal, but generally advocate one Law 95–507 and other subsequent proposal over another are not allow- amendments. able under this section because the (e) Only those activities expressly au- lawyer is not providing professional thorized by this section are allowable legal services. Similarly, communica- under this section. tions with the intent to influence made by an engineer providing an engineer- § 93.205 Professional and technical ing analysis prior to the preparation or services. submission of a bid or proposal are not (a) The prohibition on the use of ap- allowable under this section since the propriated funds, in § 93.100 (a), does engineer is providing technical services not apply in the case of a payment of but not directly in the preparation, reasonable compensation made to an submission or negotiation of a covered officer or employee of a person request- Federal action. ing or receiving a Federal contract, (c) Requirements imposed by or pur- grant, loan, or cooperative agreement suant to law as a condition for receiv- or an extension, continuation, renewal, ing a covered Federal award include amendment, or modification of a Fed- those required by law or regulation, or

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reasonably expected to be required by or a technical person (such as a li- law or regulation, and any other re- censed accountant) are not allowable quirements in the actual award docu- under this section unless they provide ments. advice and analysis directly applying (d) Only those services expressly au- their professional or technical exper- thorized by this section are allowable tise and unless the advice or analysis is under this section. rendered directly and solely in the preparation, submission or negotiation § 93.210 Reporting. of a covered Federal action. Thus, for No reporting is required with respect example, communications with the in- to payments of reasonable compensa- tent to influence made by a lawyer tion made to regularly employed offi- that do not provide legal advice or cers or employees of a person. analysis directly and solely related to the legal aspects of his or her client’s Subpart C—Activities by Other proposal, but generally advocate one than Own Employees proposal over another are not allowable under this section because the § 93.300 Professional and technical lawyer is not providing professional services. legal services. Similarly, communica- (a) The prohibition on the use of ap- tions with the intent to influence made propriated funds, in § 93.100 (a), does by an engineer providing an engineer- not apply in the case of any reasonable ing analysis prior to the preparation or payment to a person, other than an of- submission of a bid or proposal are not ficer or employee of a person request- allowable under this section since the ing or receiving a covered Federal ac- engineer is providing technical services tion, if the payment is for professional but not directly in the preparation, or technical services rendered directly submission or negotiation of a covered in the preparation, submission, or ne- Federal action. gotiation of any bid, proposal, or appli- (d) Requirements imposed by or pur- cation for that Federal contract, grant, suant to law as a condition for receiv- loan, or cooperative agreement or for ing a covered Federal award include meeting requirements imposed by or those required by law or regulation, or pursuant to law as a condition for re- reasonably expected to be required by ceiving that Federal contract, grant, law or regulation, and any other re- loan, or cooperative agreement. quirements in the actual award docu- (b) The reporting requirements in ments. § 93.110 (a) and (b) regarding filing a dis- (e) Persons other than officers or em- closure form by each person, if re- ployees of a person requesting or required, shall not apply with respect to ceiving a covered Federal action in- professional or technical services ren- clude consultants and trade associa- dered directly in the preparation, sub- tions. mission, or negotiation of any commit- (f) Only those services expressly au- ment providing for the United States thorized by this section are allowable to insure or guarantee a loan. under this section. (c) For purposes of paragraph (a) of this section, professional and technical Subpart D—Penalties and services shall be limited to advice and Enforcement analysis directly applying any professional or technical discipline. For ex- § 93.400 Penalties. ample, drafting or a legal document ac- (a) Any person who makes an expend- companying a bid or proposal by a law- iture prohibited herein shall be subject yer is allowable. Similarly, technical to a civil penalty of not less than advice provided by an engineer on the $10,000 and not more than $100,000 for performance or operational capability each such expenditure. of a piece of equipment rendered di- (b) Any person who fails to file or rectly in the negotiation of a contract amend the disclosure form (see Appen- is allowable. However, communications dix B to this part) to be filed or amend- with the intent to influence made by a ed if required herein, shall be subject professional (such as a licensed lawyer) to a civil penalty of not less than

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$10,000 and not more than $100,000 for Subpart E—Exemptions each such failure. (c) A filing or amended filing on or § 93.500 Secretary of Defense. after the date on which an administra- (a) The Secretary of Defense may ex- tive action for the imposition of a civil empt, on a case-by-case basis, a cov- penalty is commenced does not prevent ered Federal action from the prohibi- the imposition of such civil penalty for tion whenever the Secretary deter- a failure occurring before that date. An mines, in writing, that such an exemp- administrative action is commenced tion is in the national interest. The with respect to a failure when an inves- Secretary shall transmit a copy of each tigating official determines in writing such written exemption to Congress to commence an investigation of an al- immediately after making such a delegation of such failure. termination. (d) In determining whether to impose (b) The Department of Defense may a civil penalty, and the amount of any issue supplemental regulations to im- such penalty, by reason of a violation plement paragraph (a) of this section. by any person, the agency shall consider the nature, circumstances, ex- Subpart F—Agency Reports tent, and gravity of the violation, the § 93.600 Semi-annual compilation. effect on the ability of such person to continue in business, any prior viola- (a) The head of each agency shall col- tions by such person, the degree of cul- lect and compile the disclosure reports pability of such person, the ability of (see Appendix B to this part) and, on the person to pay the penalty, and such May 31 and November 30 of each year, other matters as may be appropriate. submit to the Secretary of the Senate (e) First offenders under paragraphs and the Clerk of the House of Rep- resentatives a report containing a com- (a) or (b) of this section shall be subject pilation of the information contained to a civil penalty of $10,000, absent ag- in the disclosure reports received dur- gravating circumstances. Second and ing the six-month period ending on subsequent offenses by persons shall be March 31 or September 30, respectively, subject to an appropriate civil penalty of that year. between $10,000 and $100,000, as deter- (b) The report, including the com- mined by the agency head or his or her pilation, shall be available for public designee. inspection 30 days after receipt of the (f) An imposition of a civil penalty report by the Secretary and the Clerk. under this section does not prevent the (c) Information that involves intel- United States from seeking any other ligence matters shall be reported only remedy that may apply to the same to the Select Committee on Intel- conduct that is the basis for the impo- ligence of the Senate, the Permanent sition of such civil penalty. Select Committee on Intelligence of the House of Representatives, and the § 93.405 Penalty procedures. Committees on Appropriations of the Agencies shall impose and collect Senate and the House of Representa- civil penalties pursuant to the provi- tives in accordance with procedures sions of the Program Fraud and Civil agreed to by such committees. Such in- Remedies Act, 31 U.S.C. sections 3803 formation shall not be available for public inspection. (except subsection (c)), 3804, 3805, 3806, (d) Information that is classified 3807, 3808, and 3812, insofar as these pro- under Executive Order 12356 or any suc- visions are not inconsistent with the cessor order shall be reported only to requirements herein. the Committee on Foreign Relations of the Senate and the Committee on For- § 93.410 Enforcement. eign Affairs of the House of Represent- The head of each agency shall take atives or the Committees on Armed such actions as are necessary to ensure Services of the Senate and the House of that the provisions herein are vigor- Representatives (whichever such com- ously implemented and enforced in mittees have jurisdiction of matters that agency. involving such information) and to the

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Committees on Appropriations of the report, the actions taken by the head Senate and the House of Representa- of the agency in the year covered by tives in accordance with procedures the report with respect to those alleged agreed to by such committees. Such in- violations and alleged violations in formation shall not be available for previous years, and the amounts of public inspection. civil penalties imposed by the agency (e) The first semi-annual compilation in the year covered by the report. shall be submitted on May 31, 1990, and shall contain a compilation of the dis- APPENDIX A TO PART 93—CERTIFICATION closure reports received from Decem- REGARDING LOBBYING ber 23, 1989 to March 31, 1990. Certification for Contracts, Grants, Loans, and (f) Major agencies, designated by the Cooperative Agreements Office of Management and Budget (OMB), are required to provide ma- The undersigned certifies, to the best of his or her knowledge and belief, that: chine-readable compilations to the (1) No Federal appropriated funds have Secretary of the Senate and the Clerk been paid or will be paid, by or on behalf of of the House of Representatives no the undersigned, to any person for influ- later than with the compilations due encing or attempting to influence an officer on May 31, 1991. OMB shall provide de- or employee of an agency, a Member of Con- tailed specifications in a memorandum gress, an officer or employee of Congress, or to these agencies. an employee of a Member of Congress in con- (g) Non-major agencies are requested nection with the awarding of any Federal contract, the making of any Federal grant, to provide machine-readable compila- the making of any Federal loan, the entering tions to the Secretary of the Senate into of any cooperative agreement, and the and the Clerk of the House of Rep- extension, continuation, renewal, amend- resentatives. ment, or modification of any Federal con- (h) Agencies shall keep the originals tract, grant, loan, or cooperative agreement. of all disclosure reports in the official (2) If any funds other than Federal appro- files of the agency. priated funds have been paid or will be paid to any person for influencing or attempting § 93.605 Inspector General report. to influence an officer or employee of any agency, a Member of Congress, an officer or (a) The Inspector General, or other employee of Congress, or an employee of a official as specified in paragraph (b) of Member of Congress in connection with this this section, of each agency shall pre- Federal contract, grant, loan, or cooperative pare and submit to Congress each year, agreement, the undersigned shall complete commencing with submission of the and submit Standard Form-LLL, ‘‘Disclosure President’s Budget in 1991, an evalua- Form to Report Lobbying,’’ in accordance with its instructions. tion of the compliance of that agency (3) The undersigned shall require that the with, and the effectiveness of, the re- language of this certification be included in quirements herein. The evaluation may the award documents for all subawards at all include any recommended changes that tiers (including subcontracts, subgrants, and may be necessary to strengthen or im- contracts under grants, loans, and coopera- prove the requirements. tive agreements) and that all subrecipients (b) In the case of an agency that does shall certify and disclose accordingly. not have an Inspector General, the This certification is a material representation of fact upon which reliance was placed agency official comparable to an In- when this transaction was made or entered spector General shall prepare and sub- into. Submission of this certification is a mit the annual report, or, if there is no prerequisite for making or entering into this such comparable official, the head of transaction imposed by section 1352, title 31, the agency shall prepare and submit U.S. Code. Any person who fails to file the the annual report. required certification shall be subject to a (c) The annual report shall be sub- civil penalty of not less than $10,000 and not mitted at the same time the agency more than $100,000 for each such failure. submits its annual budget justifica- Statement for Loan Guarantees and Loan tions to Congress. Insurance (d) The annual report shall include The undersigned states, to the best of his the following: All alleged violations re- or her knowledge and belief, that: lating to the agency’s covered Federal If any funds have been paid or will be paid actions during the year covered by the to any person for influencing or attempting

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to influence an officer or employee of any Submission of this statement is a pre- agency, a Member of Congress, an officer or requisite for making or entering into this employee of Congress, or an employee of a transaction imposed by section 1352, title 31, Member of Congress in connection with this U.S. Code. Any person who fails to file the commitment providing for the United States required statement shall be subject to a civil to insure or guarantee a loan, the under- penalty of not less than $10,000 and not more signed shall complete and submit Standard than $100,000 for each such failure. Form-LLL, ‘‘Disclosure Form to Report Lob- bying,’’ in accordance with its instructions.

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APPENDIX B TO PART 93—DISCLOSURE FORM TO REPORT LOBBYING

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PART 94—RESPONSIBLE 94.2 Applicability. 94.3 Definitions. PROSPECTIVE CONTRACTORS 94.4 Institutional responsibility regarding conflicting interests of investigators. Sec. 94.5 Management of conflicting interests. 94.1 Purpose. 94.6 Remedies.

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AUTHORITY: 42 U.S.C. 216, 289b–1, 299c–3. PHS to which the authority involved SOURCE: 60 FR 35817, July 11, 1995, unless may be delegated. otherwise noted. PHS Awarding Component means an organizational unit of the PHS that § 94.1 Purpose. funds research that is subject to this This part promotes objectivity in re- part. search by establishing standards to en- Public Health Service Act or PHS Act sure there is no reasonable expectation mean the statute codified at 42 U.S.C. that the design, conduct, or reporting 201 et seq. of research to be performed under PHS Research means a systematic inves- contracts will be biased by any con- tigation designed to develop or conflicting financial interest of an Investi- tribute to generalizable knowledge re- gator. lating broadly to public health, including behavioral and social-sciences re- § 94.2 Applicability. search. The term encompasses basic This part is applicable to each Insti- and applied research and product devel- tution that seeks PHS funding for re- opment. As used in this part, the term search and, through the implementa- includes any such activity for which tion of this part, to each Investigator funding is available from a PHS Award- who participates in such research (see ing Component, whether authorized § 94.4(a)); provided that this part does under the PHS Act or other statutory not apply to SBIR Program Phase I ap- authority. plications. Significant Financial Interest means anything of monetary value, including § 94.3 Definitions. but not limited to, salary or other pay- As used in this part: ments for services (e.g., consulting fees Contractor means an entity that pro- or honoraria); equity interests (e.g., vides property or services for the direct stocks, stock options or other owner- benefit or use of the Federal Govern- ship interests); and intellectual prop- ment. erty rights (e.g., patents copyrights HHS means the United States De- and royalties from such rights). The partment of Health and Human Serv- term does not include: ices, and any components of the De- (1) Salary, royalties, or other remu- partment to which the authority in- neration from the applicant institu- volved may be delegated. tion; Institution means any public or pri- (2) Any ownership interests in the in- vate entity or organization (excluding stitution, if the institution is an appli- a Federal agency) cant under the SBIR program; (1) That submits a proposal for a re- (3) Income from seminars, lectures, search contract whether in response to or teaching engagements sponsored by a solicitation from the PHS or other- public or nonprofit entities; wise, or (4) Income from service on advisory (2) That assumes the legal obligation committees or review panels for public to carry out the research required or nonprofit entities; under the contract. (5) An equity interest that when ag- Investigator means the principal in- gregated for the Investigator and the vestigator and any other person who is Investigator’s spouse and dependent responsible for the design, conduct, or children, meets both of the following reporting of a research project funded tests: Does not exceed $10,000 in value by PHS, or proposed for such funding. as determined through reference to For purposes of the requirements of public prices or other reasonable meas- this part relating to financial inter- ures of fair market value, and does not ests, ‘‘Investigator’’ includes the Inves- represent more than a five percent tigator’s spouse and dependent chil- ownership interest in any single entity; dren. or PHS means the Public Health Serv- (6) Salary, royalties or other pay- ice, an operating division of the U.S. ments that when aggregated for the in- Department of Health and Human vestigator and the investigator’s Services, and any components of the spouse and dependent children over the

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next twelve months, are not reasonably either on an annual basis or as new re- expected to exceed $10,000. portable Significant Financial Inter- Small Business Innovation Research ests are obtained. (SBIR) Program means the extramural (d) Provide guidelines consistent research program for small business with this part for the designated offi- that is established by the awarding cial(s) to identify conflicting interests components of the Public Health Serv- and take such actions as necessary to ice and certain other Federal agencies ensure that such conflicting interests under Public Law 97–219, the Small will be managed, reduced, or elimi- Business Innovation Development Act, nated. as amended. For purposes of this part, (e) Maintain records of all financial the term SBIR Program includes the Small Business Technology Transfer disclosures and all actions taken by (STTR) Program, which was estab- the Institution with respect to each lished by Public Law 102–564. conflicting interest for three years after final payment or, where applica- § 94.4 Institutional responsibility re- ble, for the other time periods specified garding conflicting interests of in- in 48 CFR part 4, subpart 4.7. vestigators. (f) Establish adequate enforcement Each Institution must: mechanisms and provide for sanctions (a) Maintain an appropriate written, where appropriate. enforced policy on conflict of interest (g) Certify, in each contract proposal, that complies with this part and in- that: form each Investigator of that policy, (1) there is in effect at that Institu- the Investigator’s reporting respon- tion a written and enforced administra- sibilities, and of these regulations. If tive process to identify and manage, re- the Institution carries out the PHS- duce or eliminate conflicting interests funded research through subcontrac- with respect to all research projects for tors, or collaborators, the Institution which funding is sought from the PHS; must take reasonable steps to ensure that Investigators working for such en- (2) prior to the Institution’s expendi- tities comply with this part, either by ture of any funds under the award, the requiring those Investigators to com- Institution will report to the PHS ply with the Institution’s policy or by Awarding Component the existence of requiring the entities to provide assur- any conflicting interest (but not the ances to the Institution that will en- nature of the interest or other details) able the Institution to comply with found by the Institution and assure this part. that the interest has been managed, re- (b) Designate an institutional offi- duced or eliminated in accordance with cial(s) to solicit and review financial this part; and, for any interest that the disclosure statements from each Inves- Institution identifies as conflicting tigator who is planning to participate subsequent to the Institution’s initial in PHS-funded research. report under the award, the report will (c)(1) Require that by the time an ap- be made and the conflicting interest plication is submitted to PHS, each In- managed, reduced, or eliminated, at vestigator who is planning to partici- least on an interim basis, within sixty pate in the PHS-funded research has days of that identification. submitted to the designated official(s) (3) the Institution agrees to make in- a listing of his/her known Significant formation available, upon request, to Financial Interests (and those of his/ the HHS regarding all conflicting inher spouse and dependent children): terests identified by the Institution (i) that would reasonably appear to and how those interests have been be affected by the research for which managed, reduced, or eliminated to PHS funding is sought; and protect the research from bias; and (ii) in entities whose financial inter- (4) the Institution will otherwise ests would reasonably appear to be af- comply with this part. fected by the research. (2) All financial disclosures must be [60 FR 35817, July 11, 1995; 60 FR 39076, July updated during the period of the award, 31, 1995]

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§ 94.5 Management of conflicting inter- actions regarding conflicting financial ests. interests in PHS-funded research, in- (a) The designated official(s) must: cluding a review of all records perti- Review all financial disclosures; and nent to compliance with this part. HHS determine whether a conflict of inter- may require submission of the records est exists, and is so, what actions or review them on site. To the extent should be taken by the institution to permitted by law HHS will maintain manage, reduce, or eliminate such con- the confidentiality of all records of financial interests. On the basis of its re- flict of interest. A conflict of interest view of records and/or other informa- exists when the designated official(s) tion that may be available, the PHS reasonably determines that a Signifi- Awarding Component may decide that cant Financial Interest could directly a particular conflict of interest will and significantly affect the design, bias the objectivity of the PHS-funded conduct, or reporting of the PHS-fund- research to such an extent that further ed research. Examples of conditions or corrective action is needed or that the restrictions that might be imposed to Institution has not managed, reduced, manage conflicts of interest include, or eliminated the conflict of interest in but are not limited to: accordance with this part. The (1) Public disclosure of significant fi- issuance of a Stop Work Order by the nancial interests; Contracting Officer may be necessary (2) Monitoring of the research by until the matter is resolved. independent reviewers; (c) In any case in which the HHS de- (3) Modification of the research plan; termines that a PHS-funded project of (4) Disqualification from participa- clinical research whose purpose is to tion in all or a portion of the research evaluate the safety or effectiveness of funded by the PHS; a drug, medical device, or treatment (5) Divestiture of significant finan- has been designed, conducted, or re- cial interests, or; ported by an Investigator with a con- (6) Severance of relationships that flicting interest that was not disclosed create actual or potential conflicts. or managed as required by this part, (b) In addition to the types of con- the Institution must require disclosure flicting financial interests described in of the conflicting interest in each pub- this paragraph that must be managed, lic presentation of the results of the re- reduced, or eliminated, an Institution search. may require the management of other conflicting financial interests, as the [60 FR 35817, July 11, 1995; 60 FR 39077, July Institution deems appropriate. 31, 1995] [60 FR 35817, July 11, 1995; 60 FR 39077, July PART 95—GENERAL ADMINISTRA- 31, 1995] TION—GRANT PROGRAMS (PUB- § 94.6 Remedies. LIC ASSISTANCE, MEDICAL AS- (a) If the failure of an Investigator to SISTANCE AND STATE CHIL- comply with the conflict of interest DREN’S HEALTH INSURANCE PRO- policy of the Institution has biased the GRAMS) design, conduct, or reporting of the PHS-funded research, the Institution Subpart A—Time Limits for States To File must promptly notify the PHS Award- Claims ing Component of the corrective action Sec. taken or to be taken. The PHS Award- 95.1 Scope. ing Component will consider the situa- 95.4 Definitions. tion and, as necessary, take appro- 95.7 Time limit for claiming payment for priate action or refer the matter to the expenditures made after September 30, institution for further action, which 1979. may include directions to the Institu- 95.10 Time limit for claiming payment for expenditures made before October 1, 1979. tion on how to maintain appropriate 95.11 Payment of claims subject to appro- objectivity in the funded project. priations restrictions. (b) The HHS may at any time inquire 95.13 In which quarter we consider an ex- into the Institutional procedures and penditure made.

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95.19 Exceptions to time limits. Subpart G—Equipment Acquired Under 95.22 Meaning of good cause. Public Assistance Programs 95.25 When to request a waiver for good cause. 95.701 Purpose and scope of subpart. 95.28 What a waiver request for good cause 95.703 Definitions. must include. 95.705 Equipment costs—Federal financial 95.31 Where to send a waiver request for participation. good cause. 95.707 Equipment management and disposi- 95.34 The decision to waive the time limit tion. for good cause. AUTHORITY: Sec. 452(a), 83 Stat. 2351, 42 U.S.C. 652(a); sec. 1102, 49 Stat. 647, 42 U.S.C. Subparts B–D Reserved [ ] 1302; sec. 7(b), 68 Stat. 658, 29 U.S.C. 37(b); sec. 139, 84 Stat. 1323, 42 U.S.C. 2577b; sec. 144, 81 Subpart E—Cost Allocation Plans Stat. 529, 42 U.S.C. 2678; sec. 1132, 94 Stat. 530, 95.501 Purpose. 42 U.S.C. 1320b-2; sec. 306(b), 94 Stat. 530, 42 U.S.C. 1320b-2note, unless otherwise noted. 95.503 Scope. 95.505 Definitions. 95.507 Plan requirements. Subpart A—Time Limits for States 95.509 Cost allocation plan amendments and To File Claims certifications. 95.511 Approval of the cost allocation plan or plan amendment. SOURCE: 46 FR 3529, Jan. 15, 1981, unless otherwise noted. 95.515 Effective date of a cost allocation plan or plan amendment. 95.517 Claims for Federal financial partici- § 95.1 Scope. pation. (a) This subpart establishes a two 95.519 Cost disallowance. year time limit (15 months in some cases) for a State to claim Federal fi- Subpart F—Automatic Data Processing nancial participation in expenditures Equipment and Services—Conditions under State plans approved under the for Federal Financial Participation (FFP) following titles of the Social Security GENERAL Act: 95.601 Scope and applicability. Title I—Grants to States for Old-Age As- 95.605 Definitions. sistance and Medical Assistance for the Aged. SPECIFIC CONDITIONS FOR FFP Title IV-A—Grants to States for Aid and Services to Needy Families with Depend- 95.611 Prior approval conditions. ent Children (except for Section 95.612 Disallowance of Federal Financial 402(a)(19)(G) of the Act). Participation (FFP). Title IV-B—Child Welfare Services. 95.613 Procurement standards. Title IV-D—Child Support and Establish- 95.615 Access to systems and records. ment of Paternity. 95.617 Software and ownership rights. Title IV-E—Foster Care and Adoption Assist- 95.619 Use of ADP systems. ance. 95.621 ADP reviews. Title X—Grants to States for Aid to the 95.623 Waiver of prior approval require- Blind. ments. Title XIV—Grants to States for Aid to the 95.624 Consideration for FFP in emergency Permanently and Totally Disabled. situations. Title XVI—Grants to States for Aid to the 95.625 Increased FFP for certain ADP sys- Aged, Blind, or Disabled (AABD), or for tems. Such Aid and Medical Assistance for the FEDERAL FINANCIAL PARTICIPATION IN COSTS Aged. OF ADP ACQUISITIONS Title XIX—Grants to States for Medical As- sistance Programs. 95.631 Cost identification for purpose of Title XX—Grants to States for Services. FFP claims. Title XXI—Grants to States for State Chil- 95.633 Nondiscrimination requirements. dren’s Health Insurance Programs. EXEMPTIONS (b) This subpart also applies to 95.641 Applicability of rules for charging claims for Federal financial participa- equipment in Subpart G of this part. tion by any State which are based on

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any provision of the Act that is en- means any agency or organization of acted after issuance of these regula- the State or local government which is tions and that provides, on an entitle- authorized to incur matchable ex- ment basis, for Federal financial par- penses; for purposes of expenditures ticipation in expenditures made under under titles XIX and XXI, means any State plans or programs. agency of the State, including the (c) This subpart explains under what State Medicaid agency or State Child conditions the Secretary may decide to Health Agency, its fiscal agents, a extend the time limit for filing claims State health agency, or any other when a State believes it has good cause State or local organization which infor not meeting the time limit. curs matchable expenses; for purposes [46 FR 3529, Jan. 15, 1981, as amended at 65 of expenditures under all other titles, FR 33632, May 24, 2000] see the definitions in the appropriate program’s regulations. § 95.4 Definitions. The Act means the Social Security In this subpart— Act, as amended. Adjustment to prior year costs means We, our, and us refer to HHS’sCenters an adjustment in the amount of a par- for Medicare & Medicaid Services, Of- ticular cost item that was previously fice of Child Support Enforcement, Of- claimed under an interim rate concept fice of Human Development Services, and for which it is later determined or the Social Security Administration, that the cost is greater or less than depending on the program involved. that originally claimed. [46 FR 3529, Jan. 15, 1981, as amended at 65 Audit exception means a proposed ad- FR 33632, May 24, 2000] justment by the responsible Federal agency to any expenditure claimed by § 95.7 Time limit for claiming payment a State by virtue of an audit. for expenditures made after Sep- Claim means a request for Federal fi- tember 30, 1979. nancial participation in the manner Under the programs listed in § 95.1, and format required by our program we will pay a State for a State agency regulations, and instructions or direc- expenditure made after September 30, tives issued thereunder. 1979, only if the State files a claim with Court-ordered retroactive payment us for that expenditure within 2 years means either a retroactive payment after the calendar quarter in which the the State makes to an assistance re- State agency made the expenditure. cipient or an individual, under a Fed- Section 95.19 lists the exceptions to eral or State court order or a retro- this rule. active payment we make to a State under a Federal court order. Although § 95.10 Time limit for claiming pay- we may accept these claims as timely, ment for expenditures made before this provision does not mean that we October 1, 1979. necessarily agree to be bound by a Under the programs listed in § 95.1, State or Federal decision when we were we will pay a State for a State agency not a party to the action. expenditure made before October 1, Federal financial participation means 1979, only if the State filed or files a the Federal government’s share of an claim with us for that expenditure be- expenditure made by a State agency fore January 1, 1981. Section 95.19 lists under any of the programs listed in the exceptions to this rule. § 95.1. State means the 50 States, the Dis- § 95.11 Payment of claims subject to trict of Columbia, Guam, Puerto Rico, appropriations restrictions. the Virgin Islands, the Commonwealth Notwithstanding any other provision of the Northern Mariana Islands, of this Subpart, we will pay States’ American Samoa and the Trust Terri- otherwise allowable claims for Federal tories of the Pacific. financial participation under the pro- State agency for the purposes of ex- grams covered by this Subpart, subject penditures for financial assistance to the availability of funds (as provided under title IV-A and for support en- in Acts appropriating funds to the De- forcement services under title IV-D partment in effect at the time in which

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such claims are being considered for agency in accordance with generally payment), and subject to conditions or accepted accounting principles. restrictions applicable to payments out [46 FR 3529, Jan. 15, 1981, as amended at 65 of such funds, including provisions of FR 33632, May 24, 2000] the first and second continuing resolu- tions for FY 1981 (Pub. L. 96–369 and § 95.19 Exceptions to time limits. Pub. L. 96–536) and the Supplemental The time limits in §§ 95.7 and 95.10 do Appropriations and Rescission Act, 1981 not apply to any of the following— (Pub. L. 97–12) that make funds under (a) Any claim for an adjustment to those Acts available to pay for a State prior year costs. agency expenditure made before Sep- tember 30, 1978, only if the State had (b) Any claim resulting from an audit filed a claim for that expenditure with exception. us within one year of the expenditure. (c) Any claim resulting from a court- ordered retroactive payment. (Pub. L. 96–369, 94 Stat. 1351; Pub. L. 96–536, (d) Any claim for which the Sec- 94 Stat. 3166; and Pub. L. 97–12, 95 Stat. 14) retary decides there was good cause for [46 FR 46136, Sept. 17, 1981] the State’s not filing it within the time limit. § 95.13 In which quarter we consider an expenditure made. § 95.22 Meaning of good cause. In this subpart— (a) Good cause for the late filing of a (a) We consider a State agency’s ex- claim is lateness due to circumstances penditure for assistance payments beyond the State’s control. under title I, IV-A, IV-E, X, XIV, or (b) Examples of circumstances be- XVI (AABD) to have been made in the yond the State’s control include: quarter in which a payment was made (1) Acts of God; to the assistance recipient, his or her (2) Documented action or inaction of protective payee, or a vendor payee, the Federal government. even if the payment was for a month in (c) Circumstances beyond the State’s a previous quarter. control do not include neglect or ad- (b) We consider a State agency’s ex- ministrative inadequacy on the part of penditure for services under title I, IV- the State, State agencies, the State A, IV-B, IV-D, IV-E, X, XIV, XVI legislature or any of their offices, offi- (AABD) , XIX, or XXI to have been cers, or employees. made in the quarter in which any State agency made a payment to the service § 95.25 When to request a waiver for provider. good cause. (c) For purposes of title XX, the date The State should request a waiver in of expenditure is governed by 45 CFR writing as soon as the State recognizes 1396.52(d). that it will be unable to submit a claim (d) We consider a State agency’s ex- within the appropriate time limit. penditure for administration or training under titles I, IV-A, IV-B, IV-D, IV- § 95.28 What a waiver request for good E, X, XIV, XVI (AABD), XIX, or XXI to cause must include. have been made in the quarter pay- The State’s request for waiver must ment was made by a State agency to a include a specific explanation, jus- private agency or individual; or in the tification or documentation of why the quarter to which the costs were allo- claim is or will be late. This request cated in accordance with the regula- must establish that the lateness in fil- tions for each program. We consider a ing the claim is for good cause as de- State agency’s expenditure under these fined in § 95.22 and not due to neglect or titles for non-cash expenditures such as administrative inadequacy. If the depreciation to have been made in the claim has not been filed, the State quarter the expenditure was recorded must also tell us when the claim will in the accounting records of any State be filed.

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§ 95.31 Where to send a waiver request under title V of Pub. L. 96–422, the Ref- for good cause. ugee Education Assistance Act of 1980. (a) A request which affects the pro- [65 FR 33633, May 24, 2000] gram(s) of only one HHS agency (theCenters for Medicare & Medicaid § 95.505 Definitions. Services, or the Office of Child Support As used in this subpart: Enforcement, or the Office of Human State agency costs include all costs in- Development Services, or the Social curred by or allocable to the State Security Administration) and does not agency except expenditures for finan- affect the programs of any other agen- cial assistance, medical vendor pay- cy or Federal Department should be ments, and payments for services and sent to the appropriate HHS agency. goods provided directly to program re- (b) A request which affects programs cipients such as day care services, fam- of more than one HHS agency or Fed- ily planning services or household eral Department should be sent to the items as provided for under the ap- Director, Division of Cost Allocation in proved State program plan. the appropriate HHS Regional Office. Cost allocation plan means a narrative description of the procedures that the § 95.34 The decision to waive the time State agency will use in identifying, limit for good cause. measuring, and allocating all State The Secretary will make a decision agency costs incurred in support of all after reviewing the State’s request for programs administered or supervised waiver. If the Secretary decides that by the State agency. good cause exists, the State will be no- FFP or Federal financial participation tified of the extended due date. If the means the Federal Government’s share Secretary decides that good cause does of expenditures made by a State agen- not exist or that the request for waiver cy under any of the programs cited in does not provide enough information to § 95.503. make a decision, the State will be so Operating Divisions means the Depart- advised. ment of Health and Human Services (HHS) organizational components re- Subparts B–D [Reserved] sponsible for administering public assistance programs. These components are the Social Security Administra- Subpart E—Cost Allocation Plans tion, Office of Human Development Services, Office of Child Support En- SOURCE: 47 FR 17509, Apr. 23, 1982, unless forcement,Centers for Medicare & Med- otherwise noted. icaid Services, and Office of Refugee Resettlement. § 95.501 Purpose. Public assistance programs means the This subpart establishes require- programs cited in § 95.503. ments for: State means the 50 States, the Dis- (a) Preparation, submission, and ap- trict of Columbia, the Commonwealth proval of State agency cost allocation of Puerto Rico, the Virgin Islands, the plans for public assistance programs; Northern Mariana Islands, and Guam. and State agency means the State agency (b) Adherence to approved cost allo- administering or supervising the ad- cation plans in computing claims for ministration of the State plan for any Federal financial participation. program cited in § 95.503. A State agency may be an organizational part of a § 95.503 Scope. larger State department that also con- This subpart applies to all State tains other components and agencies. agency costs applicable to awards made Where that occurs, the expression State under titles I, IV-A, IV-B, IV-C, IV-D, agency refers to the specific component IV-E, X, XIV, XVI (AABD), XIX, and or agency within the State department XXI, of the Social Security Act, and that is directly responsible for the ad- under the Refugee Act of 1980, title IV, ministration of, or supervising the ad- Chapter 2 of the Immigration and Na- ministration of, one or more programs tionality Act (8 U.S.C. 1521 et seq.), and identified in § 95.503.

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State Plan means a comprehensive (5) The estimated cost impact result- written commitment by the State ing from the proposed changes to a pre- agency to administer or supervise the viously approved plan. These estimated administration of any of the public as- costs are required solely to permit an sistance programs cited in § 95.503 in evaluation of the procedures used for accordance with all Federal require- identifying, measuring, and allocating ments. costs. Therefore, approval of the cost allocation plan shall not constitute ap- § 95.507 Plan requirements. proval of these estimated costs for use (a) The State shall submit a cost al- in calculating claims for FFP. Where it location plan for the State agency as is impractical to obtain this data, an required below to the Director, Divi- alternative approach should then be sion of Cost Allocation (DCA), in the negotiated with the Director, DCA, approporiate HHS Regional Office. The prior to submission of the cost alloca- plan shall: tion plan. (1) Describe the procedures used to (6) A statement stipulating that identify, measure, and allocate all wherever costs are claimed for services costs to each of the programs operated provided by a governmental agency by the State agency; outside the State agency, that they (2) Conform to the accounting prin- will be supported by a written agree- ciples and standards prescribed in Of- ment that includes, at a minimum (i) fice of Management and Budget Cir- the specific service(s) being purchased, cular A–87, and other pertinent Depart- (ii) the basis upon which the billing ment regulations and instructions; will be made by the provider agency (3) Be compatible with the State plan (e.g. time reports, number of homes infor public assistance programs de- spected, etc.) and (iii) a stipulation scribed in 45 CFR Chapter II, III and that the billing will be based on the ac- XIII, and 42 CFR Chapter IV Sub- tual cost incurred. This statement chapters C and D; and would not be required if the costs in- (4) Contain sufficient information in volved are specifically addressed in a such detail to permit the Director, Di- State-wide cost allocation plan, local- vision of Cost Allocation, after con- wide cost allocation plan, or an um- sulting with the Operating Divisions, brella/department cost allocation plan. to make an informed judgment on the (7) If the public assistance programs correctness and fairness of the State’s are administered by local government procedures for identifying, measuring, agencies under a State supervised sys- and allocating all costs to each of the tem, the overall State agency cost al- programs operated by the State agen- location plan shall also include a cost cy. allocation plan for the local agencies. (b) The cost allocation plan shall It shall be developed in accordance contain the following information: with the requirements set forth above. (1) An organizational chart showing More than one local agency plan shall the placement of each unit whose costs be submitted if the accounting systems are charged to the programs operated or other conditions at the local agen- by the State agency. cies preclude an equitable allocation of (2) A listing of all Federal and all costs by the submission of a single plan non-Federal programs performed, ad- for all local agencies. Prior to submit- ministered, or serviced by these organi- ting multiple plans for local agencies, zational units. the State should consult with the Di- (3) A description of the activities per- rector, DCA. Where more than one formed by each organizational unit local agency plan is submitted, the and, where not self-explanatory an ex- State shall identify the specific local planation of the benefits provided to agencies covered by each plan. Federal programs. (8) A certification by a duly author- (4) The procedures used to identify, ized official of the State stating: measure, and allocate all costs to each (i) That the information contained in benefiting program and activity (in- the proposed cost allocation plan was cluding activities subject to different prepared in conformance with Office of rates of FFP). Management and Budget Circular A–87.

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(ii) That the costs are accorded con- tion will be made within 60 days after sistent treatment through the applica- receipt of the proposed plan or amend- tion of generally accepted accounting ment and shall either: (1) Advise the principles appropriate to the cir- State that the plan or plan amendment cumstances. is approved or disapproved, (2) advise (iii) That an adequate accounting and the State of the changes required to statistical system exists to support make the plan or amendment accept- claims that will be made under the cost able, or (3) request the State to provide allocation plan; and additional information needed to (iv) That the information provided in evaluate the proposed plan or amend- support of the proposed cost allocation ment. If the DCA cannot make a deter- plan is accurate. (9) Other information as is necessary mination within the 60-day period, it to establish the validity of the proce- shall so advise the State. dures used to identify, measure, and al- (b) For purpose of this subpart, State locate costs to all programs being oper- agency cost allocation plans which ated by the State agency. have been approved by an authorized official of the Department of HHS prior [47 FR 17509, Apr. 23, 1982, as amended at 65 FR 33633, May 24, 2000] to the effective date of this regulation are considered approved until such § 95.509 Cost allocation plan amend- time as a new plan or plan amendment ments and certifications. is required by § 95.509(a). (a) The State shall promptly amend the cost allocation plan and submit the § 95.515 Effective date of a cost alloca- amended plan to the Director, DCA if tion plan amendment. any of the following events occur: As a general rule, the effective date (1) The procedures shown in the ex- of a cost allocation plan amendment isting cost allocation plan become out- shall be the first day of the calendar dated because of organizational quarter following the date of the event changes, changes in Federal law or reg- that required the amendment (See ulations, or significant changes in pro- § 95.509). However, the effective date of gram levels, affecting the validity of the amendment may be earlier or later the approved cost allocation proce- under the following conditions: dures. (a) An earlier date is needed to avoid (2) A material defect is discovered in a significant inequity to either the the cost allocation plan by the Direc- State or the Federal Government. tor, DCA or the State. (3) The State plan for public assist- (b) The information provided by the ance programs is amended so as to af- State which was used to approve a pre- fect the allocation of costs. vious plan or plan amendment is later (4) Other changes occur which make found to be materially incomplete or the allocation basis or procedures in inaccurate, or the previously approved the approval cost allocation plan in- plan is later found to violate a Federal valid. statute or regulation. In either situa- (b) If a State has not submitted a tion, the effective date of any required plan or plan amendment during a given modification to the plan will be the State fiscal year, an annual statement same as the effective date of the plan shall be submitted to the Director, or plan amendment that contained the DCA certifying that its approved cost defect. allocation plan is not outdated. This (c) It is impractical for the State to statement shall be submitted within 60 implement the amendment on the first days after the end of that fiscal year. day of the next calendar quarter. In § 95.511 Approval of the cost allocation these instances, a later date may be es- plan or plan amendment. tablished by agreement between the State and the DCA. (a) The Director, DCA, after consulting with the affected Operating Di- visions, shall notify the State in writing of his/her findings. This notifica-

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§ 95.517 Claims for Federal financial rector, DCA will notify the State of participation. this determination, of the dollar affect (a) A State must claim FFP for costs of the determination on the claims associated with a program only in ac- made under each program, and will in- cordance with its approved cost alloca- form the State of its opportunity for tion plan. However, if a State has sub- appeal of the determination under 45 mitted a plan or plan amendment for a CFR part 16. The State will subse- State agency, it may, at its option quently be notified by the appropriate claim FFP based on the proposed plan Operating Division as to the disposi- or plan amendment, unless otherwise tion of the funds in question. advised by the DCA. However, where a [47 FR 17509, Apr. 23, 1982, as amended at 62 State has claimed costs based on a pro- FR 38218, July 17, 1997] posed plan or plan amendment the State, if necessary, shall retroactively Subpart F—Automatic Data Proc- adjust its claims in accordance with essing Equipment and Serv- the plan or amendment as subse- ices—Conditions for Federal quently approved by the Director, DCA. The State may also continue to Financial Participation (FFP) claim FFP under its existing approved cost allocation plan for all costs not af- AUTHORITY: Secs. 402(a)(5), 452(a)(1), 1102 fected by the proposed amendment. and 1902(a)(4) of the Social Security Act, 42 U.S.C. 602(a)(5), 652(a)(1), 1302, 1396a(a)(4); 5 § 95.519 Cost disallowance. U.S.C. 301 and 8 U.S.C. 1521. If costs under a Public Assistance SOURCE: 51 FR 45326, Dec. 18, 1986, unless program are not claimed in accordance otherwise noted. with the approved cost allocation plan GENERAL (except as otherwise provided in § 95.517), or if the State failed to submit § 95.601 Scope and applicability. an amended cost allocation plan as re- This subpart prescribes part of the quired by § 95.509, the costs improperly conditions under which the Depart- claimed will be disallowed. ment of Health and Human Services (a)(1) If the issue affects the pro- will approve Federal financial partici- gram(s) of only one Operating Division pation (FFP) at the applicable rates for and does not affect the programs of the costs of automatic data processing other Operating Divisions or Federal incurred under an approved State plan departments, that Operating Division for titles I, IV-A, IV-B, IV-D, IV-E, X, will determine the amount of the dis- XIV, XVI(AABD), XIX, or XXI of the allowance and will also inform the Social Security Act and title IV chap- State of its opportunity for reconsider- ter 2 of the Immigration and Nation- ation of the determination in accord- ality Act. The conditions of approval of ance with the Operating Division’s pro- this subpart add to the statutory and cedures. Prior to issuing the notifica- regulatory requirements for acquisition, however, the Operating Division tion of ADP equipment and services shall consult with the DCA to ensure under the specified titles of the Social that the issue does not affect the pro- Security Act. grams of other Operating Divisions or Federal departments. [65 FR 33633, May 24, 2000] (2) If the State wishes to request a reconsideration of the Operating Divi- § 95.605 Definitions. sion’s determination, it must submit As used in this part, the term: the request in accordance with the Op- Acceptance documents means written erating Division’s procedures. evidence of satisfactory completion of (b) If the issue affects the programs an approved phase of work or contract, of more than one Operating Division, and acceptance thereof by the State or Federal department or the State, agency. the Director, DCA, after consulting Acquisition means acquiring ADP with the Operating Divisions, shall de- equipment or services from commercial termine the amount inappropriately sources or from State or local govern- claimed under each program. The Di- ment resources.

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Advance Planning Document (APD), (iii) A specific budget for the plan- Initial advance automatic data proc- ning of the project; essing planning document or Initial (iv) An estimated total project cost APD means a written plan of action to and a prospective State and Federal request funding approval for a project cost distribution, including planning which will require the use of ADP serv- and implementation; ices or equipment. The term APD refers (v) A commitment to conduct/prepare to a Planning APD, or to a planning the needs assessment, feasibility study, and/or, development and implementa- alternatives analysis, cost benefit tion action document, i.e., Implementa- analysis, and to develop a Functional tion APD, or to an Advance Planning Requirements Specification and/or a Document Update. General Systems Design (GSD); and, (1) Planning APD means a written (vi) A commitment to define the plan of action which requests FFP to State’s functional requirements for the determine the need for, feasibility, and purpose of evaluating the transfer of an cost factors of an APD equipment or existing system, including the transfer services acquisition and to perform one of another State’s General System De- or more of the following: Prepare a sign, which the State may adapt to Functional Requirements Specification; meet State specific requirements. assess other States’ systems for transfer, to the maximum extent possible, of Additional Planning APD content re- an existing system; prepare an Imple- quirements, for enhanced funding mentation APD; prepare a request for projects are contained in 45 CFR proposal (RFP) or develop a General 205.37(a)(1)–(8) and CFR 307.15. Systems Design (GSD). (2) Implementation APD means a writ- A separate planning effort and Plan- ten plan of action to acquire the pro- ning APD is generally applicable to posed APD services or equipment. large enhanced funded Statewide sys- The Implementation APD shall in- tem developments and/or major hard- clude: ware acquisitions. States with large, (i) The results of the activities con- independent Counties requesting fund- ducted under a Planning APD, if any; ing at the regular match rate for Coun- (ii) A statement of needs and objec- ty systems are strongly encouraged to tives; do better planning and to submit a (iii) A requirements analysis, feasi- Planning APD to allow for time and to bility study and a statement of alter- provide funding for its planning activi- native considerations including, where ties. Therefore, states must consider appropriate, a transfer of an existing the scope and complexity of a project system and an explanation of why such to determine whether to submit a Plan- a transfer is not feasible if another al- ning APD as a separate document to ternative is identified; HHS or whether to combine the two (iv) A cost benefit analysis; phases of planning and implementation into one APD covering both the Plan- (v) A personnel resource statement ning APD and the Implementation APD indicating availability of qualified and requirements. adequate staff, including a project di- The Planning APD is a relatively rector to accomplish the project objec- brief document, usually not more than tives; 6–10 pages, which must contain: (vi) A detailed description of the na- (i) A statement of the problem/need ture and scope of the activities to be in terms of deficiencies in existing ca- undertaken and the methods to be used pabilities, new or changed program re- to accomplish the project; quirements or opportunities for econo- (vii) The proposed activity schedule mies and efficiencies; for the project; (ii) A project management plan (viii) A proposed budget (including a which addresses the planning project consideration of all possible Implemen- organization, planning activities/ tation APD activity costs, e.g., system deliverables, State and contractor reconversion, computer capacity plan- source needs, planning project procure- ning, supplies, training, and miscella- ment activities and schedule; neous ADP expenses) for the project;

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(ix) A statement indicating the pe- and actual expenditures for the past riod of time the State expects to use year; the equipment or system; (vi) A report of any approved or an- (x) An estimate of prospective cost ticipated changes to the allocation distribution to the various State and basis in the APD’s approved cost meth- Federal funding sources and the pro- odology; posed procedures for distributing costs; (vii) A report which compares the es- and timated cost-savings from the State’s (xi) A statement setting forth the se- approved APD to actual cost-benefits curity and interface requirements to be to date (in the development phase of a employed and the system failure and project, this may be reported as non- disaster recovery procedures available. applicable). The proportion of costs to Additional requirements, for acquisi- savings must remain as projected in tions for which the State is requesting the APD. Once the State begins oper- enhanced funding, are contained at 45 ation, either on a pilot basis or under a CFR 205.37(a)(1)–(8), 45 CFR 307.15 and phased approval, the cost-savings shall 42 CFR part 433 subpart C. be submitted 2–5 years after statewide (3) Advance Planning Document Update operation until the Department deter- (APDU) means a document submitted mines projected cost savings have been annually (Annual APDU) to report achieved. project status and/or post implementa- (b) The As Needed APDU is defined as tion cost-savings, or on an as needed a document which requests approval (As Needed APDU) basis to request for additional funding and/or authority funding approval for project continu- for project continuation when signifi- ation when significant project changes cant changes are anticipated; when the are anticipated; for incremental fund- project is being funded on a phased im- ing authority and project continuation plementation basis; to clarify project when approval is being granted by information requested as an approval phase; or to provide detailed informa- condition of the Planning APD or Imple- tion on project and/or budget activi- mentation APD. The As Needed APDU ties. may be submitted anytime as a stand- (a) The Annual APDU is due 60 days alone funding or project continuation from the Planning APD or Implementa- request, or may be submitted with the tion APD approved anniversary and in- Annual APDU: cludes: (i) When the State anticipates incre- (i) A reference to the approved APD mental project expenditures (exceeding and all approved changes; specified thresholds); (ii) A project activity status which (ii) When the State anticipates a reports the status of the past year’s schedule extension of more than 60 major project tasks and milestones, ad- days for major milestones. For Aid to dressing the degree of completion and Families with Dependent Children tasks/milestones remaining to be com- (AFDC) Family Assistance Manage- pleted and discusses past and antici- ment Information System (FAMIS)- pated problems or delays in meeting type projects, in accordance with sec- target dates in the approved APD and tion 402(e)(2)(C) of the Social Security approved changes to it; Act, any schedule change which affects (iii) A report of all project the State’s implementation date as deliverables completed in the past year specified in the approved APD requires and degree of completion for unfinished that the Department recover 40 percent products; of the amount expended. The Secretary (iv) A project activity schedule for may extend the implementation date, the remainder of the project; if the implementation date is not met (v) A project expenditures status because of circumstances beyond the which consists of a detailed accounting State’s control. Examples of cir- of all expenditures for project develop- cumstances beyond the State’s control ment over the past year and an expla- are: nation of the differences between pro- (1) Equipment failure due to physical jected expenses in the approved APD damage or destruction; or,

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(2) Change imposed by Federal judi- (b) Services provided by private cial decisions, or by Federal legislation sources or by employees of the State or regulations; agency or by State and local organiza- (iii) When the State anticipates tions other than the State agency to major changes in the scope of its perform such tasks as feasibility stud- project, e.g., a change in its procure- ies, system studies, system design ef- ment plan, procurement activities, sys- forts, development of system specifica- tem concept or development approach; tions, system analysis, programming, (iv) When the State anticipates sig- system conversion and system imple- nificant changes to its cost distribu- mentation and include, for example, tion methodology or distribution of the following: costs among Federal programs; and/or, (1) Systems Training, (v) When the State anticipates sig- (2) Systems Development, nificant changes to its cost-benefit pro- (3) Site Preparation, jections. (4) Data Entry, and The As needed APDU shall provide sup- (5) Personal services related to auto- porting documentation to justify the mated systems development and oper- need for a change to the approved ations that are specifically identified budget. as part of a Planning ADP or Implemen- Approving component means an orga- tation ADP. As an example, a personal nization within the Department that is service would be the service of an ex- authorized to approve requests for the pert individual to provide advice on the acquisition of ADP equipment or ADP use of ADP software or hardware in de- services. Family Support Administra- veloping a State automated manage- tion (FSA) for cash assistance for titles ment information system. I, IV-A, X, XIV, and XVI(AABD); Office Data processing means the prepara- of Human Development Services tion of source media containing data or (OHDS) for social services for titles IV- basic elements of information and the B (child welfare services) and IV-E (fos- use of such source media according to ter care and adoption assistance); Fam- precise rules or procedures to accom- ily Support Administration (FSA) for plish such operations as classifying, title IV-D; and Centers for Medicare & sorting, calculating, summarizing, re- Medicaid Services (CMS) for titles XIX cording and transmitting. and XXI of the Social Security Act. Department means the Department of Automatic data processing or ADP Health and Human Service. means data processing performed by a Design or system design means a com- system of electronic or electrical ma- bination of narrative and diagrams de- chines so interconnected and inter- scribing the structure of a new or more acting as to minimize the need for efficient automatic data processing human assistance or intervention. system. This includes the use of hard- Automatic data processing equipment or ware to the extent necessary for the ADP equipment or Hardware means design phase. automatic equipment that accepts and Development means the definition of stores data, performs calculations and system requirements, detailing of sys- other processing steps, and produces tem and program specifications, pro- information. This includes: gramming and testing. This includes (a) Electronic digital computers; the use of hardware to the extent nec- (b) Peripheral or auxiliary equipment essary for the development phase. used in support of electronic com- Emergency situation is defined as a sit- puters; uation where: (c) Data transmission or communica- (a) A State can demonstrate to the tions equipment, and Department an immediate need to ac- (d) Data input equipment. quire ADP equipment or services in Automatic Data Processing Services order to continue the operation of one or ADP Services means: or more of the Social Security Act pro- (a) Services to operate ADP equip- grams covered by Subpart F, and ment, either by agency, or by State or (b) The State can clearly document local organizations other than the that the need could not have been an- State agency; and/or ticipated or planned for and the State

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was prevented from following the prior ed (including processing data trans- approval requirements of § 95.611. mission and storage requirements); a Enhanced matching rate means the description of other resource require- higher than regular rate of FFP au- ments which will be necessary to oper- thorized by Title IV-D, IV-E, and XIX ate the system; a description of system of the Social Security Act for acquisi- performance requirements; and a de- tion of services and equipment that scription of the physical and organiza- conform to specific requirements de- tional environment in which the sys- signed to improve administration of tem will operate including how the sys- the Child Support Enforcement, Foster tem will function within that environ- Care and Adoption Assistance, and ment (e.g. how workers will interface Medicaid programs. with the system). Enhancement means modifications Project means an automated systems which change the functions of software effort undertaken by the State to im- and hardware beyond their original prove the administration and/or oper- purposes, not just to correct errors or ation of one or more of its public as- deficiencies which may have been sistance programs. For example, a present in the software or hardware, or State may undertake a comprehensive, to improve the operational perform- integrated initiative in support of its ance of the software or hardware. AFDC and Medicaid programs’ intake, Feasibility study means a preliminary eligibility and case management func- study to determine whether it is suffi- tions. A project may also be a less com- ciently probable that effective and effi- prehensive activity such as, office au- cient use of ADP equipment or systems tomation, enhancements to an existing can be made to warrant a substantial system or an upgrade of computer investment of staff, time, and money hardware. being requested and whether the plan Implementation means design, devel- is capable of being accomplished suc- opment and installation and does not cessfully. include operation. FFP means Federal financial partici- Medicaid Management Information Sys- pation. tem (MMIS) is a commonly accepted Functional Requirements Specification term for Mechanized Claim Processing is defined as an initial definition of the and Information Retrieval System as pro- proposed system, which documents the vided by Section 1903(a)(3) and 1903(r) of goals, objectives, user or programmatic the Social Security Act and at 42 CFR requirements, management require- 433.110 et seq. ments, the operating environment, and Total Acquisition Cost means all an- the proposed design methodology, e.g., ticipated expenditures (including State centralized or distributed. This docu- staff costs) for planning and implemen- ment details what the new system and tation for the project. For purposes of or hardware should do, not how it is to this regulation total acquisition cost do it. The Specifications document and project cost are synonymous. shall be based upon a clear and accu- Installation means the integrated rate description of the functional re- testing of programs and subsystems, quirements for the project, and shall system conversion, and turnover to op- not, in competitive procurements, lead eration status. This includes the use of to requirements which unduly restrict hardware to the extent necessary for competition. The Specification docu- the installation phase. ment is the user’s definition of the re- Operation means the automated proc- quirements the system must meet. essing of data used in the administra- General Systems Design means a com- tion of State plans for titles I, IV-A, bination of narrative and graphic de- IV-B, IV-D, IV-E, X, XIV, XVI(AABD), scription of the generic architecture of XIX, and XXI of the Social Security a system as opposed to the detailed ar- Act. Operation includes the use of sup- chitecture of the system. A general plies, software, hardware, and per- systems design would include a sys- sonnel directly associated with the tems diagram and narrative identifying functioning of the mechanized system. overall logic flow and systems func- See 45 CFR 205.38 and 307.10 for specific tions; a description of equipment need- requirements for titles IV-A and IV-D,

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and 42 CFR 433.112 and 42 CFR 433.113 total cost of the purchase or lease of for specific requirements for title XIX. ADP equipment or services; Regular matching rate means the nor- (g) Includes the beginning and ending mal rate of FFP authorized by titles dates of the period of time covered by IV-A, IV-B, IV-D, IV-E, X, XIV, the service agreement; and XVI(AABD), XIX, and XXI of the So- (h) Includes a schedule of expected cial Security Act for State and local total charges to the title covered by agency administration of programs au- this subpart for the period of the serv- thorized by those titles. ice agreement. Requirements Analysis means deter- Software means a set of computer mining and documenting the informa- programs, procedures, and associated tion needs and the functional and tech- documentation used to operate the nical requirements the proposed com- hardware. puterized system must meet. State agency means the State agency Service agreement means the docu- administering or supervising the ad- ment signed by the State or local agen- ministration of the State plan under ti- cy and the State or local Central Data tles I, IV, X, XIV, XVI(AABD), XIX or Processing facility whenever the latter XXI of the Social Security Act. provides data processing services to the System specifications means informa- former and: tion about the new ADP system—such (a) Identifies those ADP services the as workload descriptions, input data, Central Data Processing facility will information to be maintained and proc- provide; essed, data processing techniques, and (b) Includes, preferably as an amend- output data—which is required to de- able attachment, a schedule of charges termine the ADP equipment and soft- for each identified ADP service, and a ware necessary to implement the sys- certification that these charges apply tem design. equally to all users; System study means the examination (c) Includes a description of the of existing information flow and oper- method(s) of accounting for the serv- ational procedures within an organiza- ices rendered under the agreement and tion. The study essentially consists of computing services charges; three basic phases: Data gathering in- (d) Includes assurances that services vestigation of the present system and provided will be timely and satisfac- new information requirements; anal- tory; ysis of the data gathered in the inves- (e) Includes assurances that informa- tigation; and synthesis, or refitting of tion in the computer system as well as the parts and relationships uncovered access, use and disposal of ADP data through the analysis into an efficient will be safeguarded in accordance with system. provisions of 45 CFR 205.50 and 303.21; [51 FR 45326, Dec. 18, 1986, as amended at 55 (f) Requires the provider to obtain FR 4375, Feb. 7, 1990, 59 FR 30708, June 15, prior approval pursuant to 45 CFR 1994; 65 FR 33633, May 24, 2000] 95.611(a) from the Department for ADP equipment and ADP services that are SPECIFIC CONDITIONS FOR FFP acquired from commercial sources primarily to support the titles covered by § 95.611 Prior approval conditions. this subpart and requires the provider (a) General acquisition requirements. (1) to comply with 45 CFR Part 74, Subpart A State shall obtain prior written ap- P for procurements related to the serv- proval from the Department as speci- ice agreement. ADP equipment and fied in paragraph (b) of this section, services are considered to be primarily when the State plans to acquire ADP acquired to support the titles covered equipment or services with proposed by this subpart when these titles may FFP at the regular matching rate that reasonably be expected to either: Be it anticipates will have total acquisi- billed for more than 50 percent of the tion costs of $5,000,000 or more in Fed- total charges made to all users of the eral and State funds. ADP equipment and services during the (2) A State shall obtain prior written time period covered by the service approval from the Department as speci- agreement, or directly charged for the fied in paragraph (b) of this section,

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when the State plans to acquire ADP the contract when the contract is an- equipment or services with proposed ticipated to or will exceed $5,000,000 for FFP at the enhanced matching rate au- competitive procurement and $1,000,000 thorized by 45 CFR 205.35, 45 CFR part for noncompetitive acquisitions from 307 or 42 CFR part 433, subpart C, re- nongovernmental sources. States will gardless of the acquisition cost. be required to submit RFPs and con- (3) A State shall obtain prior written tracts under these threshold amounts approval from the Department of its on an exception basis or if the procure- justification for a sole source acquisi- ment strategy is not adequately de- tion, when it plans to acquire non- scribed and justified in an APD. competitively from a nongovernmental (iv) For contract amendments, unless source ADP equipment or services, specifically exempted by the Depart- with proposed FFP at the regular matching rate, that has a total State ment, prior to execution of the con- and Federal acquisition cost of more tract amendment involving contract than $1,000,000 but no more than cost increases exceeding $1,000,000 or $5,000,000. Noncompetitive acquisitions contract time extensions of more than of more than $5,000,000 are subject to 120 days. States will be required to sub- the provisions of paragraph (b) of this mit contract amendments under these section. threshold amounts on an exception (4) Except as provided for in para- basis or if the contract amendment is graph (a)(5) of this section, the State not adequately described and justified shall submit requests for Department in an APD. approval, signed by the appropriate (2) For enhanced FFP requests. State official, to the Director, Admin- (i) For the Planning APD. istration for Children and Families, Of- (ii) For the Implementation APD. fice of State Systems. The State shall (iii) For the Request for Proposal and send to ACF one copy of the request for contract, unless specifically exempted each HHS component, from which the by the Department, prior to release of State is requesting funding, and one for the RFP or prior to execution of the the State Systems Policy Staff, the co- contract when the contract is antici- ordinating staff for these requests. The pated to or will exceed $100,000. State must also send one copy of the request directly to each Regional pro- (iv) For contract amendments, unless gram component and one copy to the specifically exempted by the Depart- Regional Director. ment, prior to execution of the con- (5) States shall submit requests for tract amendment, involving contract approval which involve solely Title cost increases exceeding $100,000 or XIX funding (i.e., State Medicaid Sys- contract time extensions of more than tems), to CMS for action. 60 days. (6) The Department will not approve (3) Failure to submit any of the any Planning or Implementation APD above to the satisfaction of the Depart- that does not include all information ment may result in disapproval or sus- required as defined in § 95.605. pension of project funding. (b) Specific prior approval requirements. (c) Specific approval requirements. The The State agency shall obtain written State agency shall obtain written ap- approval of the Department prior to proval from the Department: the initiation of project activity. (1) For regular FFP requests. (1) For regular FFP requests. (i) For an annual APDU for projects (i) For the Planning APD subject to with a total acquisition cost of more the dollar thresholds specified in paragraph (a) of this section. than $5,000,000, when specifically re- (ii) For the Implementation APD quired by the Department. subject to the dollar thresholds speci- (ii) For an ‘‘As Needed APDU’’ when fied in paragraph (a) of this section. changes cause any of the following: (iii) For the Request for Proposal and (A) A projected cost increase of Contract, unless specifically exempted $1,000,000 or more. by the Department, prior to release of (B) A schedule extension of more the RFP or prior to the execution of than 60 days for major milestones;

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(C) A significant change in procure- (3) Failure to submit any of the ment approach, and/or scope of pro- above to the satisfaction of the Depart- curement activities beyond that ap- ment may result in disapproval or sus- proved in the APD; pension of project funding. (D) A change in system concept, or a (d) Prompt action on requests for prior change to the scope of the project; approval. The ACF will promptly send (E) A change to the approved cost al- to the approving components the items location methodology. specified in paragraph (b) of this section. If the Department has not pro- The State shall submit the ‘‘As Needed vided written approval, disapproval, or APDU’’ to the Department, no later a request for information within 60 than 60 days after the occurrence of the days of the date of the Departmental project changes to be reported in the letter acknowledging receipt of a ‘‘As Needed APDU’’. State’s request, the request will auto- (2) For enhanced FFP requests. matically be deemed to have provision- (i) For an Annual APDU. ally met the prior approval conditions (ii) For an ‘‘As needed’’ APDU when of paragraph (b) of this section. changes cause any of the following: (A) A projected cost increase of [51 FR 45326, Dec. 18, 1986, as amended at 55 FR 4377, Feb. 7, 1990; 56 FR 12356, Mar. 25, $100,000 or 10 percent of the project 1991; 59 FR 30708, June 15, 1994; 61 FR 39897, cost, whichever is less; July 31, 1996] (B) A schedule extension of more than 60 days for major milestones. For § 95.612 Disallowance of Federal Fi- Aid to Families with Dependent Chil- nancial Participation (FFP). dren (AFDC) Family Assistance Man- If the Department finds that any agement Information System (FAMIS)- ADP acquisition approved or modified type projects, in accordance with sec- under the provisions of § 95.611 fails to tion 402(e)(2)(C) of the Social Security comply with the criteria, require- Act, any schedule change which affects ments, and other undertakings de- the State’s implementation date as scribed in the approved advance plan- specified in the approved APD requires ning document to the detriment of the that the Department recover 40 percent proper and efficient operation of the af- of the amount expended. The Secretary fected program, payment of FFP may may extend the implementation date, be disallowed. In the case of a suspen- if the implementation date is not met sion of approval of an APD for en- because of circumstances beyond the hanced funding, see 45 CFR 205.37(c), State’s control. Examples of cir- 307.40(a) and 307.35(d). cumstances beyond the State’s control [55 FR 4378, Feb. 7, 1990] are: (1) Equipment failure due to physical § 95.613 Procurement standards. damage or destruction; or, (a) Procurements of ADP equipment (2) Change imposed by Federal judi- and services are subject to the procure- cial decisions, or by Federal legislation ment standards prescribed by subpart or regulations; P of 45 CFR part 74 regardless of any (C) A significant change in procure- conditions for prior approval. Those ment approach, and/or a scope of pro- standards include a requirement for curement activities beyond that ap- maximum practical open and free com- proved in the APD; petition regardless of whether the pro- (D) A change in system concept or curement is formally advertised or ne- scope of the project; gotiated. (E) A change to the approved cost (b) Those standards, as well as the re- methodology; quirement for prior approval, apply to (F) A change of more than 10% of es- ADP services and equipment acquired timated cost benefits. by a State or local agency, and the ADP services and equipment acquired The State shall submit the ‘‘As Needed APDU’’ to the Department, no later than 60 by a State or local Central Data Proc- days after the occurrence of the project essing facility primarily to support the changes to be reported in the ‘‘As Needed Social Security Act programs covered APDU’’. by this subpart. Service agreements

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are exempt from these procurement § 95.621 ADP reviews. standards. The Department will conduct periodic onsite surveys and reviews of § 95.615 Access to systems and records. State and local agency ADP methods In accordance with 45 CFR part 74, and practices to determine the ade- the State agency must allow the De- quacy of such methods and practices partment access to the system in all of and to assure that ADP equipment and its aspects, including design develop- services are utilized for the purposes ments, operation, and cost records of consistent with proper and efficient ad- contractors and subcontractors at such ministration under the Act. Where intervals as are deemed necessary by practical, the Department will develop the Department to determine whether a mutually acceptable schedule be- the conditions for approval are being tween the Department and State or met and to determine the efficiency, local agencies prior to conducting such economy and effectiveness of the sys- surveys or reviews, which may include tem. but are not limited to: (a) Pre-installation readiness. A pre-in- [43 FR 44853, Sept. 29, 1978, as amended at 45 stallation survey including an onsite FR 10794, Feb. 19, 1980] evaluation of the physical site and the agency’s readiness to productively use § 95.617 Software and ownership the proposed ADP services, equipment rights. or system when installed and oper- (a) General. The State or local gov- ational. ernment must include a clause in all (b) Post-installation. A review con- procurement instruments that provides ducted after installation of ADP equip- that the State or local government will ment or systems to assure that the ob- have all ownership rights in software jectives for which FFP was approved or modifications thereof and associated are being accomplished. documentation designed, developed or (c) Utilization. A continuing review of installed with Federal financial par- ADP facilities to determine whether or ticipation under this subpart. not the ADP equipment or services are (b) Federal license. The Department being efficiently utilized in support of reserves a royalty-free, nonexclusive, approved programs or projects. and irrevocable license to reproduce, (d) Acquisitions not subject to prior ap- publish, or otherwise use and to au- proval. Reviews will be conducted on an thorize others to use for Federal Gov- audit basis to assure that system and ernment purposes, such software, modi- equipment acquisitions costing less the fications, and documentation. $200,000 were made in accordance with 45 CFR part 74 and the conditions of (c) Proprietary software. Proprietary this subpart and to determine the effi- operating/vendor software packages ciency, economy and effectiveness of (e.g., ADABAS or TOTAL) which are the equipment or system. provided at established catalog or mar- (e) State Agency Maintenance of Serv- ket prices and sold or leased to the ice Agreements. (1) The State agency general public shall not be subject to will maintain a copy of each service the ownership provisions in paragraphs agreement in its files for Federal re- (a) and (b) of this section. FFP is not view. available for proprietary applications (2) A State agency that did not ob- software developed specifically for the tain prior approval of a service agree- public assistance programs covered ment, as required by § 95.611(b)(2) as it under this subpart. was in effect from December 28, 1978 (unless a State chose to exercise the § 95.619 Use of ADP systems. option to make it effective as early as ADP systems designed, developed, or September 29, 1978) through January 19, installed with FFP shall be used for a 1987, is eligible for FFP claimed for period of time specified in the advance services furnished by other State or planning document, unless the Depart- local agencies under that agreement if: ment determines that a shorter period (i) The State agency has a copy of it is justified. in its files for Federal review;

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(ii) It meets the definition of a serv- the administration of HHS programs ice agreement as it was defined in sec- on a biennial basis. At a minimum, the tion 95.605 from December 28, 1978 reviews shall include an evaluation of through January 19, 1987; physical and data security operating (iii) The claim conforms to the time- procedures, and personnel practices. ly claim provisions of 45 CFR part 95, (4) Costs incurred in complying with subpart A; and provisions of paragraphs (f)(1)–(3) of (iv) The service agreement was not this section are considered regular ad- previously disapproved by HHS. ministrative costs which are funded at (f) ADP System Security Requirements the regular match rate. and Review Process—(1) ADP System Se- (5) The security requirements of this curity Requirement. State agencies are section apply to all ADP systems used responsible for the security of all ADP by State and local governments to ad- projects under development, and oper- minister programs covered under 45 ational systems involved in the admin- CFR part 95, subpart F. istration of HHS programs. State agen- (6) The State agency shall maintain cies shall determine the appropriate reports of their biennial ADP system ADP security requirements based on security reviews, together with perti- recognized industry standards or stand- nent supporting documentation, for ards governing security of Federal ADP HHS on-site review. systems and information processing. [43 FR 44853, Sept. 29, 1978, as amended at 51 (2) ADP Security Program. State ADP FR 45329, Dec. 18, 1986; 53 FR 27, Jan. 4, 1988; Security requirements shall include 55 FR 4378, Feb. 7, 1990; 61 FR 39898, July 31, the following components: 1996] (i) Determination and implementation of appropriate security require- § 95.623 Waiver of prior approval requirements. ments as specified in paragraph (f)(1) of this section. For ADP equipment and services ac- (ii) Establishment of a security plan quired by a State without prior written and, as appropriate, policies and proce- approval, the Department may waive dures to address the following area of the prior approval requirement if prior ADP security: to December 1, 1985: (A) Physical security of ADP re- (a) The State submitted to the De- sources; partment all information required (B) Equipment security to protect under § 95.611, satisfactorily responded equipment from theft and unauthorized to all concerns raised by the Depart- use; ment and received a final letter of ap- (C) Software and data security; proval from the Department; or, (D) Telecommunications security; (b) The State has a request pending (E) Personnel security; with the Department for retroactive (F) Contingency plans to meet crit- approval, which the Department re- ical processing needs in the event of ceived before December 1, 1985 and the short or long-term interruption of serv- Department determines that the re- ice; quest would have received prior ap- (G) Emergency preparedness; and, proval had a timely request for such (H) Designation of an Agency ADP approval been made by the State agen- Security Manager. cy. (iii) Periodic risk analyses. State [51 FR 3339, Jan. 27, 1986, as amended at 55 agencies must establish and maintain a FR 4378, Feb. 7, 1990] program for conducting periodic risk analyses to ensure that appropriate, § 95.624 Consideration for FFP in cost effective safeguards are incor- emergency situations. porated into new and existing systems. For ADP equipment and services ac- State agencies must perform risk anal- quired by a State after December 1, yses whenever significant system 1985 to meet emergency situations, changes occur. which preclude the State from fol- (3) ADP System Security Reviews. State lowing the requirements of § 95.611, the agencies shall review the ADP system Department will consider providing security of installations involved in FFP upon receipt of a written request

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from the State. In order for the Depart- the Title IV-D program are contained ment to consider providing FFP in in 45 CFR Part 307. The applicable reg- emergency situations, the following ulations for the Title IV-E program are conditions must be met: contained in 45 CFR 1355.55. The appli- (a) The State must submit a written cable regulations for the Title XIX pro- request to the Department, prior to the gram are contained in 42 CFR Part 433, acquisition of any ADP equipment or Subpart C. services. The written request must be [59 FR 30708, June 15, 1994] sent by registered mail and include: (1) A brief description of the ADP FEDERAL FINANCIAL PARTICIPATION IN equipment and/or services to be ac- COSTS OF ADP ACQUISITIONS quired and an estimate of their costs; (2) A brief description of the cir- § 95.631 Cost identification for purpose cumstances which result in the State’s of FFP claims. need to proceed prior to obtaining ap- The conditions of this subpart apply proval from the Department; and notwithstanding the existence of an ap- (3) A description of the harm which proved cost allocation plan. State will be caused if the State does not ac- agencies shall assign and claim the quire immediately the ADP equipment costs incurred under an approved APD and services. in accordance with the following cri- (b) Upon receipt of the information, teria: the Department will within 14 days (a) Development costs. (1) Using its take one of the following actions: normal departmental accounting sys- (1) Inform the State in writing that tem, the State agency shall specifi- the request has been disapproved and cally identify what items of costs con- the reason for disapproval; or stitute development costs, assign these (2) Inform the State in writing that costs to specific project cost centers, the Department recognizes that an and distribute these costs to funding emergency exists and that within 90 sources based on the specific identifica- days from the date of the State’s inition, assignment and distribution out- tial written request, the State must lined in the approved APD; (2) the submit a formal request for approval methods for distributing costs set forth which includes the information speci- in the APD should provide for assign- fied at § 95.611 in order for the ADP ing identifiable costs, to the extent equipment or services acquisition to be practicable, directly to program/func- considered for the Department’s ap- tions. The State agency shall amend proval. the cost allocation plan required by (c) If the Department approves the Subpart E of this part to include the request submitted under paragraph (b) approved APD methodology for the of this section, FFP will be available identification, assignment and dis- from the date the State acquires the tribution of the development costs. ADP equipment and services. (b) Operational costs. Costs incurred [51 FR 3339, Jan. 27, 1986, as amended at 55 for the operation of an ADP system FR 4378, Feb. 7, 1990] shall be identified and assigned by the State agency to funding sources in ac- § 95.625 Increased FFP for certain cordance with the approved cost alloca- ADP systems. tion plan required by Subpart E of this (a) General. FFP is available at en- part. hanced matching rates for the develop- (c) Service agreement costs. States that ment of individual or integrated sys- operate a central data processing facil- tems and the associated computer ity shall use their approved central equipment that support the adminis- service cost allocation plan required by tration of State plans for Titles IV-D, OMB Circular A–87 to identify and as- IV-E, and/or XIX provided the systems sign costs incurred under service agree- meet the specifically applicable provi- ments with the State agency. The sions referenced in paragraph (b) of the State agency will then distribute these section. costs to funding sources in accordance (b) Specific reference to other regula- with paragraphs (a) and (b) of this sections. The applicable regulations for tion.

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§ 95.633 Nondiscrimination require- the cost of modifications, attachments, ments. accessories, or auxiliary apparatus nec- State agencies that acquire ADP essary to make the equipment usable equipment and services are subject to for the purpose for which it was ac- the nondiscrimination requirements in quired. Other charges such as the cost Parts 80, 84, and 90. of installation, transportation, taxes, duty or protective intransit insurance [45 FR 10794, Feb. 19, 1980] shall be included in or excluded from the unit acquisition cost in accordance EXEMPTIONS with the regular accounting practices of the organization purchasing the § 95.641 Applicability of rules for charging equipment in Subpart G of equipment. If the item is acquired by this part. trading in another item and paying an additional amount, acquisition cost ADP equipment, as well as other means the amount received for trade-in equipment acquired under public as- plus the additional outlay. sistance programs, is subject to Sub- Equipment means an article of tan- part G of this part. Among other gible personal property that has a use- things, Subpart G provides that a State ful life of more than two years and an may charge only depreciation or use al- acquisition cost of $500 or more. Any lowances for equipment with unit ac- recipient may use its own definition of quisition cost of over $25,000. However, equipment, if its definition would at for ADP equipment HHS will consider least include all items of equipment as requests for waivers of that restriction. defined here. If the acquisition of the equipment is Public Assistance Programs means pro- part of an APD that is subject to the grams authorized by titles I, IV-A, IV- prior approval requirements of Subpart B, IV-C, IV-D, IV-E, X, XIV, XVI F, the State may submit the request (AABD), XIX and XXI of the Social Se- for a waiver as part of the APD. curity Act, and programs authorized by the Immigration and Nationality Act Subpart G—Equipment Acquired as amended by the Refugee Act of 1980 Under Public Assistance Programs (Pub. L. 96–212). State means the 50 States, the Dis- SOURCE: 47 FR 41576, Sept. 21, 1982, unless trict of Columbia, the Commonwealth otherwise noted. of Puerto Rico, the Virgin Islands, the Northern Mariana Islands and Guam. § 95.701 Purpose and scope of subpart. State Agency means the State agency (a) This subpart prescribes require- administering a public assistance pro- ments concerning the computation of gram(s). This term includes local gov- claims for Federal financial participa- ernment public assistance agencies tion in the cost of equipment under which administer public assistance pro- public assistance programs. This sub- grams under a State supervised system part also prescribes requirements for and the State agencies which supervise the management and disposition of the local agencies. equipment whose costs are claimed for [47 FR 41576, Sept. 21, 1982, as amended at 65 Federal financial participation under FR 33633, May 24, 2000] these programs. (b) This subpart applies to equipment § 95.705 Equipment costs—Federal fi- purchased by State agencies (as defined nancial participation. in § 95.703) and to equipment purchased (a) General rule. In computing claims under service agreements with other for Federal financial participation, State agencies and under cost-type equipment having a unit acquisition contracts. cost of $25,000 or less may be claimed in the period acquired or depreciated, at § 95.703 Definitions. the option of the State agency. Equip- As used in this subpart: ment having a unit acquisition cost of Acquisition cost of an item of pur- more than $25,000 shall be depreciated. chased equipment means the net in- For purposes of this section, the term voice price of the equipment, including depreciate also includes use allowances

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computed in accordance with the cost apply to the disposition of this equip- principles precribed in subpart Q of 45 ment: CFR part 74. (1) If the cost of the equipment was (b) Exceptions. (1) Equipment pur- claimed in the period acquired and the chased under service agreements with equipment is later sold, the proceeds of other State agencies and under cost- the sale shall be credited to current ex- type contracts shall be depreciated. penditures in approximate proportion However, equipment having a unit ac- to the distribution of the equipment’s quisition cost of $25,000 or less may be cost. claimed in the period acquired if (a) (2) If the cost of the equipment was the State agency approved the specific claimed in the period acquired and the purchase and the claiming of the cost equipment is later transferred to an ac- of the item, and (b) the contract or tivity which is not involved in the per- service agreement requires that the formance of programs currently or pre- equipment or its residual value be viously funded by the Federal Govern- transferred to the State agency when ment, an amount equal to the fair mar- the equipment is no longer needed to ket value of the equipment on the date carry out the work under the contract of the transfer shall be credited to cur- or service agreement. rent expenditures in approximate pro- (2) Reimbursement for ADP equip- portion to the distribution of the ment having an acquisition cost in ex- equipment’s costs. cess of $25,000 and subject to subpart F (3) If the cost of the equipment was of this part must be depreciated over claimed in the period acquired and the its useful life unless otherwise specifi- equipment is later traded in on other cally provided for by the Department. equipment claims for Federal financial ADP equipment not subject to subpart participation in the costs of replace- F is subject to the requirements of this ment equipment shall be limited to the subpart. additional outlay. (4) If the equipment was depreciated, § 95.707 Equipment management and any gain or loss on the disposition of disposition. the equipment shall be treated as a de- (a) An item of equipment is subject crease or an increase to the deprecia- to the property rules in subpart O of 45 tion expense of the period in which the CFR part 74 if the total cost of the disposition takes place. This provision item was claimed in the period ac- does not apply to equipment whose quired and if the item was accepted for costs were claimed for Federal finan- Federal financial participation as a dicial participation through use allow- rect cost under a single program or ances. program activity. These rules also apply to ADP equipment where the PART 96—BLOCK GRANTS State agency was permitted under Sub- part F of this part to claim the total Subpart A—Introduction cost of the equipment in the period ac- Sec. quired. 96.1 Scope. (b) Other items of equipment whose 96.2 Definitions. costs are claimed for Federal financial 96.3 Information collection approval num- participation (i.e., equipment that is bers. capitalized and depreciated or is claimed in the period acquired and Subpart B—General Procedures charged to more than one program) are 96.10 Prerequisites to obtain block grant not subject to the specific require- funds. ments in subpart O of 45 CFR part 74. 96.11 Basis of award to the States. However, the State agency is respon- 96.12 Grant payment. sible for adequately managing the 96.13 Reallotments. equipment, maintaining records on the 96.14 Time period for obligation and expenditure of grant funds. equipment, and taking periodic phys- 96.15 Waivers. ical inventories. Physical inventories 96.16 Applicability of title XVII of the Rec- may be made on the basis of statistical onciliation Act (31 U.S.C. 7301–7305). sampling. The following requirements 96.17 Annual reporting requirements.

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96.18 Participation by faith-based organiza- 96.85 Income eligibility. tions. 96.86 Exemption from requirement for additional outreach and intake services. Subpart C—Financial Management 96.87 Leveraging incentive program. 96.88 Administrative costs. 96.30 Fiscal and administrative require- 96.89 Exemptions from standards for pro- ments. viding energy crisis intervention assist- 96.31 Audits. ance. 96.32 Financial settlement. 96.33 Referral of cases to the Inspector Gen- Subpart I—Community Services Block eral. Grants Subpart D—Direct Funding of Indian Tribes 96.90 Scope. and Tribal Organizations 96.91 Audit requirement. 96.92 Termination of funding. 96.40 Scope. 96.41 General determination. Subpart J—Primary Care Block Grants 96.42 General procedures and requirements. 96.43 Procedures during FY 1982. 96.100 Scope. 96.44 Community services. 96.101 Review of a State decision to dis- 96.45 Preventive health and health services. continue funding of a community health 96.46 Substance abuse prevention and treat- center. ment services. 96.102 Carryover of unobligated funds. 96.47 Primary care. 96.48 Low-income home energy assistance. Subpart K—Transition Provisions 96.49 Due date for receipt of all information required for completion of trival applica- 96.110 Scope. tions for the low-income home energy as- 96.111 Continuation of pre-existing regula- sistance block grants. tions. 96.112 Community services block grant. Subpart E—Enforcement Subpart L—Substance Abuse Prevention 96.50 Complaints. 96.51 Hearings. and Treatment Block Grant 96.52 Appeals. 96.120 Scope. 96.53 Length of withholding. 96.121 Definitions. 96.122 Application content and procedures. Subpart F—Hearing Procedure 96.123 Assurances. 96.60 Scope. 96.124 Certain allocations. 96.61 Initiation of hearing. 96.125 Primary prevention. 96.62 Presiding officer. 96.126 Capacity of treatment for intra- 96.63 Communications to presiding officer. venous substance abusers. 96.64 Intervention. 96.127 Requirements regarding tuberculosis. 96.65 Discovery. 96.128 Requirements regarding human im- 96.66 Hearing procedure. munodeficiency virus. 96.67 Right to counsel. 96.129 Revolving funds for establishment of 96.68 Administrative record of a hearing. homes in which recovering substance abusers may reside. Subpart G—Social Services Block Grants 96.130 State law regarding sale of tobacco products to individuals under age of 18. 96.70 Scope. 96.131 Treatment services for pregnant 96.71 Definitions. women. 96.72 Transferability of funds. 96.132 Additional agreements. 96.73 Sterilization. 96.133 Submission to Secretary of Statewide 96.74 Annual reporting requirements. assessment of needs. 96.134 Maintenance of effort regarding State Subpart H—Low-Income Home Energy expenditures. Assistance Program 96.135 Restrictions on expenditure of grant. 96.136 Independent peer review. 96.80 Scope. 96.137 Payment schedule. 96.81 Carryover and reallotment. APPENDIX A TO PART 96—UNIFORM DEFINI- 96.82 Required report on households as- TIONS OF SERVICES sisted. APPENDIX B TO PART 96—SSBG REPORTING 96.83 Increase in maximum amount that FORM AND INSTRUCTIONS may be used for weatherization and other energy-related home repair. AUTHORITY: 31 U.S.C. 1243 note, 7501–7507; 42 96.84 Miscellaneous. U.S.C. 300w et seq., § 300x et seq., § 300y et seq.,

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§ 701 et seq., § 8621 et seq., § 9901 et seq., § 1397 et Health Service, the Federated States of seq., 5 U.S.C. § 301. Micronesia, the Republic of the Mar- SOURCE: 47 FR 29486, July 6, 1982, unless shall Islands, and the Republic of otherwise noted. Palau. [47 FR 29486, July 6, 1982, as amended at 52 Subpart A—Introduction FR 37965, Oct. 13, 1987; 64 FR 55856, Oct. 15, 1999] § 96.1 Scope. This part applies to the following § 96.3 Information collection approval block grant programs: numbers. (a) Community services (Pub. L. 97– Information collection requirements 35, sections 671–683) (42 U.S.C. 9901– pertaining to the block grant programs 9912). have been approved by the Office of (b) Preventive health and health Management and Budget under the pro- services (Pub. L. 97–35, section 901) (42 visions of the Paperwork Reduction U.S.C. 300w–300w–8). Act, Pub. L. 96–511 (44 U.S.C. Chapter (c) Community mental health serv- 35) and have been assigned OMB num- ices (Public Health Service Act, sec- bers: tions 1911–1920 and sections 1941–1954) 0930–0080 Alcohol and Drug Abuse and Men- (42 U.S.C. 300x–1–300x–9 and 300x–51– tal Health Services Block Grant Reporting 300x–64). Requirements (d) Substance abuse prevention and 0920–0106 Preventive Health and Health treatment (Public Health Service Act, Services Block Grant Reporting Require- sections 1921–1935 and sections 1941– ments 1954) (42 U.S.C. 300x–21–300x–35 and 300x– 0915–0023 Primary Care Block Grant Report- 51–300x–64). ing Requirements (e) Maternal and child health serv- 0915–0024 Maternal and Child Health Serv- ices Block Grant Reporting Requirements ices (Social Security Act, Title V) (42 0980–0125 Social Services Block Grant Re- U.S.C. 701–709). porting Requirements (f) Social services, empowerment 0980–0126 Community Services Block Grant zones and enterprise communities Reporting Requirements (Pub. L. 97–35, sections 2351–55; Pub. L. 0960–0261 Low-Income Home Energy Assist- 103–66, section 1371) (42 U.S.C. 1397– ance Block Grant Reporting Requirements. 1397f). [47 FR 29486, July 6, 1982; 47 FR 43062, Sept. (g) Low-income home energy assist- 30, 1982] ance (Pub. L. 97–35, sections 2601–11) (42 U.S.C. 8621–8629). Subpart B—General Procedures [47 FR 29486, July 6, 1982, as amended at 58 FR 60128, Nov. 15, 1993; 64 FR 55856, Oct. 15, § 96.10 Prerequisites to obtain block 1999] grant funds. (a) Except where prescribed else- § 96.2 Definitions. where in this rule or in authorizing leg- (a) Secretary means the Secretary of islation, no particular form is required Health and Human Services or his des- for a State’s application or the related ignee. submission required by the statute. (b) Department means the Department For the maternal and child health of Health and Human Services. block grant, the application shall be in (c) Reconciliation Act means the Om- the form specified by the Secretary, as nibus Budget Reconciliation Act of 1981 provided by section 505(a) of the Social (Pub. L. 97–35). Security Act (42 U.S.C. 705(a)). (d) State includes the fifty States, the (b) The certifications required by the District of Columbia, and as appro- community services, primary care, pre- priate with respect to each block ventive health and health services, al- grant, the Commonwealth of Puerto cohol and drug abuse and mental Rico, the U.S. Virgin Islands, Guam, health services, and low-income home American Samoa, the Commonwealth energy assistance block grant statutes of the Northern Mariana Islands, and to be made by the State’s chief execu- for purposes of the block grants admin- tive officer must be made by that indi- istered by agencies of the Public vidual personally, or by an individual

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authorized to make such certifications to carry out the program and to draw on behalf of the chief executive officer. and expend funds. (c) Effective beginning in fiscal year [47 FR 29486, July 6, 1982; 47 FR 43062, Sept. 2001, submission dates for applications 30, 1982] under the social service and low-income home energy assistance block § 96.12 Grant payment. grant programs are: The Secretary will make payments (1) for the social services block grant, at such times and in such amounts to States and territories which operate on each State from its awards in advance a Federal fiscal year basis, and make or by way of reimbursement in accord- requests for funding from the Depart- ance with section 203 of the Intergov- ment, must insure that their applica- ernmental Cooperation Act (42 U.S.C. tions (pre-expenditure reports) for 4213) and Treasury Circular No. 1075 (31 funding are submitted by September 1 CFR Part 205). When matching funds of the preceding fiscal year unless the are involved, the Secretary shall take into account the ratio that such pay- Department agrees to a later date. ment bears to such State’s total ex- States and territories which operate penditures under its awards. their social services block grant on a July 1–June 30 basis, must insure that § 96.13 Reallotments. their applications are submitted by The Secretary will re-allot to eligible June 1 of the preceding funding period States those funds available as of Sep- unless the Department agrees to a tember 1 of each fiscal year under the later date. reallotment provisions pertaining to (2) for the low-income home energy the alcohol and drug abuse and mental assistance program, States and terri- health services, maternal and child tories which make requests for funding health services, and preventive health from the Department must insure that and health services block grants. The their applications for a fiscal year are reallotment procedure for the low-in- submitted by September 1 of the pre- come home energy assistance block ceding fiscal year unless the Depart- grant is specified in section 2607 of the ment agrees to a later date. Reconciliation Act (42 U.S.C. 8626) and (d) Effective beginning in fiscal year § 96.81 of this part. 2001, for the low-income home energy § 96.14 Time period for obligation and assistance program, States and terri- expenditure of grant funds. tories which make requests for funding (a) Obligations. Amounts unobligated from the Department must insure that by the State at the end of the fiscal all information necessary to complete year in which they were first allotted their applications is received by De- shall remain available for obligation cember 15 of the fiscal year for which during the succeeding fiscal year for they are requesting funds unless the all block grants except: Department agrees to a later date. (1) Primary care. Amounts are available only if the Secretary determines [47 FR 29486, July 6, 1982, as amended at 64 FR 55856, Oct. 15, 1999] that the State acted in accordance with section 1926(a)(1) of the Public § 96.11 Basis of award to the States. Health Service Act (42 U.S.C. 300y– 5(a)(1)) and there is good cause for The Secretary will award the block funds remaining unobligated. grant funds allotted to the State in ac- (2) Low-income home energy assistance. cordance with the apportionment of Regular LIHEAP block grant funds au- funds from the Office of Management thorized under section 2602(b) of Public and Budget. Such awards will reflect Law 97–35 (42 U.S.C. 8621(b)) are avail- amounts reserved for Indian Tribes and able only in accordance with section Tribal Organizations and, in FY 1982, 2607(b)(2)(B) of Public Law 97–35 (42 any amounts awarded by the Depart- U.S.C. 8626(b)(2)(B)), as follows. From ment under transition authorities. The allotments for fiscal year 1982 through grant award constitutes the authority fiscal year 1984, a maximum of 25 percent may be held available for the next

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fiscal year. From allotments for fiscal 8624(b)) under the low-income home en- year 1985 through fiscal year 1990, a ergy assistance program is repealed. maximum of 15 percent of the amount [64 FR 55856, Oct. 15, 1999] payable to a grantee and not transferred to another block grant according § 96.16 Applicability of title XVII of the to section 2604(f) of Public Law 97–35 (42 Reconciliation Act (31 U.S.C. 7301– U.S.C. 8623(f)) may be held available for 7305). the next fiscal year. From allotments This section interprets the applica- for fiscal year 1991 through fiscal year bility of the general provisions gov- 1993, a maximum of 10 percent of the erning block grants set forth in title amount payable to a grantee and not XVII of the Reconciliation Act (31 transferred to another block grant ac- U.S.C. 7301–7305): cording to section 2604(f) of Public Law (a) Except as otherwise provided in 97–35 (42 U.S.C. 8623(f)) may be held this section or unless inconsistent with available for the next fiscal year. Be- provisions in the individual block ginning with allotments for fiscal year grant statutes, 31 U.S.C. 7301–7305 apply 1994, a maximum of 10 percent of the to the community services, preventive amount payable to a grantee may be health and health services, and alcohol held available for the next fiscal year. and drug abuse and mental health serv- No funds may be obligated after the ices block grants. end of the fiscal year following the fis- (b) The requirement in 31 U.S.C. cal year for which they were allotted. 7303(b) relating to public hearings does (b) Expenditure. No limitations exist not apply to any of the block grants on the time for expenditure of block governed by this part. Instead, the pro- grant funds, except those imposed by visions in the individual block grant statute with respect to the community statutes apply. services, maternal and child health (c) The maternal and child health services, and social services block services block grant is not subject to grants. any requirements of 31 U.S.C. 7301–7305. (d) The social services and low-in- [47 FR 29486, July 6, 1982; 47 FR 43062, Sept. 30, 1982, as amended at 52 FR 37965, Oct. 13, come home energy assistance programs 1987; 60 FR 21357, May 1, 1995] are subject only to 31 U.S.C. 7304. (e) The audit provisions of 31 U.S.C. § 96.15 Waivers. 7305 have, in most cases, been over- ridden by the Single Audit Act. Pub. L. Applications for waivers that are per- 98–502, 31 U.S.C. 75, et seq., and do not mitted by statute for the block grants apply to the block grants. Pursuant to should be submitted to the Director, § 96.31(b)(2), certain entities may, how- Centers for Disease Control and Pre- ever, elect to conduct audits under the vention in the case of the preventive block grant audit provisions. For enti- health and health services block grant; ties making this election, the provi- to the Administrator, Substance Abuse sions of 31 U.S.C. 7305 apply to the com- and Mental Health Services Adminis- munity services block grant. tration in the case of the community (f) The applicability of 31 U.S.C. mental health services block grant and 7303(a) relating to the contents of a re- the substance abuse prevention and port on proposed uses of funds is speci- treatment block grant; to the Director, fied in § 96.10. Maternal and Child Health Bureau in the case of the maternal and child [52 FR 37966, Oct. 13, 1987] health services block grant; and to the Director, Office of Community Services § 96.17 Annual reporting requirements. in the case of the community services (a) Except for the low-income home block grant, the low-income home en- energy assistance program activity re- ergy assistance program and the social ports, a state must make public and services block grant. Beginning with submit to the Department each annual fiscal year 1986, the Secretary’s author- report required by statute: ity to waive the provisions of section (1) Within six months of the end of 2605(b) of Public Law 97–35 (42 U.S.C. the period covered by the report; or

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(2) At the time the state submits its tory period for the expenditure of block application for funding for the federal grant funds, each grantee shall report or state fiscal year, as appropriate, to the Department: which begins subsequent to the expira- (i) Total funds obligated and total tion of that six-month period. funds expended by the grantee during (b) These reports are required annu- the applicable statutory periods; and ally for preventive health and health (ii) The date of the last obligation services (42 U.S.C. 300w–5(a)(1)), com- and the date of the last expenditure. munity mental health services (42 (2) Block grants containing time limits U.S.C. 300x et. seq.), the prevention and only on obligation of funds. After the treatment of substance abuse block close of each statutory period for the grant (42 U.S.C. 300x–21 et. seq.), mater- obligation of block grant funds, each nal and child health services (42 U.S.C. grantee shall report to the Depart- 706(a)(1)), and the social services block ment: grant (42 U.S.C. 1397e(a)). See § 96.82 for (i) Total funds obligated by the requirements governing the submission grantee during the applicable statutory of activity reports for the low-income period; and home energy assistance program. (ii) The date of the last obligation. (3) Block grants containing time limits [58 FR 60128, Nov. 15, 1993] only on expenditure of funds. After the § 96.18 Participation by faith-based or- close of each statutory period for the ganizations. expenditure of block grant funds, each grantee shall report to the Depart- The funds provided under this part ment: shall be administered in compliance (i) Total funds expended by the with the standards set forth in part 87 grantee during the statutory period; (Equal Treatment for Faith-based Or- and ganizations) of this chapter. (ii) The date of the last expenditure. [69 FR 42592, July 16, 2004] (4) Submission of information. Grantees shall submit the information required Subpart C—Financial by paragraph (b)(1), (2), and (3) of this Management section on OMB Standard Form 269A, Financial Status Report (short form). § 96.30 Fiscal and administrative re- Grantees are to provide the requested quirements. information within 90 days of the close (a) Fiscal control and accounting proce- of the applicable statutory grant peri- dures. Except where otherwise required ods. by Federal law or regulation, a State [47 FR 29486, July 6, 1982, as amended at 52 shall obligate and expend block grant FR 37966, Oct. 13, 1987; 53 FR 11656, Apr. 8, funds in accordance with the laws and 1988; 64 FR 55857, Oct. 15, 1999] procedures applicable to the obligation and expenditure of its own funds. Fis- § 96.31 Audits. cal control and accounting procedures (a) Basic rule. Grantees and sub- must be sufficient to (a) permit prepa- grantees are responsible for obtaining ration of reports required by the stat- audits in accordance with the Single ute authorizing the block grant and (b) Audit Act Amendments of 1996 (31 permit the tracing of funds to a level of U.S.C. 7501–7507) and revised OMB Cir- expenditure adequate to establish that cular A–133, ‘‘Audits of State, Local such funds have not been used in viola- Governments, and Non-Profit Organi- tion of the restrictions and prohibi- zations.’’ The audits shall be made by tions of the statute authorizing the an independent auditor in accordance block grant. with generally accepted Government (b) Financial summary of obligation auditing standards covering financial and expenditure of block grant funds—(1) audits. Block grants containing time limits on (b) Subgrantees. State or local govern- both the obligation and the expenditure of ments, as those terms are defined for funds. After the close of each statutory purposes of the Single Audit Act period for the obligation of block grant Amendments of 1996, that provide Fed- funds and after the close of each statu- eral awards to a subgrantee, expending

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$300,000 or more (or other amount as of Investigations of the Department’s specified by OMB) in Federal awards in Office of the Inspector General. a fiscal year, shall: [52 FR 37966, Oct. 13, 1987] (1) Determine whether subgrantees have met the audit requirements of the Act. Commercial contractors (private Subpart D—Direct Funding of In- for-profit and private and govern- dian Tribes and Tribal Organi- mental organizations) providing goods zations and services to State and local governments are not required to have a single § 96.40 Scope. audit performed. State and local gov- This subpart applies to the commu- ernments should use their own proce- nity services, alcohol and drug abuse dures to ensure that the contractor has and mental health services, preventive complied with laws and regulations af- health and health services, primary fecting the expenditure of Federal care, and low-income home energy as- funds; sistance block grants. (2) Determine whether the subgrantee spent Federal assistance funds § 96.41 General determination. provided in accordance with applicable (a) The Department has determined laws and regulations. This may be ac- that, with the exception of the cir- complished by reviewing an audit of cumstances addressed in paragraph (c) the subgrantee made in accordance of this section, Indian tribes and tribal with the Act or through other means organizations would be better served (e.g., program reviews) if the sub- by means of grants provided directly grantee has not had such an audit; by the Department to such tribes and (3) Ensure that appropriate correc- organizations out of their State’s allot- tive action is taken within six months ment of block grant funds than if the after receipt of the audit report in in- State were awarded its entire allot- stances of noncompliance with Federal ment. Accordingly, with the exception laws and regulations; of situations described in paragraph (c) (4) Consider whether subgrantee au- of this section, the Department will, dits necessitate adjustment of the upon request of an eligible Indian tribe grantee’s own records; and or tribal organization and where pro- (5) Require each subgrantee to permit vided for by statute, reserve a portion independent auditors to have access to of the allotment of the State(s) in the records and financial statements. which the tribe is located, and, upon [62 FR 45963, Aug. 29, 1997] receipt of a complete application and related submission meeting statutory § 96.32 Financial settlement. and regulatory requirements, grant it The State must repay to the Depart- directly to the tribe or organization. ment amounts found after audit resolu- (b) An Indian tribe or tribal organization to have been expended improperly. tion may request direct funding under In the event that repayment is not a block grant program included in this made voluntarily, the Department will subpart regardless of whether the State undertake recovery. in which it is located is receiving funds under the block grant program. [52 FR 37966, Oct. 13, 1987] (c) The Department has determined § 96.33 Referral of cases to the Inspec- that Indian tribal members eligible for tor General. the funds or services provided through State or tribal officials who have in- the block grants would be better served formation indicating the commission by the State(s) in which the tribe is lo- or potential commission of fraud or cated rather than by the tribe, where: other offenses against the United (1) The tribe has not used its block States involving block grant funds grant allotment substantially in ac- should promptly provide the informa- cordance with the provisions of the rel- tion to the appropriate Regional Office evant statute(s); and

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(2) Following the procedures of 45 tribe has by resolution authorized the CFR 96.51, the Department has with- organization’s action. held tribal funds because of those defi- (c) If an Indian tribe or tribal organi- ciencies; and zation whose service population resides (3) The tribe has not provided suffi- in more than one State applies for cient evidence that it has removed or block grant funds that, by statute, are corrected the reason(s) for withholding. apportioned on the basis of population, In these cases, block grant funds re- the allotment awarded to the tribe or served or set aside for a direct grant to organization shall be taken from the the Indian tribe will be awarded to the allotments of the various States in State(s), and the State(s) will provide which the service population resides in block grant services to the service pop- proportion to the number of eligible ulation of the tribe. Before awarding members or households to be served in these funds to the State(s), the Depart- each State. If block grant funds are re- ment will allow as much time as it de- quired to be apportioned on the basis of termines to be reasonable for the tribe grants during a base year, the allot- to correct the conditions that led to ment to the Indian tribe or tribal orga- withholding, consistent with provision nization shall be taken from the allot- of timely and meaningful services to ment of the State whose base year the tribe’s service population during grants included the relevant grants to the fiscal year. If a State(s) is awarded the tribe or organization. funds under this paragraph, the (d) The audit required under the State(s) will receive all remaining block grant programs shall be con- funds set aside for the tribe for the ducted by an entity that is independent Federal fiscal year for which the award of the Indian tribe or tribal organiza- is made. Where the Department has tion receiving grant funds from the withheld funds from a tribe and the Secretary. tribe has not taken satisfactory correc- (e) Beginning with fiscal year 1983, tive action by the first day of the fol- any request by an Indian tribe or tribal lowing fiscal year, all of the funds to organization for direct funding by the serve the tribe’s service population for Secretary must be submitted to the the following fiscal year will be award- Secretary, together with the required ed to the State(s). The State(s) is re- application and related materials, by sponsible for providing services to the September 1 preceding the Federal fis- service population of the tribe in these cal year for which funds are sought. A cases. This paragraph also applies when separate application is required for funds are withheld from a tribal orga- each block grant. After the September nization. 1 deadline, tribal applications will be accepted only with the concurrence of [47 FR 29486, July 6, 1982, as amended at 64 the State (or States) in which the tribe FR 55857, Oct. 15, 1999] or tribal organization is located. (f) A State receiving block grant § 96.42 General procedures and refunds is not required to use those funds quirements. to provide tangible benefits (e.g., cash (a) An Indian tribe or tribal organiza- or goods) to Indians who are within the tion applying for or receiving direct service population of an Indian tribe or funding from the Secretary under a tribal organization that received direct block grant program shall be subject to funding from the Department under all statutory and regulatory require- the same block grant program for the ments applicable to a State applying same fiscal year. A State, however, for or receiving block grant funds to may not deny Indians access to intan- the extent that such requirements are gible services funded by block grant relevant to an Indian tribe or tribal or- programs (e.g., treatment at a commu- ganization except where otherwise pro- nity health center) even if the Indians vided by statute or in this part. are members of a tribe receiving direct (b) A tribal organization representing funding for a similar service. A tribe more than one Indian tribe will be eli- receiving direct block grant funding is gible to receive block grant funds on not required to use those funds to pro- behalf of a particular tribe only if the vide tangible benefits to non-Indians

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living within the tribe’s service area Indian means a member of an Indian unless the tribe and the State(s) in tribe whose income is at or below the which the tribe is located agree in poverty line defined in section 673(2) of writing that the tribe will do so. the Act (42 U.S.C. 9902(2)). An eligible individual under section 674(c)(2) of the [47 FR 29486, July 6, 1982, as amended at 52 Reconciliation Act (42 U.S.C. 9903(c)(2)) FR 37966, Oct. 13, 1987; 64 FR 55857, Oct. 15, 1999] means a resident of the State whose income is at or below the poverty line. § 96.43 Procedures during FY 1982. (d) An Indian tribe or tribal organization will meet the requirements of sec- (a) This section applies to the fiscal tion 675(c)(1) (42 U.S.C. 9904(c)(1)) if it year beginning October 1, 1981. certifies that it agrees to use the funds (b) A request for direct funding must to provide at least one of the services be received by the Secretary before the or activities listed in that section. Secretary has awarded all of the allot- (e) An Indian tribe or tribal organiza- ment to the State involved. The appli- tion is not required to comply with sec- cation and related submission may be tion 675(b) (42 U.S.C. 9904(b)) or to pro- submitted later but must be submitted vide the certifications required by the within 75 days after the beginning of following other provisions of the Rec- the quarter in which the State quali- onciliation Act. fied for block grant funds, (or by Au- (1) Section 675(c)(2)(A) (42 U.S.C. gust 20, 1982 in the case of an Indian 9904(c)(2)(A)); tribe located in a State that has not (2) Section 675(c)(3) (42 U.S.C. qualified for block grant funds in FY 9904(c)(3)); and 1982) except that the application and (3) Section 675(c)(4) (42 U.S.C. related submission for the low-income 9904(c)(4)). home energy assistance program must (4) Section 675(c)(11) (42 U.S.C. be submitted by December 15, 1981. A 9904(c)(11)). separate request and application are (f) In each fiscal year, Indian tribes required for each block grant. and tribal organizations may expend [47 FR 29486, July 6, 1982; 47 FR 43062, Sept. for administrative expenses—com- 30, 1982] parable to the administrative expenses incurred by State at the State level— § 96.44 Community services. an amount not to exceed the greater of (a) This section applies to direct the amounts determined by: funding of Indian tribes and tribal or- (1) Multiplying their allotment under ganizations under the community serv- section 674 of the Reconciliation Act ices block grant. (42 U.S.C. 9903) by five percent; or (b) The terms Indian tribe and tribal (2) Multiplying the allotment by the organization as used in the Reconcili- percentage represented by the ratio of ation Act have the same meaning given $55,000 to the smallest State allotment such terms in section 4(b) and 4(c) of (excluding territorial allotments) for the Indian Self-Determination and that fiscal year. Education Assistance Act (25 U.S.C. [47 FR 29486, July 6, 1982, as amended at 52 450b). The terms also include organized FR 37967, Oct. 13, 1987] groups of Indians that the State in which they reside has determined are § 96.45 Preventive health and health Indian tribes. An organized group of In- services. dians is eligible for direct funding (a) This section applies to direct based on State recognition if the State funding of Indian tribes and tribal or- has expressly determined that the ganizations under the preventive group is an Indian tribe. In addition, health and health services block grant. the statement of the State’s chief exec- (b) For the purposes of determining utive officer verifying that a tribe is eligible applicants under section 1902(d) recognized by that State will also be of the Public Health Service Act, a sufficient to verify State recognition grantee that received a grant directly for the purpose of direct funding. from the Secretary in FY 1981 under (c) For purposes of section 674(c)(2) of any of the programs replaced by the the Act (42 U.S.C. 9903(c)(2)) an eligible preventive health and health services

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block grant that was specifically tar- must comply with 42 CFR Part 51c geted toward serving a particular In- (Grants for Community Health Serv- dian tribe or tribal organization will be ices). considered eligible if the grantee is an Indian tribe or tribal organization at § 96.48 Low-income home energy as- the time it requests funds under this sistance. part. Grantees that received funds (a) This section applies to direct under formula or Statewide grants, and funding of Indian tribes under the low- subgrantees that received funds from income home energy assistance pro- any program replaced by the preven- gram. tive health and health services block (b) The terms Indian tribe and tribal grant, are not eligible. organization as used in the Reconcili- § 96.46 Substance abuse prevention ation Act have the same meaning given and treatment services. such terms in section 4(b) and 4(c) of the Indian Self-Determination and (a) This section applies to direct funding of Indian tribes and tribal or- Education Assistance Act (25 U.S.C. ganizations under the substance abuse 450b) except that the terms shall also prevention and treatment Block Grant. include organized groups of Indians (b) For the purpose of determining el- that the State in which they reside has igible applicants under section 1933(d) expressly determined are Indian tribes of the Public Health Service Act (42 or tribal organizations in accordance U.S.C. 300x–33(d)) an Indian tribe or with State procedures for making such tribal organization (as defined in sub- determinations. sections (b) and (c) of section 4 of the (c) For purposes of section 2604(d) of Indian Self-Determination and Edu- the Act (42 U.S.C. 8623(d)), an organized cation Assistance Act) that received a group of Indians is eligible for direct direct grant under subpart I of part B funding based on State recognition if of title XIX of the PHS Act (as such ex- the State has expressly determined isted prior to October 1, 1992) in fiscal that the group is an Indian tribe. A year 1991 will be considered eligible for statement by the State’s chief execu- a grant under subpart 2 of part B of tive officer verifying that a tribe is title XIX of the PHS Act. recognized by that State will also be (c) For purposes of the substance sufficient to verify State recognition abuse prevention and treatment Block for the purpose of direct funding. Grant, an Indian tribe or tribal organi- (d) The plan required by section zation is not required to comply with 2604(d)(4) of the Reconciliation Act (42 the following statutory provisions of U.S.C. 8623(d)(4)) shall contain the cer- the Public Health Service Act: 1923 (42 tification and information required for U.S.C. 300x–23), 1925 (42 U.S.C. 300x–25), States under section 2605 (b) and (c) of 1926 (42 U.S.C. 300x–26), 1928 (42 U.S.C. that Act (42 U.S.C. 8624 (b) and (c)). An 300x–28), 1929 (42 U.S.C. 300x–29), and Indian tribe or tribal organization is 1943(a)(1) (42 U.S.C. 300x–53(a)(1)). An not required to comply with section Indian tribe or tribal organization is to 2605(a)(2) of the Act (42 U.S.C. comply with all other statutes and reg- 8624(a)(2)). ulations applicable to the Substance (e) Where a tribe requests that the Abuse Prevention and Treatment Secretary fund another entity to pro- Block Grant. In each case in which an vide energy assistance for tribal mem- Indian Tribe receives a direct grant, bers, as provided by section 2604(d)(3) of the State is also responsible for pro- the Act (42 U.S.C. 8623(d)(3)), the Sec- viding services to Native Americans retary shall consider the following fac- under the State’s Block Grant pro- tors in selecting the grantee: the abil- gram. ity of the other entity to provide low- [58 FR 17070, Mar. 31, 1993] income home energy assistance, existing tribal-State agreements as to the § 96.47 Primary care. size and location of the service popu- Applications for direct funding of In- lation, and the history of State serv- dian tribes and tribal organizations ices to the Indian people to be served under the primary care block grant by the other entity.

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§ 96.49 Due date for receipt of all in- plaints with respect to the low-income formation required for completion home energy assistance program and of tribal applications for the low-in- the community services block grant come home energy assistance block must be submitted in writing to the Di- grants. rector, Office of Community Services. Effective beginning in FY 2001, for (The address for the Director, Center the low-income home energy assistance for Disease Control is 1600 Clifton program, Indian tribes and tribal orga- Road, NE., Atlanta, Georgia 30333. For nizations that make requests for direct each of the other officials cited above funding from the Department must in- the address is 200 Independence Avenue sure that all information necessary to SW., Washington, DC 20201.) The com- complete their application is received plaint must identify the provision of by December 15 of the fiscal year for the act, assurance, or certification that which funds are requested, unless the was allegedly violated; must specify State(s) in which the tribe is located the basis for the violations it charges; agrees to a later date. After December and must include all relevant informa- 15, funds will revert to the State(s) in tion known to the person submitting which the tribe is located, unless the it. State(s) agrees to a later date. If funds (c) The Department shall promptly revert to a State, the State is respon- furnish a copy of any complaint to the sible for providing low-income home affected State. Any comments received energy assistance program services to from the State within 60 days (or such the service population of the tribe. longer period as may be agreed upon between the State and the Department) [64 FR 55857, Oct. 15, 1999] shall be considered by the Department in responding to the complaint. The Subpart E—Enforcement Department will conduct an investigation of complaints where appropriate. § 96.50 Complaints. (d) The Department will provide a (a) This section applies to any com- written response to complaints within plaint (other than a complaint alleging 180 days after receipt. If a final resolu- violation of the nondiscrimination pro- tion cannot be provided at that time, visions) that a State has failed to use the response will state the reasons why its allotment under a block grant in additional time is necessary. Under the accordance with the terms of the act low-income home energy assistance establishing the block grant or the cer- program, within 60 days after receipt of tifications and assurances made by the complaints, the Department will pro- State pursuant to that act. The Sec- vide a written response to the com- retary is not required to consider a plainant, stating the actions that it complaint unless it is submitted as re- has taken to date and, if the complaint quired by this section. has not yet been fully resolved, the (b) Complaints with respect to the timetable for final resolution of the health block grants must be submitted complaint. in writing to either the Assistant Sec- (e) The Department recognizes that retary for Health or: For the preven- under the block grant programs the tive health and health services block States are primarily responsible for in- grant, the Director, Centers for Disease terpreting the governing statutory pro- Control; for the alcohol and drug abuse visions. As a result, various States and mental health services block may reach different interpretations of grant, the Administrator, Alcohol, the same statutory provisions. This Drug Abuse, and Mental Health Admin- circumstance is consistent with the in- istration; for the maternal and child tent of and statutory authority for the health services block grant, the Ad- block grant programs. In resolving any ministrator, Health Resources and issue raised by a complaint or a Fed- Services Administration. Complaints eral audit the Department will defer to with respect to the social services a State’s interpretation of its assur- block grant must be submitted in writ- ances and of the provisions of the block ing to the Assistant Secretary for grant statutes unless the interpreta- Human Development Services. Com- tion is clearly erroneous. In any event,

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the Department will provide copies of (b) Decisions resulting from offset complaints to the independent entity hearings held pursuant to § 96.51(b) of responsible for auditing the State’s ac- this part may not be appealed. tivities under the block grant program (c) Decisions resulting from with- involved. Any determination by the holding hearings held pursuant to Department that a State’s interpreta- § 96.51(c) of this part may be appealed tion is not clearly erroneous shall not to the Secretary by the State or the preclude or otherwise prejudice the Department as follows: State auditors’ consideration of the (1) An application for appeal must be question. received by the Secretary no later than 60 days after the appealing party re- [47 FR 29486, July 6, 1982; 47 FR 43062, Sept. 30, 1982, as amended at 52 FR 37967, Oct. 13, ceives a copy of the presiding officer’s 1987; 57 FR 1977, Jan. 16, 1992; 60 FR 21358, decision. The application shall clearly May 1, 1995] identify the questions for which review is sought and shall explain fully the § 96.51 Hearings. party’s position with respect to those (a) The Department will order a questions. A copy shall be furnished to State to repay amounts found not to the other party. have been expended in accordance with (2) The Secretary may permit the fil- law of the certifications provided by ing of opposing briefs, hold informal the State only after the Department conferences, or take whatever other has provided the State notice of the steps the Secretary finds appropriate order and an opportunity for a hearing. to decide the appeal. Opportunity for a hearing will not be (3) The Secretary may refer an appli- provided, however, when the State, in cation for appeal to the Grant Appeals resolving audit findings or at another Board. Notwithstanding Part 16 of this time, has agreed that the amounts title, in the event of such a referral, were not expended in accordance with the Board shall issue a recommended law or the certifications. The hearing decision that will not become final will be governed by Subpart F of this until affirmed, reversed, or modified by part and will be held in the State if re- the Secretary. quired by statute. (d) Any appeal to the Grant Appeals (b) If a State refuses to repay Board under this section shall be gov- amounts after a final decision that is erned by Part 16 of this title except not subject to further review in the De- that the Board shall not hold a hear- partment, the amounts may be offset ing. The Board shall accept any find- against payments to the State. If a ings with respect to credibility of wit- statute requires an opportunity for a nesses made by the presiding officer. hearing before such an offset may be The Board may otherwise review and made, the hearing will be governed by supplement the record as provided for Subpart F of this part and will be held in Part 16 of this title and decide the in the State if required by statute. issues raised. (c) The Department will withhold § 96.53 Length of withholding. funds from a State only if the Depart- ment has provided the State an oppor- Under the low-income home energy tunity for a hearing. The hearing will assistance program and community be governed by Subpart F of this part services block grant, the Department and will be held in the State if required may withhold funds until the Depart- by statute. ment finds that the reason for the withholding has been removed. [47 FR 29486, July 6, 1982, as amended at 52 FR 37967, Oct. 13, 1987] [64 FR 55857, Oct. 15, 1999] § 96.52 Appeals. Subpart F—Hearing Procedure (a) Decisions resulting from repayment hearings held pursuant to § 96.60 Scope. § 96.51(a) of this part may be appealed The procedures in this subpart apply by either the State or the Department when opportunity for a hearing is pro- to the Grant Appeals Board. vided for by § 96.51 of this part.

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§ 96.61 Initiation of hearing. (c) The Secretary is not precluded by (a) A hearing is initiated by a notice this section from prior participation in of opportunity for hearing from the De- the investigation or action that is the partment. The notice will: subject of the hearing. (1) Be sent by mail, telegram, telex, (d) A different presiding officer may personal delivery, or any other mode of be substituted for the one originally written communication; designated under § 96.61 of this part (2) Specify the facts and the action without notice to the parties. that are the subject of the opportunity § 96.63 Communications to presiding for a hearing; officer. (3) State that the notice of opportunity for hearing and the hearing are (a) Those persons who are directly in- governed by these rules; and volved in the investigation or presen- (4) State the time within which a tation of the position of the Depart- hearing may be requested, and state ment or any party at a hearing that is the name, address, and telephone num- subject to this subpart should avoid ber of the Department employee to any off-the-record communication on whom any request for hearing is to be the matter to the presiding officer or addressed. his advisers if the communication is in- (b) A State offered an opportunity for consistent with the requirement of a hearing has the amount of time spec- § 96.68 of this part that the administra- ified in the notice, which may not be tive record be the exclusive record for less than 10 days after receipt of the decision. If any communication of this notice, within which to request a hear- type occurs, it is to be reduced to writing. The request may be filed by mail, ing and made part of the record, and telegram, telex, personal delivery, or the other party provided an oppor- any other mode of written communica- tunity to respond. tion, addressed to the designated De- (b) A copy of any communications be- partment employee. If no response is tween a participant in the hearing and filed within that time, the offer is the presiding officer, e.g., a response by deemed to have been refused and no the presiding officer to a request for a hearing will be held. change in the time of the hearing is to (c) If a hearing is requested, the De- be sent to all parties by the person ini- partment will designate a presiding of- tiating the communication. ficer, and (subject to § 96.51 of this part) the hearing will take place at a time § 96.64 Intervention. and location agreed upon by the State Participation as parties in the hear- requesting the hearing, the Depart- ing by persons other than the State ment, and the presiding officer or, if and the Department is not permitted. agreement cannot be reached, at a reasonable time and location designated § 96.65 Discovery. by the presiding officer. The use of interrogatories, depositions, and other forms of discovery § 96.62 Presiding officer. shall not be allowed. (a) A Department employee to whom the Secretary delegates such author- § 96.66 Hearing procedure. ity, or any other agency employee des- (a) A hearing is public, except when ignated by an employee to whom such the Secretary or the presiding officer authority is delegated, may serve as determines that all or part of a hearing the presiding officer and conduct a should be closed to prevent a clearly hearing under this subpart. unwarranted invasion of personal pri- (b) The presiding officer is to be free vacy (such as disclosure of information from bias or prejudice and may not in medical records that would identify have participated in the investigation patients), to prevent the disclosure of a or action that is the subject of the trade secret or confidential commer- hearing or be subordinate to a person, cial or financial information, or to pro- other than the Secretary, who has par- tect investigatory records compiled for ticipated in such investigation or ac- law enforcement purposes that are not tion. available for public disclosure.

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(b) A hearing will be conducted by ments of this subpart concerning the the presiding officer. Employees of the conduct of hearings. The presiding offi- Department will first give a full and cer may direct that the hearing be con- complete statement of the action ducted in any suitable manner per- which is the subject of the hearing, to- mitted by law and these regulations. gether with the information and rea- (i) The Secretary or the presiding of- sons supporting it, and may present ficer has the power to suspend, modify, any oral or written information rel- or waive any provision of this subpart. evant to the hearing. The State may then present any oral or written infor- § 96.67 Right to counsel. mation relevant to the hearing. Both Any party to a hearing under this parties may confront and conduct rea- part has the right at all times to be ad- sonable cross-examination of any per- vised and accompanied by counsel. son (except for the presiding officer and counsel for the parties) who makes § 96.68 Administrative record of a any statement on the matter at the hearing. hearing. (a) The exclusive administrative (c) The hearing is informal in nature, record of the hearing consists of the and the rules of evidence do not apply. following: No motions or objections relating to the admissibility of information and (1) The notice of opportunity for views will be made or considered, but hearing and the response. either party may comment upon or (2) All written information and views rebut all such data, information, and submitted to the presiding officer at views. the hearing or after if specifically per- (d) The presiding officer may order mitted by the presiding officer. the hearing to be transcribed. The (3) Any transcript of the hearing. State may have the hearing tran- (4) The presiding officer’s decision scribed, at the State’s expense, in and any briefs or comments on the de- which case a copy of the transcript is cision under § 96.66(e) of this part. to be furnished to the Department at (5) All letters or communications be- the Department’s expense. tween participants and the presiding (e) The presiding officer may, if ap- officer or the Secretary referred to in propriate, allow for the submission of § 96.63 of this part. post-hearing briefs. The presiding offi- (b) The record of the hearing is closed cer shall prepare a written decision, to the submission of information and which shall be based on a preponder- views at the close of the hearing, un- ance of the evidence, shall include a less the presiding officer specifically statement of reasons for the decision, permits additional time for a further and shall be final unless appealed pur- submission. suant to § 96.52 of this part. If posthearing briefs were not permitted, the Subpart G—Social Services Block parties to the hearing will be given the Grants opportunity to review and comment on the presiding officer’s decision prior to § 96.70 Scope. its being issued. (f) The presiding officer shall include This subpart applies to the social as part of the decision a finding on the services block grant. credibility of witnesses (other than expert witnesses) whenever credibility is § 96.71 Definitions. a material issue. (a) Section 2005 (a)(2) and (a)(5) (42 (g) The presiding officer shall furnish U.S.C. 1397d (a)(2) and (a)(5)) of the So- a copy of the decision to the parties. cial Security Act establishes prohibi- (h) The presiding officer has the tions against the provision of room and power to take such actions and make board and medical care unless, among such rulings as are necessary or appro- other reasons, they are an ‘‘integral priate to maintain order and to con- but subordinate’’ part of a State-au- duct a fair, expeditious, and impartial thorized social service. ‘‘Integral but hearing, and to enforce the require- subordinate’’ means that the room and

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board provided for a short term or med- part. The annual report must cover the ical care is a minor but essential ad- most recently completed fiscal year junct to the service of which it is a and, except for the data in paragraphs part and is necessary to achieve the ob- (a) (1) through (4) of this section, may jective of that service. Room and board be submitted in the format of the provided for a short term shall not be state’s choice. The annual report must considered an integral but subordinate address the requirements in section part of a social service when it is pro- 2006(a) of the Act, include the specific vided to an individual in a foster fam- data required by section 2006(c), and in- ily home or other facility the primary clude other information as follows: purpose of which is to provide food, (1) The number of individuals who re- shelter, and care or supervision, except ceive services paid for in whole or in for temporary emergency shelter pro- part with federal funds under the So- vided as a protective service. cial Services Block Grant, showing sep- (b) As used in section 2005(a)(5) of the arately the number of children and the Social Security Act (42 U.S.C. 1397d number of adults who received such (a)(5)) with respect to the limitations services (section 2006(c)(1)); governing the provision of services by (2) The amount of Social Services employees of certain institutions, em- Block Grant funds spent in providing ployees includes staff, contractors, or each service, showing separately for other individuals whose activities are each service the average amount spent under the professional direction or di- per child recipient and per adult recipi- rect supervision of the institution. ent (section 2006(c)(2)); (3) The total amount of federal, state [47 FR 29486, July 6, 1982; 47 FR 43062, Sept. 30, 1982] and local funds spent in providing each service, including Social Services § 96.72 Transferability of funds. Block Grant funds; Under section 2002(d) of the Social (4) The method(s) by which each serv- Security Act (42 U.S.C. 1397a(d)), funds ice is provided, showing separately the may be transferred in accordance with services provided by public agencies, the provisions of that section to the private agencies, or both (section preventive health and health services, 2006(c)(4)); and alcohol and drug abuse and mental (5) The criteria applied in deter- health services, primary care, maternal mining eligibility for each service such and child health services, and low-in- as income eligibility guidelines, sliding come home energy assistance block fee scales, the effect of public assist- grants. In addition, funds may be ance benefits, and any requirements for transferred to other Federal block enrollment in school or training pro- grants for support of health services, grams (section 2006(c)(3)). health promotion and disease preven- (b) Reporting requirement. (1) Each tion activities, or low-income home en- state must use the uniform definitions ergy assistance (or any combination of of services in appendix A of this part, those activities). categories 1–28, in submitting the data required in paragraph (a) of this sec- § 96.73 Sterilization. tion. Where a state cannot use the uniform definitions, it should report the If a State authorizes sterilization as data under category 29, ‘‘Other Serv- a family planning service, it must com- ices.’’ The state’s definitions of each of ply with the provisions of 42 CFR Part the services listed in category 29 must 441, Subpart F, except that the State be included in the annual report. plan requirement under 42 CFR 441.252 (2) Each state must use the reporting does not apply. form issued by the Department to re- [47 FR 33702, Aug. 4, 1982] port the data required in paragraphs (a) (1) through (4) of this section. § 96.74 Annual reporting requirements. (3) In reporting recipient and expend- (a) Annual report. In accordance with iture data, each state must report ac- 42 U.S.C. 1397e, each state must submit tual numbers of recipients and actual an annual report to the Secretary by expenditures when this information is the due dates specified in § 96.17 of this available. For purposes of this report,

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each state should, if possible, count Subpart H—Low-income Home only a single recipient for each service. Energy Assistance Program States should also consider a service provided to a recipient for the length of § 96.80 Scope. the reporting period (one year) or any This subpart applies to the low-in- fraction thereof as a single service. come home energy assistance program. Data based on sampling and/or estimates will be accepted when actual fig- § 96.81 Carryover and reallotment. ures are unavailable. Each state must (a) Scope. Pursuant to section 2607(b) indicate for each service whether the of Public Law 97–35 (42 U.S.C. 8626(b)), data are based on actual figures, sam- this section concerns procedures relat- pling, or estimates and must describe ing to carryover and reallotment of the sampling and/or estimation proc- regular LIHEAP block grant funds au- ess(es) it used to obtain these data in thorized under section 2602(b) of Public the annual report. Each state must Law 97–35 (42 U.S.C. 8621(b)). also indicate, in reporting recipient (b) Required carryover and reallotment data, whether the data reflects an report. Each grantee must submit a re- unduplicated count of recipients. port to the Department by August 1 of (4) Each state must use category 30, each year, containing the information ‘‘Other Expenditures,’’ to report non- in paragraphs (b)(1) through (b)(4) of service expenditures. Only total dollar this section. The Department shall amounts in this category are required, make no payment to a grantee for a fiscal year unless the grantee has com- i.e., they need not be reported by re- plied with this paragraph with respect cipient count or cost per adult/child. to the prior fiscal year. This will include carry over balances, (1) The amount of funds that the carry forward balances, funds trans- grantee requests to hold available for ferred to or from the SSBG program, obligation in the next (following) fiscal and administrative costs as defined by year, not to exceed 10 percent of the the state. funds payable to the grantee; (5) Each state must use its own defi- (2) A statement of the reasons that nition of the terms ‘‘child’’ and this amount to remain available will ‘‘adult’’ in reporting the data required not be used in the fiscal year for which in paragraphs (a) (1) through (5) of this it was allotted; section. (3) A description of the types of as- (6) Each state’s definition of ‘‘child’’ sistance to be provided with the and ‘‘adult’’ must be reported as a part amount held available; and of the eligibility criteria for each serv- (4) The amount of funds, if any, to be ice required in paragraph (a)(5) of this subject to reallotment. section. The data on eligibility criteria (c) Conditions for reallotment. If the may be submitted in whatever format total amount available for reallotment the state chooses as a part of its an- for a fiscal year is less than $25,000, the nual report. Department will not reallot such amount. If the total amount available (c) Transfer of computer data. In addi- for reallotment for a fiscal year is tion to making the annual report avail- $25,000 or more, the Department will able to the public and to the Depart- reallot such amount, except that the ment, a state may submit the informa- Department will not award less than tion specified in paragraphs (a) (1) $25 in reallotted funds to a grantee. through (4) of this section using electronic equipment. A full description of [64 FR 55858, Oct. 15, 1999] procedures for electronic transmission § 96.82 Required report on households of data, and of the availability of com- assisted. puter diskettes, is included in Appen- (a) Each grantee which is a State or dix B to this part. an insular area which receives an an- [58 FR 60129, Nov. 15, 1993] nual allotment of at least $200,000 shall submit to the Department, as part of its LIHEAP grant application, the data

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required by section 2605(c)(1)(G) of Pub- grantees, as must any summaries pre- lic Law 97–35 (42 U.S.C. 8624(c)(1)(G)) for pared of written comments, and tran- the 12-month period corresponding to scripts and/or summaries of verbal the Federal fiscal year (October 1–Sep- comments made on proposed requests tember 30) preceding the fiscal year for at public meetings or hearings. Pro- which funds are requested. The data posed waiver requests, and any prelimi- shall be reported separately for nary waiver requests, must be made LIHEAP heating, cooling, crisis, and available for public inspection and weatherization assistance. comment until at least March 15 of the (b) Each grantee which is an insular fiscal year for which the waiver is to be area which receives an annual allot- requested. Copies of actual waiver re- ment of less than $200,000 or which is quests must be made available for pub- an Indian tribe or tribal organization lic inspection upon submission of the which receives direct funding from the requests to the Department. Department shall submit to the De- (c) Waiver request. After March 31 of partment, as part of its LIHEAP grant each fiscal year, the chief executive of- application, data on the number of ficer (or his or her designee) may re- households receiving LIHEAP assist- quest a waiver of the weatherization ance during the 12-month period cor- obligation limit for this fiscal year, if responding to the Federal fiscal year the grantee meets criteria in para- (October 1–September 30) preceding the graphs (c)(2)(i), (c)(2)(ii), and (c)(2)(iii) fiscal year for which funds are re- of this section, or can show ‘‘good quested. The data shall be reported sep- cause’’ for obtaining a waiver despite a arately for LIHEAP heating, cooling, failure to meet one or more of these crisis, and weatherization assistance. criteria. (If the request is made by the (c) Grantees will not receive their chief executive officer’s designee and LIHEAP grant allotment for the fiscal the Department does not have on file year until the Department has received written evidence of the designation, the report required under paragraph (a) the request also must include evidence or (b) of this section. of the appropriate delegation of au- [64 FR 55858, Oct. 15, 1999] thority.) Waiver requests must be in writing and must include the informa- § 96.83 Increase in maximum amount tion specified in paragraphs (c)(1) that may be used for weatheriza- through (c)(6) of this section. The tion and other energy-related home grantee may submit a preliminary repair. waiver request for a fiscal year, be- (a) Scope. This section concerns re- tween February 1 and March 31 of the quests for waivers increasing from 15 fiscal year for which the waiver is re- percent to up to 25 percent of LIHEAP quested. If a grantee chooses to submit funds allotted or available to a grantee a preliminary waiver request, the pre- for a fiscal year, the maximum amount liminary request must include the in- that grantees may use for low-cost res- formation specified in paragraphs (c)(1) idential weatherization and other en- through (c)(6) of this section; in addi- ergy-related home repair for low-in- tion, after March 31 the chief executive come households (hereafter referred to officer (or his or her designee) must as ‘‘weatherization’’), pursuant to sec- submit the information specified in tion 2605(k) of Public Law 97–35 (42 paragraphs (c)(7) through (c)(10) of this U.S.C. 8624(k)). section, to complete the preliminary (b) Public inspection and comment. Be- waiver request. fore submitting waiver requests to the (1) A statement of the total percent Department, grantees must make proof its LIHEAP funds allotted or avail- posed waiver requests available for able in the fiscal year for which the public inspection within their jurisdic- waiver is requested, that the grantee tions in a manner that will facilitate desires to use for weatherization. timely and meaningful review of, and (2) A statement of whether the grant- comment upon, these requests. Written ee has met each of the following three public comments on proposed waiver criteria: requests must be made available for (i) In the fiscal year for which the public inspection upon their receipt by waiver is requested, the combined total

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(aggregate) number of households in ceived on the request (including tran- the grantee’s service population that scripts and/or summaries of any com- will receive LIHEAP heating, cooling, ments made on the request at public and crisis assistance benefits that are meetings or hearings), a statement of provided from Federal LIHEAP allot- the method for reviewing public comments from regular and supplemental ments, and a statement of the changes, appropriations will not be fewer than if any, that were made in response to the combined total (aggregate) number these comments. that received such benefits in the pre- (7) To complete a preliminary waiver ceding fiscal year; request: Official confirmation that the (ii) In the fiscal year for which the grantee wishes approval of the waiver waiver is requested, the combined total request. (aggregate) amount, in dollars, of (8) To complete a preliminary waiver LIHEAP heating, cooling, and crisis as- request: A statement of whether any sistance benefits received by the grant- public comments were received after ee’s service population that are pro- preparation of the preliminary waiver vided from Federal LIHEAP allotments request and, if so, copies and/or sum- from regular and supplemental appro- maries of these comments (including priations will not be less than the com- transcripts and/or summaries of any bined total (aggregate) amount re- comments made on the request at pub- ceived in the preceding fiscal year; and lic meetings or hearings), and a state- (iii) All LIHEAP weatherization ac- ment of the changes, if any, that were tivities to be carried out by the grant- made in response to these comments. ee in the fiscal year for which the (9) To complete a preliminary waiver wavier is requested have been shown to request: A statement of whether any produce measurable savings in energy material/substantive changes of fact expenditures. have occurred in information included (3) With regard to criterion in para- in the preliminary waiver request since graph (c)(2)(i) of this section, a state- its submission, and, if so, a description ment of the grantee’s best estimate of the appropriate household totals for of the change(s). the fiscal year for which the wavier is (10) To complete a preliminary waiv- requested and for the preceding fiscal er request: A description of any other year. changes to the preliminary request. (4) With regard to criterion in para- (d) ‘‘Standard’’ waiver. If the Depart- graph (c)(2)(ii) of this section, a statement determines that a grantee has ment of the grantee’s best estimate of meet the three criteria in paragraph the appropriate benefit totals, in dol- (c)(2) of this section, has provided all lars, for the fiscal year for which the information required by paragraph (c) waiver is requested and for the pre- of this section, has shown adequate ceding fiscal year. concern for timely and meaningful (5) With regard to criterion in para- public review and comment, and has graph (c)(2)(iii) of this section, a de- proposed weatherization that meets all scription of the weatherization activi- relevant requirements of title XXVI of ties to be carried out by the grantee in Public Law 97–35 (42 U.S.C. 8621 et seq.) the fiscal year for which the wavier is and 45 CFR part 96, the Department requested (with all LIHEAP funds pro- will approve a ‘‘standard’’ waiver. posed to be used for weatherization, (e) ‘‘Good cause’’ waiver. (1) If a grant- not just with the amount over 15 per- ee does not meet one or more of the cent), and an explanation of the spe- three criteria in paragraph (c)(2) of this cific criteria under which the grantee section, then the grantee may submit has determined whether these activi- documentation that demonstrates good ties have been shown to produce meas- cause why a waiver should be granted urable savings in energy expenditures. despite the grantee’s failure to meet (6) A description of how and when the this criterion or these criteria. ‘‘Good proposed wavier request was made cause’’ waiver requests must include available for timely and meaningful the following information, in addition public review and comment, copies and/ to the information specified in para- or summaries of public comments re- graph (c) of this section:

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(i) For each criterion under para- tion, has shown adequate concern for graph (c)(2) of this section that the timely and meaningful public review grantee does not meet, an explanation and comment, and has proposed weath- of the specific reasons demonstrating erization that meets all relevant re- good cause why the grantee does not quirements of title XXVI of Public Law meet the criterion and yet proposes to 97–35 (42 U.S.C. 8621 et seq.) and 45 CFR use additional funds for weatheriza- part 96, the Department will approve a tion, citing measurable, quantified ‘‘good cause’’ waiver. data, and stating the source(s) of the (f) Approvals and disapprovals. After data used; receiving the grantee’s complete waiv- (ii) A statement of the grantee’s er request, the Department will re- LIHEAP heating, cooling, and crisis as- spond in writing within 45 days, in- sistance eligibility standards (eligi- forming the grantee whether the re- bility criteria) and benefits levels for quest is approved on either a ‘‘stand- the fiscal year for which the waiver is ard’’ or ‘‘good cause’’ basis. The De- requested and for the preceding fiscal partment may request additional infor- year; and, if eligibility standards were mation and/or clarification from the less restrictive and/or benefit levels grantee. If additional information and/ were higher in the preceding fiscal year or clarification is requested, the 45-day for one or more of these program com- period for the Department’s response ponents, an explanation of the reasons will start when the additional informa- demonstrating good cause why a waiv- tion and/or clarification is received. No er should be granted in spite of this waiver will be granted for a previous fact; (iii) A statement of the grantee’s fiscal year. opening and closing dates for applica- (g) Effective period. Waivers will be ef- tions for LIHEAP heating, cooling, and fective from the date of the Depart- crisis assistance in the fiscal year for ment’s written approval until the funds which the waiver is requested and in for which the waiver is granted are ob- the preceding fiscal year, and a de- ligated in accordance with title XXVI scription of the grantee’s outreach ef- of Public Law 97–35 (42 U.S.C. 8621 et forts for heating, cooling, and crisis as- seq.) and 45 CFR part 96. Funds for sistance in the fiscal year for which the which a weatherization waiver was waiver is requested and in the pre- granted that are carried over to the ceding fiscal year, and, if the grantee’s following fiscal year and used for application period was longer and/or weatherization shall not be considered outreach efforts were greater in the ‘‘funds allotted’’ or ‘‘funds available’’ preceding fiscal year for one or more of for the purposes of calculating the these program components, an expla- maximum amount that may be used for nation of the reasons demonstrating weatherization in the succeeding fiscal good cause why a waiver should be year. granted in spite of this fact; and (iv) If the grantee took, or will take, [60 FR 21358, May 1, 1995; 60 FR 33260, June 27, 1995] other actions that led, or will lead, to a reduction in the number of applica- § 96.84 Miscellaneous. tions for LIHEAP heating, cooling, and/or crisis assistance, from the pre- (a) Rights and responsibilities of terri- ceding fiscal year to the fiscal year for tories. Except as otherwise provided, a which the waiver is requested, a de- territory eligible for funds shall have scription of these actions and an expla- the same rights and responsibilities as nation demonstrating good cause why a State. a waiver should be granted in spite of (b) Applicability of assurances. The as- these actions. surances in section 2605(b) of Public (2) If the Department determines Law 97–35 (42 U.S.C. 8624(b)), as amend- that a grantee requesting a ‘‘good ed, pertain to all forms of assistance cause’’ waiver has demonstrated good provided by the grantee, with the ex- cause why a waiver should be granted, ception of assurance 15, which applies has provided all information required to heating, cooling, and energy crisis by paragraphs (c) and (e)(1) of this sec- intervention assistance.

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(c) Prevention of waste, fraud, and (4) Four-person household, 100 per- abuse. Grantees must establish appro- cent; priate systems and procedures to pre- (5) Five-person household, 116 per- vent, detect, and correct waste, fraud, cent; and abuse in activities funded under (6) Six-person household, 132 percent; the low-income home energy assistance and program. The systems and procedures (7) For each additional household are to address possible waste, fraud, member above six persons, add three and abuse by clients, vendors, and ad- percentage points to the percentage administering agencies. justment for a six-person household. (d) End of transfer authority. Begin- ning with funds appropriated for FY [53 FR 6827, Mar. 3, 1988, as amended at 64 FR 1994, grantees may not transfer any 55858, Oct. 15, 1999] funds pursuant to section 2604(f) of § 96.86 Exemption from requirement Public Law 97–35 (42 U.S.C. 8623(f)) that for additional outreach and intake are payable to them under the LIHEAP services. program to the block grant programs specified in section 2604(f). The requirement in section 2605(b)(15) of Public Law 97–35 (42 U.S.C. [57 FR 1978, Jan. 16, 1992, as amended at 64 8624(b)(15)), as amended by section FR 55858, Oct. 15, 1999] 704(a)(4) of the Augustus F. Hawkins Human Services Reauthorization Act § 96.85 Income eligibility. of 1990 (Pub. L. 101–501)—concerning ad- (a) Application of poverty income guide- ditional outreach and intake services— lines and State median income estimates. does not apply to: In implementing the income eligibility (a) Indian tribes and tribal organiza- standards in section 2605(b)(2) of Public tions; and Law 97–35 (42 U.S.C. 8624(b)(2)), grant- (b) Territories whose annual LIHEAP ees using the Federal government’s of- allotments under section 2602(b) of ficial poverty income guidelines and Public Law 97–35 (42 U.S.C. 8621(b)) are State median income estimates for $200,000 or less. households as a basis for determining eligibility for assistance shall, by Octo- [57 FR 1978, Jan. 16, 1992] ber 1 of each year, or by the beginning of the State fiscal year, whichever is § 96.87 Leveraging incentive program. later, adjust their income eligibility (a) Scope and eligible grantees. (1) This criteria so that they are in accord with section concerns the leveraging incen- the most recently published update of tive program authorized by section the guidelines or estimates. Grantees 2607A of Public Law 97–35 (42 U.S.C. may adjust their income eligibility cri- 8626a). teria to accord with the most recently (2)(i) The only entities eligible to re- published revision to the poverty in- ceive leveraging incentive funds from come guidelines or State median in- the Department are States (including come estimates for households at any the District of Columbia), Indian time between the publication of the re- tribes, tribal organizations, and terri- vision and the following October 1, or tories that received direct Federal the beginning of the State fiscal year, LIHEAP funding under section 2602(b) whichever is later. of Public Law 97–35 (42 U.S.C. 8621(b)) (b) Adjustment of annual median in- in both the base period for which lever- come for household size. In order to de- aged resources are reported, and the termine the State median income for award period for which leveraging in- households that have other than four centive funds are sought; and tribes individuals, grantees shall adjust the and tribal organizations described in State median income figures (published paragraphs (a)(2)(ii) and (a)(2)(iii) of annually by the Secretary), by the fol- this section. lowing percentages: (ii) Indian tribes that received (1) One-person household, 52 percent; LIHEAP services under section 2602(b) (2) Two-person household, 68 percent; of Public Law 97–35 (42 U.S.C. 8621(b)) (3) Three-person household, 84 per- through a directly-funded tribal orga- cent; nization in the base period for which

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leveraged resources are reported, and (3) Countable loan fund means revolv- receive direct Federal LIHEAP funding ing loan funds and similar loan instru- under section 2602(b) in the award pe- ments in which: riod, will receive leveraging incentive (i) The sources of both the loaned and funds allocable to them if they submit the repaid funds meet the requirements leveraging reports meeting all applica- of this section, including the prohibi- ble requirements. If the tribal organi- tions of paragraphs (f)(1), (f)(2), and zation continues to receive direct fund- (f)(3) of this section; ing under section 2602(b) in the award (ii) Neither the loaned nor the repaid period, the tribal organization also will funds are Federal funds or payments receive incentive funds allocable to it from low-income households, and the if it submits a leveraging report meet- loans are not made to low-income ing all applicable requirements. In households; and such cases, incentive funds will be allo- (iii) The benefits provided by the cated among the involved entities that loaned funds meet the requirements of submit leveraging reports, as agreed by this section for countable leveraged re- these entities. If they cannot agree, sources and benefits. HHS will allocate incentive funds (4) Countable petroleum violation es- based on the comparative role of each crow funds means petroleum violation entity in obtaining and/or admin- escrow (oil overcharge) funds that were istering the leveraged resources, and/or distributed to a State or territory by their relative number of LIHEAP-eligi- the Department of Energy (DOE) after ble households. October 1, 1990, and interest earned in (iii) If a tribe received direct Federal accordance with DOE policies on petro- LIHEAP funding under section 2602(b) leum violation escrow funds that were of Public Law 97–35 (42 U.S.C. 8621(b)) distributed to a State or territory by DOE after October 1, 1990, that: in the base period for which resources leveraged by the tribe are reported, and (i) Were used to assist low-income the tribe receives LIHEAP services households to meet the costs of home energy through (that is, within and as under section 2602(b) through a di- a part of) a State or territory’s rectly-funded tribal organization in the LIHEAP program, another Federal pro- award period, the tribal organization gram, or a non-Federal program, in ac- will receive leveraging incentive funds cordance with a submission for use of on behalf of the tribe for the resources these petroleum violation escrow funds if the tribal organization submits a that was approved by DOE; leveraging report meeting all applica- (ii) Were not previously required to ble requirements. be allocated to low-income households; (b) Definitions—(1) Award period and means the fiscal year during which (iii) Meet the requirements of para- leveraging incentive funds are distrib- graph (d)(1) of this section, and of para- uted to grantees by the Department, graph (d)(2)(ii) or (d)(2)(iii) or this sec- based on the countable leveraging action. tivities they reported to the Depart- (5) Home energy means a source of ment for the preceding fiscal year (the heating or cooling in residential dwell- base period). ings. (2) Base period means the fiscal year (6) Low-income households means fed- for which a grantee’s leveraging activi- erally eligible (federally qualified) ties are reported to the Department; households meeting the standards for grantees’ countable leveraging activi- LIHEAP income eligibility and/or ties during the base period or base year LIHEAP categorical eligibility as set are the basis for the distribution of by section 2605(b)(2) of Public Law 97–35 leveraging incentive funds during the (42 U.S.C. 8624(b)(2)). succeeding fiscal year (the award pe- (7) Weatherization means low-cost res- riod or award year). Leveraged re- idential weatherization and other en- sources are counted in the base period ergy-related home repair for low-in- during which their benefits are pro- come households. Weatherization must vided to low-income households. be directly related to home energy.

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(c) LIHEAP funds used to identify, de- cess of the amount of such resources velop, and demonstrate leveraging pro- that could be acquired by these house- grams. (1) Each fiscal year, States (ex- holds through the purchase of home en- cluding Indian tribes, tribal organiza- ergy, or the purchase of items that tions, and territories) may spend up to help these households meet the cost of the greater of $35,000 or 0.08 percent of home energy, at commonly available their net Federal LIHEAP allotments household rates or costs, or that could (funds payable) allocated under section be obtained with regular LIHEAP al- 2602(b) of Public Law 97–35 (42 U.S.C. lotments provided under section 2602(b) 8621(b)) specifically to identify, de- of Public Law 97–35 (42 U.S.C. 8621(b)). velop, and demonstrate leveraging pro- (v) They meet the requirements for grams under section 2607A(c)(2) of Pub- countable leveraged resources and ben- lic Law 97–35 (42 U.S.C. 8626a(c)(2)). efits throughout this section and sec- Each fiscal year, Indian tribes, tribal tion 2607A of Public Law 97–35 (42 organizations, and territories may U.S.C. 8626a). spend up to the greater of two (2.0) per- (2) Also, in order to be counted under cent or $100 of their Federal LIHEAP the leveraging incentive program, le- allotments allocated under section veraged resources and benefits must 2602(b) of Public law 97–35 (42 U.S.C. meet at least one of the following three 8621(b)) specifically to identify, de- criteria: velop, and demonstrate leveraging pro- (i) The grantee’s LIHEAP program grams under section 2607A(c)(2) of Pub- had an active, substantive role in de- lic Law 97–35 (42 U.S.C. 8626a(c)(2)). For veloping and/or acquiring the resource/ the purpose of this paragraph, Federal benefits from home energy vendor(s) LIHEAP allotments include funds from through negotiation, regulation, and/or regular and supplemental appropria- competitive bid. The actions or efforts tions, with the exception of leveraging of one or more staff of the grantee’s incentive funds provided under section LIHEAP program—at the central and/ 2602(d) of Public Law 97–35 (42 U.S.C. or local level—and/or one or more staff 8621(d)). of LIHEAP program subrecipient(s) (2) LIHEAP funds used under section acting in that capacity, were substan- 2607A(c)(2) of Public Law 97–35 (42 tial and significant in obtaining the re- U.S.C. 8626a(c)(2)) specifically to iden- source/benefits from the vendor(s). tify, develop, and demonstrate (ii) The grantee appropriated or man- leveraging programs are not subject to dated the resource/benefits for distribu- the limitation in section 2605(b)(9) of tion to low-income households through Public Law 97–35 (42 U.S.C. 8624(b)(9)) (that is, within and as a part of) its on the maximum percent of Federal LIHEAP program. The resource/bene- funds that may be used for costs of fits are provided through the grantee’s planning and administration. LIHEAP program to low-income house- (d) Basic requirements for leveraged re- holds eligible under the grantee’s sources and benefits. (1) In order to be LIHEAP standards, in accordance with counted under the leveraging incentive the LIHEAP statute and regulations program, leveraged resources and bene- and consistent with the grantee’s fits must meet all of the following five LIHEAP plan and program policies criteria: that were in effect during the base pe- (i) They are from non-Federal riod, as if they were provided from the sources. grantee’s Federal LIHEAP allotment. (ii) They are provided to the grant- (iii) The grantee appropriated or ee’s low-income home energy assist- mandated the resource/benefits for dis- ance program, or to federally qualified tribution to low-income households as low-income households as described in described in its LIHEAP plan (referred section 2605(b)(2) of Public Law 97–35 to in section 2605(c)(1)(A) of Public Law (42 U.S.C. 8624(b)(2)). 97–35) (42 U.S.C. 8624(c)(1)(A)). The re- (iii) They are measurable and quan- source/benefits are provided to low-in- tifiable in dollars. come households as a supplement and/ (iv) They represent a net addition to or alternative to the grantee’s LIHEAP the total home energy resources avail- program, outside (that is, not through, able to low-income households in ex- within, or as a part of) the LIHEAP

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program. The resource/benefits are in- how to meet the home energy needs of tegrated and coordinated with the specific, individual households. For the grantee’s LIHEAP program. Before the duration of the LIHEAP program, this end of the base period, the plan identi- communication takes place before as- fies and describes the resource/benefits, sistance is provided to each household their source(s), and their integration/ to be served by the resource, unless the coordination with the LIHEAP pro- applicant for assistance from the re- gram. The Department will determine source presents documentation of resources/benefits to be integrated and LIHEAP eligibility and/or the amount coordinated with the LIHEAP program of LIHEAP assistance received or to be if they meet at least one of the fol- received. lowing eight conditions. If a resource (F) A written agreement between the meets at least one of conditions A grantee’s LIHEAP program or local through F when the grantee’s LIHEAP LIHEAP administering agency, and the program is operating (and meets all agency administering the resource, other applicable requirements), the re- specifies the following about the resource also is countable when the source: eligibility criteria; benefit lev- LIHEAP program is not operating. els; period of operation; how the (A) For all households served by the LIHEAP program and the resource are resource, the assistance provided by integrated/coordinated; and relation- the resource depends on and is deter- ship between LIHEAP eligibility and/or mined by the assistance provided to benefit levels, and eligibility and/or these households by the grantee’s benefit levels for the resource. The LIHEAP program in the base period. agreement provides for annual or more The resource supplements LIHEAP as- frequent reports to be provided to the sistance that was not sufficient to LIHEAP program by the agency admin- meet households’ home energy needs, istering the resource. and the type and amount of assistance (G) The resource accepts referrals provided by the resource is directly af- from the grantee’s LIHEAP program, fected by the LIHEAP assistance re- and as long as the resource has benefits ceived by the households. available, it provides assistance to all (B) Receipt of LIHEAP assistance in the base period is necessary to receive households that are referred by the assistance from the resource. The re- LIHEAP program and that meet the resource serves only households that resource’s eligibility requirements. ceived LIHEAP assistance in the base Under this condition, only the benefits period. provided to households referred by the (C) Ineligibility for the grantee’s LIHEAP program are countable. LIHEAP program, or denial of LIHEAP (H) Before the grantee’s LIHEAP assistance in the base period because of heating, cooling, crisis, and/or weather- unavailability of LIHEAP funds, is nec- ization assistance component(s) open essary to receive assistance from the and/or after the grantee’s LIHEAP resource. heating, cooling, crisis, and/or weather- (D) For discounts and waivers: eligi- ization assistance component(s) close bility for and/or receipt of assistance for the season or for the fiscal year, or under the grantee’s LIHEAP program before the entire LIHEAP program in the base period, and/or eligibility opens and/or after the entire LIHEAP under the Federal standards set by sec- program closes for the season or for the tion 2605(b)(2) of Public Law 97–35 (42 fiscal year, the resource is made avail- U.S.C. 8624(b)(2)), is necessary to re- able specifically to fill the gap caused ceive the discount or waiver. by the absence of the LIHEAP compo- (E) During the period when the nent(s) or program. The resource is not grantee’s LIHEAP program is oper- available while the LIHEAP compo- ating, staff of the grantee’s LIHEAP nent(s) or program is operating. program and/or staff assigned to the (e) Countable leveraged resources and LIHEAP program by a local LIHEAP benefits. Resources and benefits that administering agency or agencies, and are countable under the leveraging in- staff assigned to the resource commu- centive program include but are not nicate orally and/or in writing about limited to the following, provided that

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they also meet all other applicable re- as a result of these audits; and post- quirements: weatherization inspection of homes; (1) Cash resources: State, tribal, ter- and ritorial, and other public and private (vii) The following services, when non-Federal funds, including countable they are provided (carried out) in the loan funds and countable petroleum base period: installation, replacement, violation escrow funds as defined in and repair of smoke/fire alarms that paragraphs (b)(3) and (b)(4) of this sec- are an integral part, and necessary for tion, that are used for: safe operation, of a home heating or (i) Heating, cooling, and energy crisis cooling system installed or repaired as assistance payments and cash benefits a weatherization activity; and asbestos made in the base period to or on behalf removal and that is an integral part of, of low-income households toward their and necessary to carry out, weatheriza- home energy costs (including home en- tion to help low-income households ergy bills, taxes on home energy sales/ meet the costs of home energy. purchases and services, connection and (2) Home energy discounts and waiv- reconnection fees, application fees, late ers that are provided in the base period payment charges, bulk fuel tank rental to low-income households and pertain or purchase costs, and security depos- to generally applicable prices, rates, its that are retained for six months or fees, charges, costs, and/or require- longer); ments, in the amount of the discount, (ii) Purchase of fuels that are pro- reduction, waiver, or forgiveness, or vided to low-income households in the that apply to certain tangible fuel and base period for home energy (such as non-fuel items and to certain services, fuel oil, liquefied petroleum gas, and that are provided in the base period to wood); low-income households and help these (iii) Purchase of weatherization ma- households meet the costs of home en- terials that are installed in recipients’ ergy, in the amount of the discount or homes in the base period; reduction: (iv) Purchase of the following tangible items that are provided to low-in- (i) Discounts or reductions in utility come households and/or installed in re- and bulk fuel prices, rates, or bills; cipients’ homes in the base period: (ii) Partial or full forgiveness of blankets, space heating devices, equip- home energy bill arrearages; ment, and systems; space cooling de- (iii) Partial or full waivers of utility vices, equipment, and systems; and and other home energy connection and other tangible items that help low-in- reconnection fees, application fees, late come households meet the costs of payment charges, bulk fuel tank rental home energy and are specifically ap- or purchase costs, and home energy se- proved by the Department as countable curity deposits that are retained for six leveraged resources; months or longer; (v) Installation, replacement, and re- (iv) Reductions in and partial or full pair of the following in the base period: waivers of non-Federal taxes on home weatherization materials; space heat- energy sales/purchases and services, ing devices, equipment, and systems; and reductions in and partial or full space cooling devices, equipment, and waivers of other non-Federal taxes pro- systems; and other tangible items that vided as tax ‘‘credits’’ to low-income help low-income households meet the households to offset their home energy costs of home energy and are specifi- costs, except when Federal funds or cally approved by the Department; Federal tax ‘‘credits’’ provide payment (vi) The following services, when or reimbursement for these reductions/ they are an integral part of weatheriza- waivers; tion to help low-income households (v) Discounts or reductions in the meet the costs of home energy in the cost of the following tangible items base period: installation, replacement, that are provided to low-income house- and repair of windows, exterior doors, holds and/or installed in recipients’ roofs, exterior walls, and exterior homes: weatherization materials; blan- floors; pre-weatherization home energy kets; space heating devices, equipment, audits of homes that were weatherized and systems; space cooling devices,

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equipment, and systems; and other tan- rials; space heating devices, equip- gible items that are specifically ap- ment, and systems; space cooling de- proved by the Department; vices, equipment, and systems; and (vi) Discounts or reductions in the other items that help low-income cost of installation, replacement, and households meet the costs of home en- repair of the following: weatherization ergy and are specifically approved by materials; space heating devices, the Department; equipment, and systems; space cooling (v) Unpaid volunteers’ services spe- devices, equipment, and systems; and cifically to provide (carry out) the fol- other tangible items that help low-in- lowing, when these services are an income households meet the costs of tegral part of weatherization to help home energy and are specifically ap- low-income households meet the costs proved by the Department; of home energy: installation, replace- (vii) Discounts or reductions in the ment, and repair of windows, exterior cost of the following services, when the doors, roofs, exterior walls, and exte- services are an integral part of weath- rior floors; pre-weatherization home erization to help low-income house- energy audits of homes that were holds meet the costs of home energy: weatherized as a result of these audits; installation, replacement, and repair of and post-weatherization inspection of windows, exterior doors, roofs, exterior homes; walls, and exterior floors; pre-weather- (vi) Unpaid volunteers’ services spe- ization home energy audits of homes cifically to: install, replace, and repair that were weatherized as a result of smoke/fire alarms as an integral part, these audits; and post-weatherization and necessary for safe operation, of a inspection of homes; and home heating or cooling system in- (viii) Discounts or reductions in the stalled or repaired as a weatherization cost of installation, replacement, and activity; and remove asbestos as an in- repair of smoke/fire alarms that are an tegral part of, and necessary to carry integral part, and necessary for safe out, weatherization to help low-income operation, of a home heating or cooling households meet the costs of home en- system installed or repaired as a ergy; weatherization activity; and discounts (vii) Paid staff’s services that are do- or reductions in the cost of asbestos re- nated by the employer specifically to moval that is an integral part of, and install, replace, and repair the fol- necessary to carry out, weatherization lowing: weatherization materials; to help low-income households meet space heating devices, equipment, and the costs of home energy. systems; space cooling devices, equip- (3) Certain third-party in-kind con- ment, and systems; and other items tributions that are provided in the base that help low-income households meet period to low-income households: the costs of home energy and are spe- (i) Donated fuels used by recipient cifically approved by the Department; households for home energy (such as (viii) Paid staff’s services that are fuel oil, liquefied petroleum gas, and donated by the employer specifically to wood); provide (carry out) the following, when (ii) Donated weatherization mate- these services are an integral part of rials that are installed in recipients’ weatherization to help low-income homes; households meet the costs of home en- (iii) Donated blankets; donated space ergy: installation, replacement, and re- heating devices, equipment, and sys- pair of windows, exterior doors, roofs, tems; donated space cooling devices, exterior walls, and exterior floors; pre- equipment, and systems; and other do- weatherization home energy audits of nated tangible items that help low-in- homes that were weatherized as a re- come households meet the costs of sult of these audits; and post-weather- home energy and are specifically ap- ization inspection of homes; and proved by the Department as countable (ix) Paid staff’s services that are do- leveraged resources; nated by the employer specifically to: (iv) Unpaid volunteers’ services spe- install, replace, and repair smoke/fire cifically to install, replace, and repair alarms as an integral part, and nec- the following: weatherization mate- essary for safe operation, of a home

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heating or cooling system installed or (8) Petroleum violation escrow (oil repaired as a weatherization activity; overcharge) funds that do not meet the and remove asbestos as an integral definition in paragraph (b)(4) of this part of, and necessary to carry out, section; weatherization to help low-income (9) Interest earned/paid on petroleum households meet the costs of home en- violation escrow funds that were dis- ergy. tributed to a State or territory by the (f) Resources and benefits that cannot Department of Energy on or before Oc- be counted. The following resources and tober 1, 1990; benefits are not countable under the (10) Interest earned/paid on Federal leveraging incentive program: funds; (1) Resources (or portions of re- (11) Interest earned/paid on cus- sources) obtained, arranged, provided, tomers’ security deposits, utility de- contributed, and/or paid for, by a low- posits, etc., except when forfeited by income household for its own benefit, the customer and used to provide or which a low-income household is re- countable benefits; sponsible for obtaining or required to (12) Borrowed funds that do not meet provide for its own benefit or for the the requirements in paragraph (b)(3) benefit of others, in order to receive a above (including loans made by and/or benefit of some type; to low-income households), interest (2) Resources (or portions of repaid on borrowed funds, and reductions sources) provided, contributed, and/or in interest paid on borrowed funds; paid for by building owners, building (13) Resources (or portions of re- managers, and/or home energy vendors, sources) for which Federal payment or if the cost of rent, home energy, or reimbursement has been or will be pro- other charge(s) to the recipient were or vided/received; will be increased, or if other charge(s) (14) Tax deductions and tax credits to the recipient were or will be im- received from any unit(s) of govern- posed, as a result; ment by donors/contributors of re- (3) Resources (or portions of resources for these donations, and by sources) directly provided, contributed, vendors for providing rate reductions, and/or paid for by member(s) of the re- discounts, waivers, credits, and/or ar- cipient household’s family (parents, rearage forgiveness to or for low-in- grandparents, great-grandparents, come households, etc.; sons, daughters, grandchildren, great- (15) Funds and other resources that grandchildren, brothers, sisters, aunts, have been or will be used as matching uncles, first cousins, nieces, and neph- or cost sharing for any Federal pro- ews, and their spouses), regardless of gram; whether the family member(s) lived (16) Leveraged resources counted with the household, unless the family under any other Federal leveraging in- member(s) also provided the same re- centive program; source to other low-income households (17) Costs of planning and adminis- during the base period and did not tration, space costs, and intake costs; limit the resource to members of their (18) Outreach activities, budget coun- own family; seling, case management, and energy (4) Deferred home energy obligations; conservation education; (5) Projected future savings from (19) Training; weatherization; (20) Installation, replacement, and re- (6) Delivery, and discounts in the pair of lighting fixtures and light cost of delivery, of fuel, weatherization bulbs; materials, and all other items; (21) Installation, replacement, and re- (7) Purchase, rental, donation, and pair of smoke/fire alarms that are not loan, and discounts in the cost of pur- an integral part, and necessary for safe chase and rental, of: supplies and operation, of a home heating or cooling equipment used to deliver fuel, weath- system installed or repaired as a erization materials, and all other weatherization activity; items; and supplies and equipment used (22) Asbestos removal that is not an to install and repair weatherization integral part of, and necessary to carry materials and all other items; out, weatherization to help low-income

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households meet the costs of home en- not in the employee’s normal line of ergy; work, will be valued at rates consistent (23) Paid services where payment is with those ordinarily paid for similar not made from countable leveraged re- work, by persons of similar skill in this sources, unless these services are do- work, in the grantee’s or subrecipient’s nated as a countable in-kind contribu- organization in the local area, at the tion by the employer; time these services were provided. If (24) All in-kind contributions except the grantee or subrecipient does not those described in paragraph (e)(3) of have employees performing similar this section; and work, the rates will be consistent with (25) All other resources that do not those ordinarily paid by other employ- meet the requirements of this section ers for similar work, by persons of and of section 2607A of Public Law 97– similar skill in this work, in the same 35 (42 U.S.C. 8626a). labor market, at the time these serv- (g) Valuation and documentation of le- ices were provided. Fringe benefits and veraged resources and offsetting costs. (1) overhead costs will not be counted. Do- Leveraged cash resources will be val- nated third-party paid services of em- ued at the fair market value of the ben- ployees in their normal line of work efits they provided to low-income will be valued at the employee’s reg- households, as follows. Payments to or ular rate of pay, excluding fringe bene- on behalf of low-income households for fits and overhead costs. heating, cooling, and energy crisis as- (5) Offsetting costs and charges will sistance will be valued at their actual be valued at their actual amount or amount or value at the time they were value. provided. Purchased fuel, weatheriza- (i) Funds from grantees’ regular tion materials, and other countable LIHEAP allotments that are used spe- tangible items will be valued at their cifically to identify, develop, and dem- fair market value (the commonly onstrate leveraging programs under available household rate or cost in the section 2607A(c)(2) of Public Law 97–35 local market area) at the time they (42 U.S.C. 8626a(c)(2)) will be deducted were purchased. Installation, replace- as offsetting costs in the base period in ment, and repair of weatherization ma- which these funds are obligated, wheth- terials, and other countable services, er or not there are any resulting lever- will be valued at rates consistent with aged benefits. Costs incurred from those ordinarily paid for similar work, grantees’ own funds to identify, de- by persons of similar skill in this work, velop, and demonstrate leveraging pro- in the grantee’s or subrecipient’s orga- grams will be deducted in the first base nization in the local area, at the time period in which resulting leveraged these services were provided. If the benefits are provided to low-income grantee or subrecipient does not have households. If there is no resulting le- employees performing similar work, veraged benefit from the expenditure of the rates will be consistent with those the grantee’s own funds, the grantee’s ordinarily paid by other employers for expenditure will not be counted or de- similar work, by persons of similar ducted. skill in this work, in the same labor (ii) Any costs assessed or charged to market, at the time these services were low-income households on a continuing provided. Fringe benefits and overhead or on-going basis, year after year, spe- costs will not be counted. cifically to participate in a counted (2) Home energy discounts, waivers, leveraging program or to receive and credits will be valued at their accounted leveraged resources/benefits tual amount or value. will be deducted in the base period (3) Donated fuel, donated weatheriza- these costs are paid. Any one-time tion materials, and other countable do- costs or charges to low-income house- nated tangible items will be valued at holds specifically to participate in a their fair market value (the commonly counted leveraging program or to re- available household cost in the local ceive counted leveraged resources/bene- market area) at the time of donation. fits will be deducted in the first base (4) Donated unpaid services, and do- period the leveraging program or re- nated third-party paid services that are source is counted. Such costs or

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charges will be subtracted from the provided, and state the eligibility gross value of a counted resource or standard(s) for the low-income house- benefit for low-income households holds to whom the benefit(s) were pro- whose benefits are counted, but not for vided; any households whose benefits are not (G) Indicate the agency or agencies counted. that administered the resource/ben- (6) Only the amount of the net addi- efit(s); and tion to recipient low-income house- (H) Indicate the criterion or criteria holds’ home energy resources may be for leveraged resources in paragraph counted in the valuation of a leveraged (d)(2) of this section that the resource/ resource. benefits meet, and for criteria in para- (7) Leveraged resources and benefits, graphs (d)(2)(i) and (d)(2)(iii) of this and offsetting costs and charges, will section, explain how resources/benefits be valued according to the best data valued at $5,000 or more meet the cri- available to the grantee. terion or criteria. (8) Grantees must maintain, or have (ii) State the total gross dollar value readily available, records sufficient to of the countable leveraged resources document leveraged resources and ben- and benefits provided to low-income efits, and offsetting costs and charges, households during the base period (the and their valuation. These records sum of the amounts listed pursuant to must be retained for three years after paragraph (h)(1)(i)(E) of this section). the end of the base period whose lever- (iii) State in dollars any costs in- aged resources and benefits they document. curred by the grantee to leverage re- (h) Leveraging report. (1) In order to sources, and any costs and charges im- qualify for leveraging incentive funds, posed on low-income households to par- each grantee desiring such funds must ticipate in a counted leveraging pro- submit to the Department a report on gram or to receive counted leveraged the leveraged resources provided to benefits, as determined in accordance low-income households during the with paragraph (g)(5) of this section. preceeding base period. These reports Also state the amount of the grantee’s must contain the following informa- regular LIHEAP allotment that the tion in a format established by the De- grantee used during the base period partment. specifically to identify, develop, and (i) For each separate leveraged re- demonstrate leveraging programs source, the report must: under section 2607A(c)(2) of Public Law (A) Briefly describe the specific le- 97–35 (42 U.S.C. 8626a(c)(2)). veraged resource and the specific ben- (iv) State the net dollar value of the efit(s) provided to low-income house- countable leveraged resources and ben- holds by this resource, and state the efits for the base period. (Subtract the source of the resource; amounts in paragraph (h)(1)(iii) of this (B) State whether the resource was section from the amount in paragraph acquired in cash, as a discount/waiver, (h)(1)(ii) of this section.) or as an in-kind contribution; (2) Leveraging reports must be post- (C) Indicate the geographical area in marked or hand-delivered not later which the benefit(s) were provided to than November 30 of the fiscal year for recipients; which leveraging incentive funds are (D) State the month(s) and year(s) requested. when the benefit(s) were provided to re- (3) The Department may require sub- cipients; mission of additional documentation (E) State the gross dollar value of the and/or clarification as it determines countable benefits provided by the re- necessary to verify information in a source as determined in accordance grantee’s leveraging report, to deter- with paragraph (g) of this section, indi- mine whether a leveraged resource is cate the source(s) of the data used, and countable, and/or to determine the net describe how the grantee quantified the valuation of a resource. In such cases, value and calculated the total amount; the Department will set a date by (F) State the number of low-income which it must receive information suf- households to whom the benefit(s) were ficient to document countability and/or

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valuation. In such cases, if the Depart- is, within and as a part of) the grant- ment does not receive information that ee’s LIHEAP program. These funds can it considers sufficient to document be used for weatherization without re- countability and/or valuation by the gard to the weatherization maximum date it has set, then the Department in section 2605(k) of Public Law 97–35 will not count the resource (or portion (42 U.S.C. 8624(k)). However, they can- of resource) in question. not be counted in the base for calcula- (i) Determination of grantee shares of tion of the weatherization maximum leveraging incentive funds. Allocation of for regular LIHEAP funds authorized leveraging incentive funds to grantees under section 2602(b) of Public Law 97– will be computed according to a for- 35 (42 U.S.C. 8621(b)). Leveraging incen- mula using the following factors and tive funds cannot be used for costs of weights: planning and administration. However, (1) Fifty (50) percent based on the in either the award period or the fiscal final net value of countable leveraged year following the award period, they resources provided to low-income can be counted in the base for calcula- households during the base period by a tion of maximum grantee planning and grantee relative to its net Federal al- administrative costs under section lotment of funds allocated under sec- 2605(b)(9) of Public Law 97–35 (42 U.S.C. tion 2602(b) of Public Law 97–35 (42 8624(b)(9)). They cannot be counted in U.S.C. 8621(b)) during the base period, the base for calculation of maximum as a proportion of the final net value of carryover of regular LIHEAP funds au- the countable leveraged resources pro- thorized under section 2602(b) of Public vided by all grantees during the base Law 97–35 (42 U.S.C. 8621(b)). period relative to their net Federal al- (2) Grantees must include the uses of lotment of funds allocated under that leveraging incentive funds in their section during the base period; and LIHEAP plans (referred to in section (2) Fifty (50) percent based on the 2605(c)(1)(A) of Public Law 97–35) (42 final net value of countable leveraged U.S.C. 8624(c)(1)(A)) for the fiscal year resources provided to low-income in which the grantee obligates these households during the base period by a funds. Grantees must document uses of grantee as a proportion of the total leveraging incentive funds in the same final net value of the countable lever- way they document uses of regular aged resources provided by all grantees LIHEAP funds authorized under sec- during the base period; except that: No tion 2602(b) of Public Law 97–35 (42 grantee may receive more than twelve U.S.C. 8621(b)). Leveraging incentive (12.0) percent of the total amount of funds are subject to the same audit re- leveraging incentive funds available for quirements as regular LIHEAP funds. distribution to grantees in any award (k) Period of obligation for leveraging period; and no grantee may receive incentive funds. Leveraging incentive more than the smaller of its net Fed- funds are available for obligation dur- eral allotment of funds allocated under ing both the award period and the fis- section 2602(b) of Public Law 97–35 (42 cal year following the award period, U.S.C. 8621(b)) during the base period, without regard to limitations on carry- or two times (double) the final net over of funds in section 2607(b)(2)(B) of value of its countable leveraged re- Public Law 97–35 (42 U.S.C. sources for the base period. The cal- 8626(b)(2)(B)). Any leveraging incentive culations will be based on data con- funds not obligated for allowable pur- tained in the leveraging reports sub- poses by the end of this period must be mitted by grantees under paragraph (h) returned to the Department. of this section as approved by the De- [60 FR 21359, May 1, 1995; 60 FR 36334, July 14, partment, and allocation data devel- 1995] oped by the Department. (j) Uses of leveraging incentive funds. § 96.88 Administrative costs. (1) Funds awarded to grantees under (a) Costs of planning and administra- the leveraging incentive program must tion. Any expenditure for governmental be used to increase or maintain heat- functions normally associated with ad- ing, cooling, energy crisis, and/or ministration of a public assistance pro- weatherization benefits through (that gram must be included in determining

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administrative costs subject to the her designee) to the Secretary (or his statutory limitation on administrative or her designee) of the following: costs, regardless of whether the ex- (1) Information substantiating the penditure is incurred by the State, a existence of a disaster or emergency; subrecipient, a grantee, or a contractor (2) Information substantiating the of the State. impracticability of compliance with (b) Administrative costs for territories the standards, including a description and Indian tribes. For Indian tribes, of the specific conditions caused by the tribal organizations and territories disaster or emergency which make with allotments of $20,000 or less, the compliance impracticable; and limitation on the cost of planning and (3) Information on the expected dura- administering the low-income home tion of the conditions that make com- energy assistance program shall be 20 pliance impracticable. percent of funds payable and not transferred for use under another block If the communication is made by the grant. For tribes, tribal organizations chief executive officer’s designee and and territories with allotments over the Department does not have on file $20,000, the limitation on the cost of written evidence of the designation, planning and administration shall be the communication must also include: $4,000 plus 10% of the amount of funds (4) Evidence of the appropriate dele- payable (and not transferred for use gation of authority. under another block grant) that ex- (c) The initial communication by the ceeds $20,000. chief executive officer may be oral or written. If oral, it must be followed as [52 FR 37967, Oct. 13, 1987] soon as possible by written commu- § 96.89 Exemption from standards for nication confirming the information providing energy crisis interven- provided orally. The Secretary’s ex- tion assistance. emption initially may be oral. If so, The performance standards in section the Secretary will provide written con- 2604(c) of Pub. L. 97–35 (42 U.S.C. 8623), firmation of the exemption as soon as as amended by section 502(a) of the possible after receipt of appropriate Human Services Reauthorization Act written communication from the chief of 1986 (Pub. L. 99–425)—concerning pro- executive officer. vision of energy crisis assistance with- (d) Exemption from the standards in specified time limits, acceptance of shall apply from the moment of the applications for energy crisis benefits Secretary’s determination, only in the at geographically accessible sites, and geographical area affected by the dis- provision to physically infirm low-in- aster or emergency, and only for so come persons of the means to apply for long as the Secretary determines that energy crisis benefits at their resi- the disaster or emergency makes com- dences or to travel to application pliance with the standards impracti- sites—shall not apply under the condi- cable. tions described in this section. [53 FR 6827, Mar. 3, 1988] (a) These standards shall not apply to a program in a geographical area af- Subpart I—Community Services fected by (1) a major disaster or emergency designated by the President Block Grants under the Disaster Relief Act of 1974, or § 96.90 Scope. (2) a natural disaster identified by the chief executive officer of a State, terri- This subpart applies to the commu- tory, or direct-grant Indian tribe or nity services block grant. tribal organization, if the Secretary (or his or her designee) determines that § 96.91 Audit requirement. the disaster or emergency makes com- Pursuant to section 1745(b) of the pliance with the standards impracti- Reconciliation Act (31 U.S.C. 1243 note) cable. an audit is required with respect to the (b) The Secretary’s determination 2-year period beginning on October 1, will be made after communication by 1981, and with respect to each 2-year the chief executive officer (or his or period thereafter. In its application for

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funds, a State may modify the assur- 30 days to respond to the State’s deter- ance required by section 675(c)(9) of the mination. After evaluating the reasons Reconciliation Act (42 U.S.C. 9904(c)(9)) advanced by the State and the center, to conform to the requirements of sec- the Department will determine within tion 1745(b). 30 days after the center’s response is due whether the center meets the re- § 96.92 Termination of funding. quirements for receiving a grant under Where a State determines pursuant the Public Health Service Act. The to section 675(c)(11) of the Community State may not discontinue funding the Services Block Grant Act that it will center until the Department has com- terminate present or future funding of pleted its review. any community action agency or mi- grant and seasonal farmworker organi- [47 FR 29486, July 6, 1982; 47 FR 43062, Sept. zation which received funding in the 30, 1982] previous fiscal year, the State must provide the organization with notice § 96.102 Carryover of unobligated and an opportunity for hearing on the funds. record prior to terminating funding. If In implementing section 1925(a)(2) of a review by the Secretary of the the Public Health Service Act (42 State’s final decision to terminate U.S.C. 300y–4(a)(2)), the Secretary will funding is requested pursuant to sec- determine that there is good cause for tion 676A, the request must be made in funds remaining unobligated if planned writing, within 30 days of notification obligations could not be carried out be- by the State of its final decision to ter- cause of a bona fide reason or if the minate funding. The Department will State has determined that program ob- confirm or reject the State’s finding of jectives would be better served by de- cause, normally within 90 days. If a referring obligation of the funds to the quest for a review has been made, the following year. State may not discontinue present or future funding until the Department confirms the State’s finding of cause. If Subpart K—Transition Provisions no request for a review is made within the 30-day limit, the State’s decision § 96.110 Scope. will be effective at the expiration of Except as otherwise stated, this sub- that time. part applies to the community serv- [52 FR 37968, Oct. 13, 1987] ices, preventive health and health services, alcohol and drug abuse and men- Subpart J—Primary Care Block tal health services, and maternal and child health services block grants for Grants the fiscal year beginning October 1, § 96.100 Scope. 1981. The social services block grant and the low-income home energy as- This subpart applies to the primary sistance program are not subject to the care block grant. provisions of this subpart. § 96.101 Review of a State decision to discontinue funding of a commu- § 96.111 Continuation of pre-existing nity health center. regulations. Where a State determines for FY The regulations previously issued by 1983, pursuant to section 1926(a)(2) of the Department and the Community the Public Health Service Act (42 Services Administration to govern ad- U.S.C. 300y–5(a)(2)), that a community ministration of the programs replaced health center does not meet the cri- by the block grants specified in § 96.1 of teria for continued funding set forth in this part shall continue in effect until section 330 of the Public Health Service revised to govern administration of Act (42 U.S.C. 254c), the State must ad- those programs by the Department in vise the Department of the decision those circumstances in which States and the basis upon which it was made. have not qualified for block grants. The Department will permit the center

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§ 96.112 Community services block ices Administration. 45 C.F.R. Part 96, grant. subparts A through F, are applicable to (a) For the fiscal year beginning Oc- this subpart to the extent that those tober 1, 1981, only, a State may choose subparts are consistent with subpart L. to operate programs under the commu- To the extent subparts A through F are nity services block grant or, instead, inconsistent with subpart L, the provi- have the Secretary operate the pro- sions of subpart L are applicable. grams replaced by the block grant. If a State does not notify the Secretary in § 96.121 Definitions. accordance with the statutory dead- Block Grant means the Substance lines each quarter, it will be deemed to Abuse Prevention and Treatment have requested the Secretary to oper- Block Grant, 42 U.S.C. 300x–21, et seq. ate the programs for the following Early Intervention Services Relating to quarter. HIV means: (b) A State or territory that does not (1) appropriate pretest counseling for have any eligible entity’’ as that term HIV and AIDS; is defined in section 673(1) of the Rec- (2) testing individuals with respect to onciliation Act (42 U.S.C. 9902), as such disease, including tests to confirm amended by section 17 of Pub. L. 97–115 the presence of the disease, tests to di- (December 19, 1981), or any other entity agnose the extent of the deficiency in for which funding is allowed under sec- the immune system, and tests to pro- tion 138 of Pub. L. 97–276, may dis- vide information on appropriate thera- tribute its allotment for the Fiscal peutic measures for preventing and Year beginning October 1, 1982 accord- treating the deterioration of the im- ing to section 675(c)(2)(A)(ii) of the mune system and for preventing and Reconciliation Act. treating conditions arising from the (c) For any quarter in which the Sec- disease; retary administers the programs, the (3) appropriate post-test counseling; Department’s administration costs will and be deducted from the State’s allot- (4) providing the therapeutic meas- ment. The Department’s total adminis- ures described in Paragraph (2) of this tration costs for making grants during definition. fiscal year 1982 and for any monitoring Fiscal Year, unless provided other- of these grants in fiscal year 1983 will wise, means the Federal fiscal year. be deducted from each State’s allot- Interim Services or Interim Substance ment in proportion to the total amount Abuse Services means services that are of grants awarded from the allotment provided until an individual is admit- during the period of administration by ted to a substance abuse treatment the Department (but not to exceed 5 program. The purposes of the services percent of the State’s fiscal year 1982 are to reduce the adverse health effects allotment). of such abuse, promote the health of [47 FR 29486, July 6, 1982, as amended at 48 the individual, and reduce the risk of FR 9271, Mar. 4, 1983] transmission of disease. At a minimum, interim services include coun- Subpart L—Substance Abuse Pre- seling and education about HIV and tuberculosis (TB), about the risks of nee- vention and Treatment Block dle-sharing, the risks of transmission Grant to sexual partners and infants, and about steps that can be taken to ensure AUTHORITY: 42 U.S.C. 300x–21 to 300x–35 and that HIV and TB transmission does not 300x–51 to 300x–64. occur, as well as referral for HIV or TB SOURCE: 58 FR 17070, Mar. 31, 1993, unless treatment services if necessary. For otherwise noted. pregnant women, interim services also include counseling on the effects of al- § 96.120 Scope. cohol and drug use on the fetus, as well This subpart applies to the Substance as referral for prenatal care. Abuse Prevention and Treatment Primary Prevention Programs are those Block Grant administered by the Sub- directed at individuals who have not stance Abuse and Mental Health Serv- been determined to require treatment

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for substance abuse. Such programs are as the Secretary determines is appro- aimed at educating and counseling in- priate. dividuals on such abuse and providing (b) For fiscal year 1993, applicants for activities to reduce the risk of such must submit an application containing abuse. information which conforms to the as- Principal Agency is the single State surances listed under § 96.123, the re- agency responsible for planning, car- port as provided in § 96.122(f), and the rying out and evaluating activities to State plan as provided in § 96.122(g). prevent and treat substance abuse and (c) Beginning fiscal year 1994, appli- related activities. cants shall only use standard applica- Rural Area The definition of a rural tion forms prescribed by the granting area within a State shall be the latest agency with the approval of the Office definition of the Bureau of the Census, of Management and Budget (OMB) Department of Commerce. under the Paperwork Reduction Act of Secretary is the Secretary of the 1980. Applicants must follow all appli- United States Department of Health cable instructions that bear OMB and Human Services or the Secretary’s clearance numbers. The application designee. will require the State to submit the as- State, unless provided otherwise, in- surances listed under § 96.123, the re- cludes the 50 States, the District of Co- port as provided in § 96.122(f), and the lumbia, the Commonwealth of Puerto State Plan as provided in § 96.122(g). Rico, the U.S. Virgin Islands, Guam, (d) The State shall submit the appli- America Samoa, the Commonwealth of cation for a block grant by the date the Northern Mariana Islands, Palau, prescribed by law. The annual report Micronesia, and the Marshall Islands. required under § 96.130(e) is not required to be submitted as part of the applica- State Medical Director for Substance tion, but must be submitted no later Abuse Services is a licensed physician with the knowledge, skill and ability than December 31 of the fiscal year for to address the multiple physical and which the State is seeking a grant. psychological problems associated with Grant awards will not be made without substance abuse, and who provides the the report required under § 96.130(e). principle agency with clinical con- (e) The funding agreements and as- sultation and direction regarding effec- surances in the application shall be tive substance abuse treatment, effec- made through certification by the tive primary medical care, effective in- State’s chief executive officer person- fection control and public health and ally, or by an individual authorized to quality assurance. make such certification on behalf of the chief executive officer. When a del- Substance Abuse is defined to include egation has occurred, a copy of the cur- the abuse or illicit use of alcohol or rent delegation of authority must be other drugs. submitted with the application. Tuberculosis Services means: (f) A report shall be submitted annu- (1) Counseling the individual with re- ally with the application and State spect to tuberculosis; Plan. Among other things, the report (2) Testing to determine whether the must contain information as deter- individual has been infected with mined by the Secretary to be necessary mycobacteria tuberculosis to deter- to determine the purposes and the ac- mine the appropriate form of treat- tivities of the State, for which the ment for the individual; and Block Grant was expended. The report (3) Providing for or referring the indi- shall include (but is not limited to) the viduals infected by mycobacteria tu- following: berculosis for appropriate medical (1) For the fiscal year three years evaluation and treatment. prior to the fiscal year for which the State is applying for funds: § 96.122 Application content and pro- (i) A statement of whether the State cedures. exercised its discretion under applica- (a) For each fiscal year, beginning ble law to transfer Block Grant funds with fiscal year 1993, the State shall from substance abuse services to men- submit an application to such address tal health services or vice versa, and a

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description of the transfers which were (i) A description of the amounts ex- made; pended by the principal agency for sub- (ii) A description of the progress stance abuse prevention and treatment made by the State in meeting the pre- activities, by activity and source of vention and treatment goals, objec- funds; tives and activities submitted in the (ii) A description of substance abuse application for the relevant year; funding by other State agencies and of- (iii) A description of the amounts ex- fices, by activity and source of funds pended under the Block Grant by the when available; and State agency, by activity; (iii) A description of the types and (iv) A description of the amounts ex- amounts of substance abuse services pended on primary prevention and purchased by the principal agency. early intervention activities (if report- (3) For the fiscal year two years prior ing on fiscal years 1990, 1991, and 1992 to the fiscal year for which the State is only) and for primary prevention ac- applying for funds: tivities (if reporting on fiscal years 1993 (i) A description of the amounts obli- and subsequent years); gated under the Block Grant by the principal agency, by activity; (v) A description of the amounts ex- (ii) A description of the amounts ob- pended for activities relating to sub- ligated for primary prevention and stance abuse such as planning, coordi- early intervention (if reporting on fis- nation, needs assessment, quality as- cal years 1990, 1991, and 1992 activities surance, training of counselors, pro- only) and primary prevention activities gram development, research and devel- (if reporting on fiscal years 1993 and opment and the development of infor- subsequent year activities); mation systems; (iii) A description of the entities to (vi) A description of the entities, which Block Grant funds were obli- their location, and the total amount gated; the entity received from Block Grant (iv) A description of the State’s poli- funds with a description of the activi- cies, procedures and laws regarding ties undertaken by the entity; substance abuse prevention, especially (vii) A description of the use of the the use of alcohol and tobacco products State’s revolving funds for establish- by minors; ment of group homes for recovering (v) For applications for fiscal year substance abusers, as provided by 1995 and all subsequent fiscal years, a § 96.129, including the amount available description of the State’s procedures in the fund throughout the fiscal year and activities undertaken to comply and the number and amount of loans with the requirement to conduct inde- made that fiscal year; pendent peer review as provided by (viii) A detailed description of the § 96.136; State’s programs for women and, in (vi) For applications for fiscal year particular for pregnant women and 1995 and all subsequent fiscal years, a women with dependent children, if re- description of the State’s procedures porting on fiscal years 1990, 1991, or and activities undertaken to comply 1992; and pregnant women or women with the requirement to develop capac- with dependent children for fiscal year ity management and waiting list sys- 1993 and subsequent fiscal years; tems, as provided by §§ 96.126 and 96.131, (ix) A detailed description of the as well as an evaluation summary of State’s programs for intravenous drug these activities; and users; and (vii) For applications for fiscal year (x) For applications for fiscal year 1995 and subsequent fiscal years, a de- 1996 and subsequent fiscal years, a description of the strategies used for scription of the State’s expenditures monitoring program compliance with for tuberculosis services and, if a des- § 96.126(f), § 96.127(b), and § 96.131(f), as ignated State, early intervention serv- well as a description of the problems ices for HIV. identified and the corrective actions (2) For the most recent 12 month taken. State expenditure period for which ex- (4) The aggregate State expenditures penditure information is complete: by the principle agency for authorized

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activities for the two State fiscal years lotment under section 1921 of the PHS preceding the fiscal year for which the Act to the Community Mental Health State is applying for a grant, pursuant Services Block Grant allotment under to § 96.134(d). section 1911 of the PHS Act or vice (5) For the previous fiscal year: versa and a description of the planned (i) A description of the State’s transfer; progress in meeting the goals, objec- (2) A budget of expenditures which tives and activities included in the pre- provides an estimate of the use and dis- vious year’s application, and a brief de- tribution of Block Grant and other scription of the recipients of the Block funds to be spent by the agency admin- Grant funds; istering the Block Grant during the pe- (ii) A description of the methods used riod covered by the application, by ac- to calculate the following: tivity and source of funds; (A) The base for services to pregnant (3) A description of how the State women and women with dependent carries out planning, including how the children as required by § 96.124; State identifies substate areas with the (B) The base for tuberculosis services greatest need, what process the State as required for § 96.127; and uses to facilitate public comment on (C) For designated States, the base the plan, and what criteria the State for HIV early intervention services as uses in deciding how to allocate Block required by § 96.128; Grant funds; (iii) For applications for fiscal years (4) A detailed description of the State 1994 and 1995 only, a description of the procedures to monitor programs that State’s progress in the development of reach 90% capacity pursuant to protocols for and the implementation § 96.126(a); of tuberculosis services, and, if a des- (5) A detailed description of the State ignated State, early intervention serv- procedures to implement the 14/120 day ices for HIV; and requirement provided by § 96.126(b) as (iv) For applications for fiscal year well as the interim services to be pro- 1994 only, a description of the States vided and a description of the strate- progress in the development, imple- gies to be used in monitoring program mentation, and utilization of capacity compliance in accordance with management and waiting list systems. § 96.126(f); (v) A description of the activities the (6) A full description of the outreach State has undertaken to comply with efforts States will require entities 42 CFR part 54. which receive funds to provide pursu- (6) For the first applicable fiscal year ant to § 96.126(e); for which the State is applying for a (7) A detailed description of the State grant, a copy of the statute enacting procedures implementing TB services the law as described in § 96.130(b) and, pursuant to § 96.127, and a description for subsequent fiscal years for which of the strategies to be used in moni- the State is applying for a grant, any toring program compliance in accord- amendment to the law described in ance with § 96.127(b); § 96.130(b). (8) A detailed description of the (7) In addition to the information State’s procedures implementing HIV above, any information that the Sec- services pursuant to § 96.128, if consid- retary may, from time to time, require, ered a designated State; consistent with the Paperwork Reduc- (9) A description of estimates of non- tion Act. Federal dollars to be spent for early (g) For each fiscal year, beginning intervention services relating to HIV, fiscal year 1993, the State Plan shall be if a designated State, and tuberculosis submitted to the Secretary and shall services for the fiscal year covered by include the following: the application, as well as the amounts (1) For fiscal years 1993 and 1994, a actually spent for such services for the statement on whether the Governor in- two previous fiscal years; tends to exercise discretion under ap- (10) For fiscal year 1993, a detailed de- plicable law to transfer Block Grant scription of the State’s revolving fund funds from the Substance Abuse Pre- for establishment of group homes for vention and Treatment Block Grant al- recovering substance abusers pursuant

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to § 96.129 and, for subsequent years, the activities the State will carry out any revisions to the program; to achieve these objectives; and (11) A detailed description of State (22) Such other information as the procedures implementing § 96.131 relat- Secretary may, from time to time, re- ing to treatment services for pregnant quire, consistent with the Paperwork women; Reduction Act. (12) Unless waived, a description on (h) The Secretary will approve an ap- how the State will improve the process plication which includes the assur- for referrals for treatment, will ensure ances, the State plan and the report that continuing education is provided, that satisfies the requirements of this and will coordinate various activities part and the relevant sections of the and services as provided by § 96.132; PHS Act. As indicated above, the State (13) Statewide assessment of needs as is required to provide descriptions of provided in § 96.133; the State’s procedures to implement (14) The aggregate State dollar pro- the provisions of the Act and the regu- jected expenditures by the principal lations. Unless provided otherwise by agency of a State for authorized activi- these regulations, the Secretary will ties for the fiscal year for which the approve procedures which are provided Block Grant is to be expended, as well as examples in the regulations, or the as the aggregate obligations or expend- State may submit other procedures itures, when available, for authorized which the Secretary determines to rea- activities for the two years prior to sonably implement the requirements of such fiscal year as required by § 96.134; the Act. (15) Unless waived, a description of [58 FR 17070, Mar. 31, 1993, as amended at 61 the services and activities to be pro- FR 1508, Jan. 19, 1996; 65 FR 45305, July 21, vided by the State with Block Grant 2000; 66 FR 46226, Sept. 4, 2001; 68 FR 56448, funds consistent with § 96.124 for alloca- Sept. 4, 2003] tions to be spent on services to preg- § 96.123 Assurances. nant women and women with dependent children, alcohol and other drug (a) The application must include as- treatment and prevention, including surances that: primary prevention, and any other re- (1) the State will expend the Block quirement; Grant in accordance with the percentage to be allocated to treatment, pre- (16) A description of the State proce- vention, and other activities as pre- dures to implement § 96.132(e) regarding scribed by law and, also, for the pur- inappropriate disclosure of patient poses prescribed by law; records; (2) The activities relating to intra- (17) A description of the amounts to venous drug use pursuant to § 96.126 be spent for primary prevention in ac- will be carried out; cordance with § 96.125; (3) The TB services and referral will (18) A description of the amounts to be carried out pursuant to § 96.127, as be spent on activities relating to sub- well as the early intervention services stance abuse such as planning coordi- for HIV provided for in § 96.128, if a des- nation, needs assessment, quality as- ignated State; surance, training of counselors, pro- (4) The revolving funds to establish gram development, research and devel- group homes for recovering substance opment and the development of infor- abusers is in place consistent with the mation systems; provisions of § 96.129 and the loans will (19) A description of the State plans be made and used as provided for by regarding purchasing substance abuse law; services; (5) The State has a law in effect mak- (20) A description of how the State ing it illegal to sell or distribute to- intends to monitor and evaluate the bacco products to minors as provided performance of substance abuse service in § 96.130(b), will conduct annual, un- providers in accordance with § 96.136; announced inspections as prescribed in (21) A description of the State’s over- § 96.130, will enforce such law in a man- all goals for Block Grant expenditures, ner that can reasonably be expected to specific objectives under each goal, and reduce the extent to which tobacco

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products are available to individuals (14) The State will for the fiscal year under the age of 18, and will submit an for which the grant is provided, provide annual report as required under for independent peer review to assess § 96.122(d) and § 96.130(e); the quality, appropriateness, and effi- (6) Pregnant women are provided cacy of treatment services provided in preference in admission to treatment the State to individuals under the pro- centers as provided by § 96.131, and are gram involved as required by § 96.136; provided interim services as necessary (15) The State has in effect a system and as required by law; to protect from inappropriate disclo- (7) The State will improve the proc- sure patient records maintained by the ess in the State for referrals of individ- State in connection with an entity uals to the treatment modality that is which is receiving amounts from the most appropriate for the individuals, grant; will ensure that continuing education (16) The State will comply with chap- is provided to employees of any funded ter 75 of title 31, United States Code, entity providing prevention activities pertaining to audits; and or treatment services, and will coordi- (17) The State will abide by all appli- nate prevention activities and treat- cable Federal laws and regulations, in- ment services with the provision of cluding those relating to lobbying (45 CFR Part 93), drug-free workplace (45 other appropriate services as provided CFR 76.600), discrimination (PHS Act by § 96.132; Sec. 1947), false statements or failure (8) The State will submit an assess- to disclose certain events (PHS Act ment of need as required by section Sec. 1946), and, as to the State of Ha- 96.133; waii, services for Native Hawaiians (9) The State will for such year main- (PHS Act Sec. 1953). tain aggregate State expenditures by (18) The State will comply with the the principal agency of a State for au- requirements of 42 CFR part 54. thorized activities at a level that is not less than the average level of such ex- [58 FR 17070, Mar. 31, 1993, as amended at 61 penditures maintained by the State for FR 1508, Jan. 19, 1996; 66 FR 46227, Sept. 4, 2001; 68 FR 56448, Sept. 30, 2003] the 2-year period preceding the fiscal year for which the State is applying for § 96.124 Certain allocations. the grant as provided by § 96.134; (a) States are required to expend the (10) The Block Grant will not be used Block Grant on various activities in to supplant State funding of alcohol certain proportions. Specifically, as to and other drug prevention and treat- treatment and prevention, the State ment programs; shall expend the grant as follows: (11) For purposes of maintenance of (1) not less than 35 percent for pre- effort pursuant to §§ 96.127(f), 96.128(f), vention and treatment activities re- and 96.134, the State will calculate the garding alcohol; and base using Generally Accepted Ac- (2) not less than 35 percent for pre- counting Principles and the composi- vention and treatment activities re- tion of the base will be applied consist- garding other drugs. ently from year to year; (b) The States are also to expend the (12) The State will for the fiscal year Block Grant on primary prevention for which the grant is provided comply programs as follows: with the restrictions on the expendi- (1) Consistent with § 96.125, the State ture of Block Grant funds as provided shall expend not less than 20 percent by § 96.135; for programs for individuals who do not (13) The State will make the State require treatment for substance abuse, Plan public within the State in such which programs— manner as to facilitate comment from (i) educate and counsel the individ- any person (including any Federal or uals on such abuse; and other public agency) during the devel- (ii) provide for activities to reduce opment of the State Plan and after the the risk of such abuse by the individ- submission of the State Plan (including uals; any revisions) to the Secretary as pro- (2) The State shall, in carrying out vided by § 1941 of the PHS Act; paragraph (b)(1) of this section—

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(i) give priority to programs for pop- level of services for this population. In ulations that are at risk of developing determining whether an adequate level a pattern of such abuse; and of services is being provided the Sec- (ii) ensure that programs receiving retary will review the extent to which priority under paragraph (b)(2)(i) of such individuals are receiving services. this section develop community-based This determination may be supported strategies for prevention of such abuse, by a combination of criminal justice including strategies to discourage the data, the National Drug and Treatment use of alcoholic beverages and tobacco Units Survey, statewide needs assess- products by individuals to whom it is ment data, waiting list data, welfare unlawful to sell or distribute such bev- department data, including medicaid erages or products. expenditures, or other State statistical (c) Subject to paragraph (d) of this data that are systematically collected. section, a State is required to expend The Secretary will also consider the the Block Grant on women services as extent to which the State offers the follows: minimum services required under (1) The State for fiscal year 1993 shall § 96.124(e). The Secretary shall approve expend not less than five percent of the or deny a request for a waiver not later grant to increase (relative to fiscal than 120 days after the date on which year 1992) the availability of treatment the request is made. Any waiver pro- services designed for pregnant women vided by the Secretary shall be applica- and women with dependent children ble only to the fiscal year involved. (either by establishing new programs (e) With respect to paragraph (c) of or expanding the capacity of existing this section, the amount set aside for programs). The base for fiscal year 1993 such services shall be expended on indi- shall be an amount equal to the fiscal viduals who have no other financial year 1992 alcohol and drug services means of obtaining such services as Block Grant expenditures and State ex- provided in § 96.137. All programs pro- penditures for pregnant women and viding such services will treat the fam- women with dependent children as de- ily as a unit and therefore will admit scribed in paragraph (e) of this section, both women and their children into and to this base shall be added at least treatment services, if appropriate. The 5 percent of the 1993 Block Grant allot- State shall ensure that, at a minimum, ment. The base shall be calculated treatment programs receiving funding using Generally Accepted Accounting for such services also provide or ar- Principles and the composition of the range for the provision of the following base shall be applied consistently from services to pregnant women and women year to year. States shall report the with dependent children, including methods used to calculate their base women who are attempting to regain for fiscal year 1992 expenditures on custody of their children: treatment for pregnant women and (1) primary medical care for women, women with dependent children. including referral for prenatal care (2) For fiscal year 1994, the State and, while the women are receiving shall, consistent with paragraph (c)(1) such services, child care; of this section, expend not less than (2) primary pediatric care, including five percent of the grant to increase immunization, for their children; (relative to fiscal year 1993) the avail- (3) gender specific substance abuse ability of such services to pregnant treatment and other therapeutic inter- women and women with dependent ventions for women which may address children. issues of relationships, sexual and (3) For grants beyond fiscal year 1994, physical abuse and parenting, and child the States shall expend no less than an care while the women are receiving amount equal to the amount expended these services; by the State for fiscal year 1994. (4) therapeutic interventions for chil- (d) Upon the request of a State, the dren in custody of women in treatment Secretary may waive all or part of the which may, among other things, ad- requirement in paragraph (c) of this dress their developmental needs, their section if the Secretary determines issues of sexual and physical abuse, and that the State is providing an adequate neglect; and

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(5) sufficient case management and (2) Education: This strategy involves transportation to ensure that women two-way communication and is distin- and their children have access to serv- guished from the Information Dissemi- ices provided by paragraphs (e) (1) nation strategy by the fact that inter- through (4) of this section. action between the educator/facilitator (f) Procedures for the implementa- and the participants is the basis of its tion of paragraphs (c) and (e) of this activities. Activities under this strat- section will be developed in consulta- egy aim to affect critical life and social tion with the State Medical Director skills, including decision-making, re- for Substance Abuse Services. fusal skills, critical analysis (e.g. of media messages) and systematic judg- § 96.125 Primary prevention. ment abilities. Examples of activities (a) For purposes of § 96.124, each conducted and methods used for this State/Territory shall develop and im- strategy include (but are not limited plement a comprehensive prevention to) the following: program which includes a broad array (i) Classroom and/or small group ses- of prevention strategies directed at in- sions (all ages); dividuals not identified to be in need of (ii) Parenting and family manage- treatment. The comprehensive program ment classes; shall be provided either directly or (iii) Peer leader/helper programs; through one or more public or non- (iv) Education programs for youth profit private entities. The comprehen- groups; and sive primary prevention program shall (v) Children of substance abusers include activities and services provided groups. in a variety of settings for both the (3) Alternatives: This strategy pro- general population, as well as targeting vides for the participation of target sub-groups who are at high risk for populations in activities that exclude substance abuse. alcohol, tobacco and other drug use. (b) In implementing the prevention The assumption is that constructive program the State shall use a variety and healthy activities offset the at- of strategies, as appropriate for each traction to, or otherwise meet the target group, including but not limited needs usually filled by alcohol, tobacco to the following: and other drugs and would, therefore, (1) Information Dissemination: This minimize or obviate resort to the lat- strategy provides awareness and ter. Examples of activities conducted knowledge of the nature and extent of and methods used for this strategy in- alcohol, tobacco and drug use, abuse clude (but are not limited to) the fol- and addiction and their effects on indi- lowing: viduals, families and communities. It (i) Drug free dances and parties; also provides knowledge and awareness (ii) Youth/adult leadership activities; of available prevention programs and (iii) Community drop-in centers; and services. Information dissemination is (iv) Community service activities. characterized by one-way communica- (4) Problem Identification and Referral: tion from the source to the audience, This strategy aims at identification of with limited contact between the two. those who have indulged in illegal/age- Examples of activities conducted and inappropriate use of tobacco or alcohol methods used for this strategy include and those individuals who have in- (but are not limited to) the following: dulged in the first use of illicit drugs in (i) Clearinghouse/information re- order to assess if their behavior can be source center(s); reversed through education. It should (ii) Resource directories; be noted, however, that this strategy (iii) Media campaigns; does not include any activity designed (iv) Brochures; to determine if a person is in need of (v) Radio/TV public service an- treatment. Examples of activities con- nouncements; ducted and methods used for this strat- (vi) Speaking engagements; egy include (but are not limited to) the (vii) Health fairs/health promotion; following: and (i) Employee assistance programs; (viii) Information lines. (ii) Student assistance programs; and

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(iii) Driving while under the influ- that receive funding under the grant ence/driving while intoxicated edu- and that treat individuals for intra- cation programs. venous substance abuse to provide to (5) Community-Based Process: This the State, upon reaching 90 percent of strategy aims to enhance the ability of its capacity to admit individuals to the the community to more effectively program, a notification of that fact provide prevention and treatment serv- within seven days. In carrying out this ices for alcohol, tobacco and drug section, the State shall establish a ca- abuse disorders. Activities in this pacity management program which strategy include organizing, planning, reasonably implements this section— enhancing efficiency and effectiveness that is, which enables any such proof services implementation, inter-agen- gram to readily report to the State cy collaboration, coalition building when it reaches 90 percent of its capac- and networking. Examples of activities ity—and which ensures the mainte- conducted and methods used for this nance of a continually updated record strategy include (but are not limited of all such reports and which makes ex- to) the following: cess capacity information available to (i) Community and volunteer train- such programs. ing, e.g., neighborhood action training, (b) In order to obtain Block Grant training of key people in the system, funds, the State shall ensure that each staff/officials training; individual who requests and is in need (ii) Systematic planning; of treatment for intravenous drug (iii) Multi-agency coordination and abuse is admitted to a program of such collaboration; treatment not later than— (iv) Accessing services and funding; (1) 14 days after making the request and for admission to such a program; or (v) Community team-building. (6) Environmental: This strategy es- (2) 120 days after the date of such re- tablishes or changes written and un- quest, if no such program has the ca- written community standards, codes pacity to admit the individual on the and attitudes, thereby influencing inci- date of such request and if interim dence and prevalence of the abuse of al- services, including referral for prenatal cohol, tobacco and other drugs used in care, are made available to the indi- the general population. This strategy vidual not later than 48 hours after is divided into two subcategories to such request. permit distinction between activities (c) In carrying out subsection (b), the which center on legal and regulatory State shall establish a waiting list initiatives and those which relate to management program which provides the service and action-oriented initia- systematic reporting of treatment de- tives. Examples of activities conducted mand. The State shall require that any and methods used for this strategy program receiving funding from the shall include (but not be limited to) the grant, for the purposes of treating in- following: jecting drug abusers, establish a wait- (i) Promoting the establishment and ing list that includes a unique patient review of alcohol, tobacco and drug use identifier for each injecting drug policies in schools; abuser seeking treatment including (ii) Technical assistance to commu- those receiving interim services, while nities to maximize local enforcement awaiting admission to such treatment. procedures governing availability and For individuals who cannot be placed distribution of alcohol, tobacco and in comprehensive treatment within 14 other drug use; days, the State shall ensure that the (iii) Modifying alcohol and tobacco program provide such individuals in- advertising practices; and terim services as defined in § 96.121 and (iv) Product pricing strategies. ensure that the programs develop a mechanism for maintaining contact § 96.126 Capacity of treatment for in- with the individuals awaiting admis- travenous substance abusers. sion. The States shall also ensure that (a) In order to obtain Block Grant the programs consult the capacity funds, the State must require programs management system as provided in

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paragraph (a) of this section so that pa- (f) The State shall develop effective tients on waiting lists are admitted at strategies for monitoring programs the earliest possible time to a program compliance with this section. States providing such treatment within rea- shall report under the requirements of sonable geographic area. § 96.122(g) on the specific strategies to (d) In carrying out paragraph (b)(2) of be used to identify compliance prob- this section the State shall ensure that lems and corrective actions to be taken all individuals who request treatment to address those problems. and who can not be placed in comprehensive treatment within 14 days, § 96.127 Requirements regarding tu- are enrolled in interim services and berculosis. those who remain active on a waiting (a) States shall require any entity re- list in accordance with paragraph (c) of ceiving amounts from the grant for op- this section, are admitted to a treat- erating a program of treatment for ment program within 120 days. If a per- substance abuse to follow procedures son cannot be located for admission developed by the principal agency of a into treatment or, if a person refuses State for substance abuse, in consulta- treatment, such persons may be taken tion with the State Medical Director off the waiting list and need not be pro- for Substance Abuse Services, and in vided treatment within 120 days. For cooperation with the State Department example, if such persons request treat- of Health/Tuberculosis Control Officer, ment later, and space is not available, which address how the program— they are to be provided interim serv- (1) Will, directly or through arrange- ices, placed on a waiting list and ad- ments with other public or nonprofit mitted to a treatment program within private entities, routinely make avail- 120 days from the latter request. able tuberculosis services as defined in (e) The State shall require that any § 96.121 to each individual receiving entity that receives funding for treat- treatment for such abuse; ment services for intravenous drug (2) In the case of an individual in abuse carry out activities to encourage need of such treatment who is denied individuals in need of such treatment admission to the program on the basis to undergo such treatment. The States of the lack of the capacity of the pro- shall require such entities to use out- gram to admit the individual, will refer reach models that are scientifically the individual to another provider of sound, or if no such models are avail- tuberculosis services; and able which are applicable to the local (3) Will implement infection control situation, to use an approach which procedures established by the principal reasonably can be expected to be an ef- agency of a State for substance abuse, fective outreach method. The model in cooperation with the State Depart- shall require that outreach efforts in- ment of Health/Tuberculosis Control clude the following: Officer, which are designed to prevent (1) Selecting, training and super- the transmission of tuberculosis, in- vising outreach workers; cluding the following: (2) Contacting, communicating and (i) Screening of patients; following-up with high risk substance (ii) Identification of those individuals abusers, their associates, and neighbor- who are at high risk of becoming in- hood residents, within the constraints fected; and of Federal and State confidentiality re- (iii) Meeting all State reporting requirements, including 42 C.F.R. Part 2; quirements while adhering to Federal (3) Promoting awareness among in- and State confidentiality require- jecting drug abusers about the rela- ments, including 42 CFR part 2; and tionship between injecting drug abuse (4) will conduct case management ac- and communicable diseases such as tivities to ensure that individuals re- HIV; ceive such services. (4) Recommend steps that can be (b) The State shall develop effective taken to ensure that HIV transmission strategies for monitoring programs does not occur; and compliance with this section. States (5) Encouraging entry into treat- shall report under the requirements of ment. § 96.122(g) on the specific strategies to

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be used to identify compliance prob- (4) the State shall require programs lems and corrective actions to be taken participating in the project to estab- to address those problems. The prin- lish linkages with a comprehensive cipal agency, in cooperation with the community resource network of re- State Department of Health/Tuber- lated health and social services organi- culosis Control Officer, shall also es- zations to ensure a wide-based knowl- tablish linkages with other health care edge of the availability of these serv- providers to ensure that tuberculosis ices; and services are routinely made available. (5) the State shall require any entity All individuals identified with active receiving amounts from the Block tuberculosis shall be reported to the Grant for operating a substance abuse appropriate State official as required treatment program to follow proce- by law and consistent with paragraph dures developed by the principal agen- (a)(3)(iii) of this section. cy of a State for substance abuse, in (c) With respect to services provided consultation with the State Medical for by a State for purposes of compli- Director for Substance Abuse Services, ance with this section, the State shall and in cooperation with the State De- maintain Statewide expenditures of partment of Health/Communicable Dis- non-Federal amounts for such services ease Officer. at a level that is not less than an aver- (b) For purposes of this section, a age level of such expenditures main- ‘‘designated State’’ is any State whose tained by the State for the 2-year pe- rate of cases of acquired immune defi- riod preceding the first fiscal year for ciency syndrome is 10 or more such which the State receives such a grant. cases per 100,000 individuals (as indi- In making this determination, States cated by the number of such cases re- shall establish a reasonable funding ported to and confirmed by the Direc- base for fiscal year 1993. The base shall tor of the Centers for Disease Control be calculated using Generally Accepted for the most recent calendar year for Accounting Principles and the com- which the data are available). position of the base shall be applied (c) With respect to programs that consistently from year to year. provide treatment services for substance abuse, the State shall ensure § 96.128 Requirements regarding that each such program participating human immunodeficiency virus. in a project under paragraph (a) of this (a) In the case of a designated State section will be a program that began as described in paragraph (b) of this operation prior to the fiscal year for section, the State shall do the fol- which the State is applying to receive lowing— the grant. A program that so began op- (1) with respect to individuals under- eration may participate in a project going treatment for substance abuse, under paragraph (a) of this section the State shall, subject to paragraph without regard to whether the program (c) of this section, carry out one or has been providing early intervention more projects to make available to the services for HIV disease. individuals early intervention services (d) If the State plans to carry out 2 or for HIV disease as defined in § 96.121 at more projects under paragraph (a) of the sites at which the individuals are this section, the State shall carry out undergoing such treatment; one such project in a rural area of the (2) for the purpose of providing such State, unless the requirement is early intervention services through waived. The Secretary shall waive the such projects, the State shall make requirement if the State certifies to available from the grant the amounts the Secretary that: prescribed by section 1924 of the PHS (1) The rate of cases of acquired im- Act; mune deficiency syndrome is less than (3) the State shall, subject to para- or equal to two such cases per 100,000 graph (d) of this section, carry out such individuals in any rural area of the projects only in geographic areas of the State, or there are so few infected per- State that have the greatest need for sons that establishing a project in the the projects; area is not reasonable; or

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(2) There are no rural areas in the (5) Such loans are made only to non- State as defined in § 96.121. profit private entities agreeing that, in (e) With respect to the provision of the operation of the program estab- early intervention services for HIV dis- lished pursuant to the loan— ease to an individual, the State shall (i) The use of alcohol or any illegal ensure that the entities comply with drug in the housing provided by the § 96.137 regarding payment and § 96.135 program will be prohibited; regarding restrictions on expenditure (ii) Any resident of the housing who of grant. The State shall also ensure violates such prohibition will be ex- that such services will be undertaken pelled from the housing; voluntarily by, and with the informed (iii) The costs of the housing, includ- consent of, the individual, and under- ing fees for rent and utilities, will be going such services will not be required paid by the residents of the housing; as a condition of receiving treatment and services for substance abuse or any (iv) The residents of the housing will, other services. through a majority vote of the resi- (f) With respect to services provided dents, otherwise establish policies gov- for a State for purposes of compliance erning residence in the housing, includ- with this section, the State shall main- ing the manner in which applications tain Statewide expenditures of non- for residence in the housing are ap- Federal amounts for such services at a proved; level that is not less than the average (6) States shall identify and clearly level of such expenditures maintained define legitimate purposes for which by the State for 2-year period pre- the funds will be spent, such as first ceding the first fiscal year for which month’s rent, necessary furniture (e.g., the State receives such a grant. In beds), facility modifications (e.g., con- making this determination, States version of basement into a game room or extra bedrooms), and purchase of shall establish a reasonable base for amenities which foster healthy group fiscal year 1993. The base shall be cal- living (e.g., dishwasher); culated using Generally Accepted Ac- (7) In managing the revolving fund, counting Principles and the composi- the State and the financial entity man- tion of the base shall be applied con- aging the fund for the State shall abide sistently from year to year. by all Federal, State and local laws and § 96.129 Revolving funds for establish- regulations; ment of homes in which recovering (8) If the State decides to indirectly substance abusers may reside. manage the fund using a private nonprofit entity as the fund management (a) The State shall establish and pro- group, the State shall establish reason- vide for the ongoing operation of a re- able criteria for selecting the group, volving fund as follows: such as qualifications, expertise, expe- (1) The purpose of the fund is to rience, and capabilities of the group, make loans for the costs of estab- and the State shall require that these lishing programs for the provision of entities abide by all Federal, State and housing in which individuals recov- local laws and regulations; ering from alcohol and drug abuse may (9) The State may seek assistance to reside in groups of not less than six in- approve or deny applications from enti- dividuals; ties that meet State-established cri- (2) Not less than $100,000 will be teria; available for the revolving fund; (10) The State shall set reasonable (3) Loans made from the revolving criteria in determining the eligibility fund do not exceed $4,000 and that each of prospective borrowers such as quali- such loan is repaid to the revolving fications, expertise, capabilities, the fund not later than 2 years after the acceptability of a proposed plan to use date on which the loan is made; the funds and operate the house, and an (4) Each such loan is repaid by such assessment of the potential borrower’s residents through monthly install- ability to pay back the funds; ments by the date specified in the loan (11) The State shall establish a proce- agreement involved; dure and process for applying for a loan

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under the program which may include (c) For the first and second applica- completion of the application, personal ble fiscal years, the State shall, at a interviews and submission of evidence minimum, conduct annually a reason- to support eligibility requirements, as able number of random, unannounced well as establish a written procedure inspections of outlets to ensure compli- for repayment which will set forth rea- ance with the law and plan and begin sonable penalties for late or missed to implement any other actions which payments and liability and recourse for the State believes are necessary to en- default; force the law. (12) The State shall provide clearly (d) For the third and subsequent fis- defined written instructions to appli- cal years, the States shall do the fol- cants which lays out timeliness, mile- lowing: stones, required documentation, notifi- (1) The State shall conduct annual, cation of reasonable penalties for late random, unannounced inspections of or missed payments and recourse for both over-the-counter and vending ma- default, notification on legitimate pur- chine outlets. The random inspections poses for which the loan may be spent, shall cover a range of outlets (not and other procedures required by the preselected on the basis of prior viola- State; and tions) to measure overall levels of com- (13) The State shall keep a written pliance as well as to identify viola- record of the number of loans and tions. amount of loans provided, the identi- (2) Random, unannounced inspections ties of borrowers and the repayment shall be conducted annually to ensure history of each borrower and retain it compliance with the law and shall be for three years. conducted in such a way as to provide (b) The requirements established in a probability sample of outlets. The paragraph (a) of this section shall not sample must reflect the distribution of apply to any territory of the United the population under age 18 throughout States other than the Commonwealth the State and the distribution of the of Puerto Rico. outlets throughout the State accessible to youth. § 96.130 State law regarding sale of to- (e) As provided by § 96.122(d), the bacco products to individuals under State shall annually submit to the Sec- age of 18. retary a report which shall include the (a) For purposes of this section, the following: term ‘‘first applicable fiscal year’’ (1) a detailed description of the means fiscal year 1994, except in the State’s activities to enforce the law re- case of any State described in section quired in paragraph (b) of this section 1926(a)(2) of the PHS Act, in which case during the fiscal year preceding the fis- ‘‘first applicable fiscal year’’ means fiscal year for which that State is seeking cal year 1995. The term ‘‘outlet’’ is any the grant; location which sells at retail or other- (2) a detailed description regarding wise distributes tobacco products to the overall success the State has consumers including (but not limited achieved during the previous fiscal to) locations that sell such products year in reducing the availability of to- over-the-counter or through vending bacco products to individuals under the machines. age of 18, including the results of the (b) The Secretary may make a grant unannounced inspections as provided to a State only if the State, for the by paragraph (d) of this section for first applicable fiscal year and subse- which the results of over-the-counter quent fiscal years, has in effect a law and vending machine outlet inspec- providing that it is unlawful for any tions shall be reported separately; manufacturer, retailer, or distributor (3) a detailed description of how the of tobacco products to sell or distribute unannounced inspections were con- any such product to any individual ducted and the methods used to iden- under age 18 through any sales or dis- tify outlets; tribution outlet, including over-the- (4) the strategies to be utilized by the counter and vending machine sales. State for enforcing such law during the

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fiscal year for which the grant is in extraordinary circumstances, may sought; and consider a number of factors, including (5) the identity of the agency or survey data showing that the State is agencies designated by the Governor to making significant progress toward re- be responsible for the implementation ducing use of tobacco products by chil- of the requirements of section 1926 of dren and youth, data showing that the the PHS Act. State has progressively decreased the (f) Beginning in the second applicable availability of tobacco products to mi- fiscal year, the annual report required nors, the composition of the outlets in- under paragraph (e) of this section spected as to whether they were over- shall be made public within the State, the-counter or vending machine out- along with the State plan as provided lets, and the State’s plan for improving in section 1941 of the PHS Act. the enforcement of the law in the next (g) Beginning with applications for fiscal year. the fourth applicable fiscal year and all (i) If, after notice to the State and an subsequent fiscal years, the Secretary opportunity for a hearing, the Sec- will negotiate with the State, as part retary determines under paragraph (h) of the State’s plan, the interim per- of this section that the State has not formance target the State will meet for maintained compliance, the Secretary that fiscal year and in subsequent will reduce the amount of the allot- years will seek evidence of progress to- ment in such amounts as is required by ward achieving or surpassing a per- section 1926(c) of the PHS Act. formance objective in which the in- (j) States may not use the Block spection failure rate would be no more Grant to fund the enforcement of their than 20% within several years. statute, except that they may expend (h) Beginning with the second appli- funds from the primary prevention set- cable fiscal year and all subsequent fis- aside of their Block Grant allotment cal years, the Secretary shall make a under 45 CFR 96.124(b)(1) for carrying determination, before making a Block out the administrative aspects of the Grant to a State for that fiscal year, requirements such as the development whether the State reasonably enforced of the sample design and the con- its law in the previous fiscal year pur- ducting of the inspections. suant to this section. In making this determination, the Secretary will con- [61 FR 1508, Jan. 19, 1996, as amended at 66 sider the following factors: FR 46227, Sept. 4, 2001] (1) During the first and second appli- § 96.131 Treatment services for preg- cable fiscal years, the State must con- nant women. duct the activities prescribed in paragraph (c) of this section. (a) The State is required to, in ac- (2) During the third applicable fiscal cordance with this section, ensure that year, the State must conduct random, each pregnant woman in the State who unannounced inspections in accordance seeks or is referred for and would ben- with paragraph (d) of this section. efit from such services is given pref- (3) During the fourth and all subse- erence in admissions to treatment fa- quent applicable fiscal years, the State cilities receiving funds pursuant to the must do the following: grant. In carrying out this section, the (i) conduct random, unannounced in- State shall require all entities that spections in accordance with paragraph serve women and who receive such (d); and funds to provide preference to pregnant (ii) except as provided by paragraph women. Programs which serve an in- (h)(4) of this section, the State must be jecting drug abuse population and who in substantial compliance with the tar- receive Block Grant funds shall give get negotiated with the Secretary preference to treatment as follows: under paragraph (g) of this section for (1) Pregnant injecting drug users; that fiscal year. (2) Pregnant substance abusers; (4) If a State has not substantially (3) Injecting drug users; and complied with the target as prescribed (4) All others. under paragraph (h)(3)(ii) of this sec- (b) The State will, in carrying out tion for any fiscal year, the Secretary, this provision publicize the availability

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to such women of services from the fa- be used to identify compliance prob- cilities and the fact that pregnant lems and corrective actions to be taken women receive such preference. This to address those problems. may be done by means of street outreach programs, ongoing public service § 96.132 Additional agreements. announcements (radio/television), reg- (a) With respect to individuals seek- ular advertisements in local/regional ing treatment services, the State is re- print media, posters placed in targeted quired to improve (relative to fiscal areas, and frequent notification of year 1992) the process in the State for availability of such treatment distrib- referring the individuals to treatment uted to the network of community facilities that can provide to the indi- based organizations, health care pro- viduals the treatment modality that is viders, and social service agencies. most appropriate for the individuals. (c) The State shall in carrying out Examples of how this may be accom- paragraph (a) of this section require plished include the development and that, in the event that a treatment fa- implementation of a capacity manage- cility has insufficient capacity to pro- ment/waiting list management system; vide treatment services to any such the utilization of a toll-free number for pregnant woman who seeks the serv- programs to report available capacity ices from the facility, the facility refer and waiting list data; and the utiliza- the woman to the State. This may be tion of standardized assessment proce- accomplished by establishing a capac- dures that facilitate the referral proc- ity management program, utilizing a ess. toll-free number, an automated report- (b) With respect to any facility for ing system and/or other mechanisms to treatment services or prevention ac- ensure that pregnant women in need of tivities that is receiving amounts from such services are referred as appro- a Block Grant, continuing education in priate. The State shall maintain a con- such services or activities (or both, as tinually updated system to identify the case may be) shall be made avail- treatment capacity for any such preg- able to employees of the facility who nant women and will establish a mech- provide the services or activities. The anism for matching the women in need States will ensure that such programs of such services with a treatment facil- include a provision for continuing edu- ity that has the capacity to treat the cation for employees of the facility in woman. its funding agreement. (d) The State, in the case of each (c) The State shall coordinate pre- pregnant woman for whom a referral vention and treatment activities with under paragraph (a) of this section is the provision of other appropriate serv- made to the State— ices (including health, social, correc- (1) will refer the woman to a treat- tional and criminal justice, edu- ment facility that has the capacity to cational, vocational rehabilitation, and provide treatment services to the employment services). In evaluating woman; or compliance with this section, the Sec- (2) will, if no treatment facility has retary will consider such factors as the the capacity to admit the woman, existence of memoranda of under- make available interim services, in- standing between various service pro- cluding a referral for prenatal care, viders/agencies and evidence that the available to the woman not later than State has included prevention and 48 hours after the woman seeks the treatment services coordination in its treatment services. grants and contracts. (e) Procedures for the implementa- (d) Upon the request of a State, the tion of this section shall be developed Secretary may provide to a State a in consultation with the State Medical waiver of any or all of the require- Director for Substance Abuse Services. ments established in paragraphs (a), (b) (f) The State shall develop effective and (c) of this section, if the Secretary strategies for monitoring programs determines that, with respect to serv- compliance with this section. States ices for the prevention and treatment shall report under the requirements of of substance abuse, the requirement in- § 96.122(g) on the specific strategies to volved is unnecessary for maintaining

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quality in the provision of such serv- data and a description on how the ices in the State. In evaluating wheth- State plans to strengthen the data in er to grant or deny a waiver, the Sec- the future. retary will rely on information drawn (2) The State shall provide a descrip- from the independent peer review/qual- tion on current substance abuse pre- ity assurance activities conducted by vention and treatment activities: the State. For example, a State may be (i) For fiscal year 1993, the State eligible for a waiver of the requirement shall provide its best available data on of paragraph (a) of this section if a current prevention and treatment ac- State already has a well developed tivities in the State in such detail as it process for referring individuals to finds reasonably practicable given its treatment facilities that can provide to own data collection activities and the individuals the treatment modality records. that is most appropriate for the indi- (ii) For fiscal year 1994 and subse- viduals. The Secretary will approve or quent years, the State shall provide a deny a request for a waiver not later detailed description on current preven- than 120 days after the date on which tion and treatment activities in the the request is made. Any waiver pro- State. This report shall include a de- vided by the Secretary for paragraphs tailed description of the intended use (a), (b) and (c) of this section, will be of the funds relating to prevention and applicable only to the fiscal year in- treatment, as well as a description of volved. treatment capacity. As to primary pre- (e) The State is also required to have vention activities, the activities must in effect a system to protect from inap- be broken down by strategies used, propriate disclosure patient records such as those provided in section 96.125, maintained by the State in connection including the specific activities con- with an activity funded under the pro- ducted. The State shall provide the fol- gram involved or by any entity which lowing data if available: the specific is receiving amounts from the grant risk factors being addressed by activ- and such system shall be in compliance ity; the age, race/ethnicity and gender with all applicable State and Federal of the population being targeted by the laws and regulations, including 42 CFR prevention activity; and the commu- part 2. This system shall include provi- nity size and type where the activity is sions for employee education on the carried out. As to all treatment and confidentiality requirements and the prevention activities, including pri- fact that disciplinary action may occur mary prevention, the State shall pro- upon inappropriate disclosures. This vide the identities of the entities that requirement cannot be waived. provide the services and describe the services provided. The State shall sub- § 96.133 Submission to Secretary of mit information on treatment utiliza- Statewide assessment of needs. tion to describe the type of care and (a) The State is required to submit to the utilization according to primary di- the Secretary an assessment of the agnosis of alcohol or drug abuse, or a need in the State for authorized activi- dual diagnosis of drug and alcohol ties, both by locality and by the State abuse. in general. The State is to provide a (3) The State may describe the need broad range of information which infor technical assistance to carry out cludes the following: Block Grant activities, including ac- (1) The State is to submit data which tivities relating to the collection of in- shows the incidence and prevalence in cidence and prevalence data identified the State of drug abuse and the inci- in paragraph (a)(1) of this section. dence and prevalence in the State of al- (4) The State shall establish goals cohol abuse and alcoholism. For fiscal and objectives for improving substance years 1993 through 1996, the State shall abuse treatment and prevention activi- submit its best available data on the ties and shall report activities taken in incidence and prevalence of drug and support of these goals and objectives in alcohol abuse and alcoholism. The its application. State shall also provide a summary de- (5) The State shall submit a detailed scribing the weakness and bias in the description on the extent to which the

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availability of prevention and treat- the request is made. Any waiver pro- ment activities is insufficient to meet vided by the Secretary shall be applica- the need for the activities, the interim ble only to the fiscal year involved. services to be made available under ‘‘Extraordinary economic conditions’’ sections 96.126 and 96.131, and the man- mean a financial crisis in which the ner in which such services are to be so total tax revenue declines at least one available. Special attention should be and one-half percent, and either unem- provided to the following groups: ployment increases by at least one per- (i) Pregnant addicts; centage point, or employment declines (ii) Women who are addicted and who by at least one and one-half percent. have dependent children; (c) In making a Block Grant to a (iii) Injecting drug addicts; and State for a fiscal year, the Secretary (iv) Substance abusers infected with shall make a determination of whether, HIV or who have tuberculosis. for the previous fiscal year or years, (6) Documentation describing the re- the State maintained material compli- sults of the State’s management infor- ance with any agreement made under mation system pertaining to capacity paragraph (a) of this section. If the and waiting lists shall also be sub- Secretary determines that a State has mitted, as well as a summary of such failed to maintain such compliance, information for admissions and, when the Secretary shall reduce the amount available, discharges. As to prevention of the allotment for the State for the activities, the report shall include a fiscal year for which the grant is being description of the populations at risk made by an amount equal to the of becoming substance abusers. amount constituting such failure for the previous fiscal year. § 96.134 Maintenance of effort regarding State expenditures. (d) The Secretary may make a Block Grant for a fiscal year only if the State (a) With respect to the principal involved submits to the Secretary in- agency of a State for carrying out au- formation sufficient for the Secretary thorized activities, the agency shall for to make the determination required in each fiscal year maintain aggregate paragraph (a) of this section, which in- State expenditures by the principal cludes the dollar amount reflecting the agency for authorized activities at a aggregate State expenditures by the level that is not less than the average principal agency for authorized activi- level of such expenditures maintained ties for the two State fiscal years pre- by the State for the two year period ceding the fiscal year for which the preceding the fiscal year for which the State is applying for the grant. The State is applying for the grant. The Block Grant shall not be used to sup- base shall be calculated using Gen- plant State funding of alcohol and erally Accepted Accounting Principles other drug prevention and treatment and the composition of the base shall programs. be applied consistently from year to (b) Upon the request of a State, the year. Secretary may waive all or part of the § 96.135 Restrictions on expenditure of requirement established in paragraph grant. (a) of this section if the Secretary determines that extraordinary economic (a) The State shall not expend the conditions in the State justify the Block Grant on the following activi- waiver. The State involved must sub- ties: mit information sufficient for the Sec- (1) To provide inpatient hospital retary to make the determination, in- services, except as provided in para- cluding the nature of the extraordinary graph (c) of this section; economic circumstances, documented (2) To make cash payments to in- evidence and appropriate data to sup- tended recipients of health services; port the claim, and documentation on (3) To purchase or improve land, pur- the year for which the State seeks the chase, construct, or permanently im- waiver. The Secretary will approve or prove (other than minor remodeling) deny a request for a waiver not later any building or other facility, or pur- than 120 days after the date on which chase major medical equipment;

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(4) To satisfy any requirement for the (i) The daily rate of payment pro- expenditure of non-Federal funds as a vided to the hospital for providing the condition for the receipt of Federal services to the individual will not ex- funds; ceed the comparable daily rate pro- (5) To provide financial assistance to vided for community-based, nonhos- any entity other than a public or non- pital, residential programs of treat- profit private entity; or ment for substance abuse; and (6) To provide individuals with hypo- (ii) The grant may be expended for dermic needles or syringes so that such such services only to the extent that it individuals may use illegal drugs, un- is medically necessary, i.e., only for less the Surgeon General of the Public those days that the patient cannot be Health Service determines that a dem- safely treated in a residential, commu- onstration needle exchange program nity-based program. would be effective in reducing drug (d) The Secretary may approve a abuse and the risk that the public will waiver for construction under para- become infected with the etiologic graph (a)(3) of this section within 120 agent for AIDS. days after the date of a request only if: (b) The State shall limit expendi- (1) The State demonstrates to the tures on the following: Secretary that adequate treatment (1) The State involved will not ex- cannot be provided through the use of pend more than 5 percent of the grant existing facilities and that alternative to pay the costs of administering the facilities in existing suitable buildings grant; and are not available; (2) The State will not, in expending (2) The State has carefully designed a the grant for the purpose of providing plan that minimizes the costs of ren- treatment services in penal or correc- ovation or construction; tional institutions of the State, expend (3) The State agrees, with respect to more than an amount prescribed by the costs to be incurred by the State in section 1931(a)(3) of the PHS Act. carrying out the purpose of the waiver, (c) Exception regarding inpatient to make available non-Federal con- hospital services. tributions in cash toward such costs in (1) With respect to compliance with an amount equal to not less than $1 for the agreement made under paragraph each $1 of Federal funds provided under (a) of this section, a State (acting the Block Grant; and through the Director of the principal agency) may expend a grant for inpa- (4) The State submits the following tient hospital-based substance abuse to support paragraphs (b)(1), (2) and (3), programs subject to the limitations of of this section: paragraph (c)(2) of this section only (i) Documentation to support para- when it has been determined by a phy- graph (d)(1) of this section, such as sician that: local needs assessments, waiting lists, (i) The primary diagnosis of the indi- survey data and other related informa- vidual is substance abuse, and the phy- tion; sician certifies this fact; (ii) A brief description of the project (ii) The individual cannot be safely to be funded, including the type(s) of treated in a community-based, nonhos- services to be provided and the pro- pital, residential treatment program; jected number of residential and/or (iii) The Service can reasonably be outpatient clients to be served; expected to improve an individual’s (iii) The specific amount of Block condition or level of functioning; Grant funds to be used for this project; (iv) The hospital-based substance (iv) The number of outpatient treat- abuse program follows national stand- ment slots planned or the number of ards of substance abuse professional residential beds planned, if applicable; practice; and (v) The estimate of the total cost of (2) In the case of an individual for the construction or rehabilitation (and whom a grant is expended to provide a description of how these estimates inpatient hospital services described were determined), based on an inde- above, the allowable expenditure shall pendent estimate of said cost, using conform to the following: standardized measures as determined

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by an appropriate State construction (xiii) Any other information the Sec- certifying authority; retary may determine to be appro- (vi) An assurance by the State that priate. all applicable National (e.g., National Fire Protection Association, Building § 96.136 Independent peer review. Officials and Codes Administrators (a) The State shall for the fiscal year International), Federal (National Envi- for which the grant is provided, provide ronmental Policy Act), State, and local for independent peer review to assess standards for construction or rehabili- the quality, appropriateness, and effi- tation of health care facilities will be cacy of treatment services provided in complied with; the State to individuals under the pro- (vii) Documentation of the State’s gram involved, and ensure that at least commitment to obligate these funds by 5 percent of the entities providing serv- the end of the first year in which the ices in the State under such program funds are available, and that such are reviewed. The programs reviewed funds must be expended by the end of shall be representative of the total pop- the second year (section 1914(a)(2) of ulation of such entities. the PHS Act); (b) The purpose of independent peer (viii) A certification that there is review is to review the quality and ap- public support for a waiver, as well as propriateness of treatment services. a description of the procedure used The review will focus on treatment (and the results therein) to ensure ade- programs and the substance abuse serv- quate comment from the general public ice system rather than on the indi- and the appropriate State and local vidual practitioners. The intent of the health planning organizations, local independent peer review process is to governmental entities and public and continuously improve the treatment private-sector service providers that services to alcohol and drug abusers may be impacted by the waiver re- within the State system. ‘‘Quality,’’ quest; for purposes of this section, is the pro- (ix) Evidence that a State is com- vision of treatment services which, mitted to using the proposed new or re- within the constraints of technology, habilitated substance abuse facility for resources, and patient/client cir- the purposes stated in the request for cumstances, will meet accepted stand- at least 20 years for new construction ards and practices which will improve and at least 10 years for rehabilitated patient/client health and safety status facilities; in the context of recovery. ‘‘Appro- (x) An assurance that, if the facility priateness,’’ for purposes of this sec- ceases to be used for such services, or if tion, means the provision of treatment the facility is sold or transferred for a services consistent with the individ- purpose inconsistent with the State’s ual’s identified clinical needs and level waiver request, monies will be returned of functioning. to the Federal Government in an (c) The independent peer reviewers amount proportionate to the Federal shall be individuals with expertise in assistance provided, as it relates to the the field of alcohol and drug abuse value of the facility at the time serv- treatment. Because treatment services ices cease or the facility sold or trans- may be provided by multiple dis- ferred; ciplines, States will make every effort (xi) A description of the methods to ensure that individual peer review- used to minimize the costs of the con- ers are representative of the various struction or rehabilitation, including disciplines utilized by the program documentation of the costs of the resi- under review. Individual peer reviewers dential facilities in the local area or must also be knowledgeable about the other appropriate equivalent sites in modality being reviewed and its under- the State; lying theoretical approach to addic- (xii) An assurance that the State tions treatment, and must be sensitive shall comply with the matching re- to the cultural and environmental quirements of paragraph (d)(3) of this issues that may influence the quality section; and of the services provided.

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(d) As part of the independent peer program, any private health insurance, review, the reviewers shall review a or any other benefit program; and representative sample of patient/client (2) Secure from patients or clients records to determine quality and ap- payments for services in accordance propriateness of treatment services, with their ability to pay. while adhering to all Federal and State confidentiality requirements, including APPENDIX A TO PART 96—UNIFORM 42 CFR Part 2. The reviewers shall ex- DEFINITIONS OF SERVICES amine the following: 1. Adoption Services (1) Admission criteria/intake process; 2. Case Management Services (2) Assessments; 3. Congregate Meals (3) Treatment planning, including ap- 4. Counseling Services propriate referral, e.g., prenatal care 5. Day Care Services—Adults and tuberculosis and HIV services; 6. Day Care Services—Children (4) Documentation of implementa- 7. Education and Training Services tion of treatment services; 8. Employment Services (5) Discharge and continuing care 9. Family Planning Services planning; and 10. Foster Care Services for Adults (6) Indications of treatment out- 11. Foster Care Services for Children 12. Health Related and Home Health Services comes. 13. Home Based Services (e) The State shall ensure that the 14. Home Delivered Meals independent peer review will not in- 15. Housing Services volve practitioners/providers reviewing 16. Independent and Transitional Living their own programs, or programs in Services which they have administrative over- 17. Information and Referral Services sight, and that there be a separation of 18. Legal Services peer review personnel from funding de- 19. Pregnancy and Parenting Services for cisionmakers. In addition, the State Young Parents 20. Prevention and Intervention Services shall ensure that independent peer re- 21. Protective Services for Adults view is not conducted as part of the li- 22. Protective Services for Children censing/certification process. 23. Recreational Services (f) The States shall develop proce- 24. Residential Treatment Services dures for the implementation of this 25. Special Services for Persons with Devel- section and such procedures shall be opmental or Physical Disabilities, or Per- developed in consultation with the sons with Visual or Auditory Impairments State Medical Director for Substance 26. Special Services for Youth Involved in or Abuse Services. At Risk of Involvement in Criminal Activ- ity § 96.137 Payment schedule. 27. Substance Abuse Services 28. Transportation Services (a) The Block Grant money that may 29. Other Services be spent for §§ 96.124(c) and (e), 96.127 and 96.128 is governed by this section UNIFORM DEFINITIONS OF SERVICES which ensures that the grant will be 1. Adoption Services the ‘‘payment of last resort.’’ The entities that receive funding under the Adoption services are those services or activities provided to assist in bringing about Block Grant and provides services re- the adoption of a child. Component services quired by the above-referenced sections and activities may include, but are not lim- shall make every reasonable effort, in- ited to, counseling the biological parent(s), cluding the establishment of systems recruitment of adoptive homes, and pre- and for eligibility determination, billing, post-placement training and/or counseling. and collection, to: 2. Case Management Services (1) Collect reimbursement for the costs of providing such services to per- Case management services are services or sons who are entitled to insurance ben- activities for the arrangement, coordination, efits under the Social Security Act, in- and monitoring of services to meet the needs of individuals and families. Component serv- cluding programs under title XVIII and ices and activities may include individual title XIX, any State compensation pro- service plan development; counseling; moni- gram, any other public assistance pro- toring, developing, securing, and coordi- gram for medical expenses, any grant nating services; monitoring and evaluating

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client progress; and assuring that clients’ second language, and General Educational rights are protected. Development (G.E.D.). Component services or activities may include screening, assess- 3. Congregate Meals ment and testing; individual or group in- Congregate meals are those services or ac- struction; tutoring; provision of books, sup- tivities designed to prepare and serve one or plies and instructional material; counseling; more meals a day to individuals in central transportation; and referral to community dining areas in order to prevent institu- resources. tionalization, malnutrition, and feelings of isolation. Component services or activities 8. Employment Services may include the cost of personnel, equipment, and food; assessment of nutritional Employment services are those services or and dietary needs; nutritional education and activities provided to assist individuals in counseling; socialization; and other services securing employment or acquiring or learn- such as transportation and information and ing skills that promote opportunities for em- referral. ployment. Component services or activities may include employment screening, assess- 4. Counseling Services ment, or testing; structured job skills and Counseling services are those services or job seeking skills; specialized therapy (occu- activities that apply therapeutic processes pational, speech, physical); special training to personal, family, situational, or occupa- and tutoring, including literacy training and tional problems in order to bring about a pre-vocational training; provision of books, positive resolution of the problem or im- supplies and instructional material; coun- proved individual or family functioning or seling, transportation; and referral to com- circumstances. Problem areas may include munity resources. family and marital relationships, parent- child problems, or drug abuse. 9. Family Planning Services 5. Day Care Services—Adults Family planning services are those edu- Day care services for adults are those serv- cational, comprehensive medical or social ices or activities provided to adults who re- services or activities which enable individ- quire care and supervision in a protective uals, including minors, to determine freely setting for a portion of a 24-hour day. Com- the number and spacing of their children and ponent services or activities may include op- to select the means by which this may be portunity for social interaction, companion- achieved. These services and activities in- ship and self-education; health support or as- clude a broad range of acceptable and effec- sistance in obtaining health services; coun- tive methods and services to limit or en- seling; recreation and general leisure time hance fertility, including contraceptive activities; meals; personal care services; plan methods (including natural family planning development; and transportation. and abstinence), and the management of in- fertility (including referral to adoption). 6. Day Care Services—Children Specific component services and activities Day care services for children (including may include preconceptional counseling, infants, pre-schoolers, and school age chil- education, and general reproductive health dren) are services or activities provided in a care, including diagnosis and treatment of setting that meets applicable standards of infections which threaten reproductive capa- state and local law, in a center or in a home, bility. Family planning services do not infor a portion of a 24-hour day. Component clude pregnancy care (including obstetric or services or activities may include a comprehensive and coordinated set of appro- prenatal care). priate developmental activities for children, 10. Foster Care Services for Adults recreation, meals and snacks, transportation, health support services, social service Foster care services for adults are those counseling for parents, plan development, services or activities that assess the need and licensing and monitoring of child care and arrange for the substitute care and al- homes and facilities. ternate living situation of adults in a setting suitable to the individual’s needs. Individ- 7. Education and Training Services uals may need such services because of so- Education and training services are those cial, physical or mental disabilities, or as a services provided to improve knowledge or consequence of abuse or neglect. Care may daily living skills and to enhance cultural be provided in a community-based setting, or opportunities. Services may include instruc- such services may arrange for institutional- tion or training in, but are not limited to, ization when necessary. Component services such issues as consumer education, health education, community protection and safety education, literacy education, English as a

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or activities include assessment of the indi- relative, or to prevent abuse and neglect of a vidual’s needs; case planning and case man- child or adult. Major service components in- agement to assure that the individual re- clude homemaker services, chore services, ceives proper care in the placement; coun- home maintenance services, and household seling to help with personal problems and ad- management services. Component services or justing to new situations; assistance in ob- activities may include protective supervision taining other necessary supportive services; of adults and/or children to help prevent determining, through periodic reviews, the abuse, temporary non-medical personal care, continued appropriateness of and need for house-cleaning, essential shopping, simple placement; and recruitment and licensing of household repairs, yard maintenance, teach- foster care homes and facilities. ing of homemaking skills, training in self- help and self-care skills, assistance with 11. Foster Care Services for Children meal planning and preparation, sanitation, Foster care services for children are those budgeting, and general household manage- services or activities associated with the ment. provision of an alternative family life experience for abused, neglected or dependent chil- 14. Home Delivered Meals dren, between birth and the age of majority, Home-delivered meals are those services or on the basis of a court commitment or a vol- activities designed to prepare and deliver untary placement agreement signed by the one or more meals a day to an individual’s parent or guardian. Services may be provided residence in order to prevent institutional- to children in foster family homes, foster ization, malnutrition, and feelings of isola- homes of relatives, group homes, emergency tion. Component services or activities may shelters, residential facilities, child care in- include the cost of personnel, equipment, and stitutions, pre-adoptive homes or supervised food; assessment of nutritional and dietary independent living situation. Component needs; nutritional education and counseling; services or activities may include assess- socialization services; and information and ment of the child’s needs; case planning and referral. case management to assure that the child receives proper care in the placement; medical 15. Housing Services care as an integral but subordinate part of the service; counseling of the child, the Housing services are those services or ac- child’s parents, and the foster parents; refer- tivities designed to assist individuals or fam- ral and assistance in obtaining other nec- ilies in locating, obtaining, or retaining suit- essary supportive services; periodical re- able housing. Component services or activi- views to determine the continued appro- ties may include tenant counseling; helping priateness and need for placement; and re- individuals and families to identify and cor- cruitment and licensing of foster homes and rect substandard housing conditions on be- child care institutions. half of individuals and families who are unable to protect their own interests; and as- 12. Health Related and Home Health Services sisting individuals and families to understand leases, secure utilities, make moving Health related and home health services arrangements and minor renovations. are those in-home or out-of-home services or activities designed to assist individuals and 16. Independent and Transitional Living families to attain and maintain a favorable Services condition of health. Component services and activities may include providing an analysis Independent and transitional living serv- or assessment of an individual’s health prob- ices are those services and activities de- lems and the development of a treatment signed to help older youth in foster care or plan; assisting individuals to identify and homeless youth make the transition to inde- understand their health needs; assisting indi- pendent living, or to help adults make the viduals to locate, provide or secure, and uti- transition from an institution, or from lize appropriate medical treatment, preven- homelessness, to independent living. Compo- tive medical care, and health maintenance nent services or activities may include edu- services, including in-home health services cational and employment assistance, train- and emergency medical services; and pro- ing in daily living skills, and housing assist- viding follow-up services as needed. ance. Specific component services and activities may include supervised practice living 13. Home Based Services and post-foster care services. Home based services are those in-home 17. Information and Referral Services services or activities provided to individuals or families to assist with household or per- Information and referral services are those sonal care activities that improve or main- services or activities designed to provide in- tain adequate family well-being. These serv- formation about services provided by public ices may be provided for reasons of illness, and private service providers and a brief as- incapacity, frailty, absence of a caretaker sessment of client needs (but not diagnosis

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and evaluation) to facilitate appropriate re- counseling for the individual and the family; ferral to these community resources. assessment/evaluation of family circumstances; arranging alternative or im- 18. Legal Services proved living arrangements; preparing for Legal services are those services or activi- foster placement, if needed; and case man- ties provided by a lawyer or other person(s) agement and referral to service providers. under the supervision of a lawyer to assist individuals in seeking or obtaining legal help 22. Protective Services for Children in civil matters such as housing, divorce, child support, guardianship, paternity, and Protective services for children are those legal separation. Component services or ac- services or activities designed to prevent or tivities may include receiving and preparing remedy abuse, neglect, or exploitation of cases for trial, provision of legal advice, rep- children who may be harmed through phys- resentation at hearings, and counseling. ical or mental injury, sexual abuse or exploitation, and negligent treatment or maltreat- 19. Pregnancy and Parenting Services for Young ment, including failure to be provided with Parents adequate food, clothing, shelter, or medical Pregnancy and parenting services are care. Component services or activities may those services or activities for married or include immediate investigation and inter- unmarried adolescent parents and their fam- vention; emergency medical services; emer- ilies designed to assist young parents in cop- gency shelter; developing case plans; initi- ing with the social, emotional, and economic ation of legal action (if needed); counseling problems related to pregnancy and in plan- for the child and the family; assessment/ ning for the future. Component services or evaluation of family circumstances; arrang- activities may include securing necessary ing alternative living arrangement; pre- health care and living arrangements; obtain- paring for foster placement, if needed; and ing legal services; and providing counseling, case management and referral to service pro- child care education, and training in and de- viders. velopment of parenting skills. 20. Prevention and Intervention Services 23. Recreational Services Prevention and intervention services are Recreational services are those services or those services or activities designed to pro- activities designed to provide, or assist indi- vide early identification and/or timely inter- viduals to take advantage of, individual or vention to support families and prevent or group activities directed towards promoting ameliorate the consequences of, abuse, ne- physical, cultural, and/or social develop- glect, or family violence, or to assist in mak- ment. ing arrangement for alternate placements or living arrangements where necessary. Such 24. Residential Treatment Services services may also be provided to prevent the Residential treatment services provide removal of a child or adult from the home. Component services and activities may in- short-term residential care and comprehen- clude investigation; assessment and/or eval- sive treatment and services for children or uation of the extent of the problem; coun- adults whose problems are so severe or are seling, including mental health counseling such that they cannot be cared for at home or therapy as needed; developmental and par- or in foster care and need the specialized enting skills training; respite care; and other services provided by specialized facilities. services including supervision, case manage- Component services and activities may in- ment, and transportation. clude diagnosis and psychological evaluation; alcohol and drug detoxification serv- 21. Protective Services for Adults ices; individual, family, and group therapy Protective services for adults are those and counseling; remedial education and GED services or activities designed to prevent or preparation; vocational or pre-vocational remedy abuse, neglect or exploitation of training; training in activities of daily liv- adults who are unable to protect their own ing; supervised recreational and social ac- interests. Examples of situations that may tivities; case management; transportation; require protective services are injury due to and referral to and utilization of other serv- maltreatment or family violence; lack of ices. adequate food, clothing or shelter; lack of essential medical treatment or rehabilitation 25. Special Services for Persons With Develop- services; and lack of necessary financial or mental or Physical Disabilities, or Persons other resources. Component services or ac- With Visual or Auditory Impairments tivities may include investigation; immediate intervention; emergency medical serv- Special services for persons with develop- ices; emergency shelter; developing case mental or physical disabilities, or persons plans; initiation of legal action (if needed); with visual or auditory impairments, are

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services or activities to maximize the poten- each of these services should appear else- tial of persons with disabilities, help allevi- where in the annual report. ate the effects of physical, mental or emo- [58 FR 60128, Nov. 15, 1993] tional disabilities, and to enable these persons to live in the least restrictive environ- APPENDIX B TO PART 96—SSBG ment possible. Component services or activities may include personal and family coun- REPORTING FORM AND INSTRUCTIONS seling; respite care; family support; recre- Instructions ation; transportation; aid to assist with independent functioning in the community; This form must be used by states as the re- and training in mobility, communication porting instrument to satisfy the require- skills, the use of special aids and appliances, ments of 45 CFR 96.74(a) (1) through (4). Fol- and self-sufficiency skills. Residential and lowing are instructions on how to complete medical services may be included only as an the form: integral, but subordinate, part of the services. General 1. Enter the name of the state submitting 26. Special Services for Youth Involved in or at the form. Risk of Involvement With Criminal Activity 2. Enter the fiscal year for which the form Special services for youth involved in or at is being submitted. Either the state or fed- risk of involvement with criminal activity eral fiscal year may be used. are those services or activities for youth who 3. Enter the month and year of the begin- are, or who may become, involved with the ning and end of the fiscal year—e.g., 07/91 to juvenile justice system and their families. 06/92. Components services or activities are designed to enhance family functioning and/or Services modify the youth’s behavior with the goal of 4. The ‘‘service’’ column contains a list of developing socially appropriate behavior and services that are to be used for national re- may include counseling, intervention ther- porting. This list in no way mandates how a apy, and residential and medical services if state is to design its program of services included as an integral but subordinate part under the SSBG, but rather is to be used of the service. only to obtain nationally comparable statis- 27. Substance Abuse Services tics. If the services that your state provides reasonably fit the uniform service defini- Substance abuse services are those services tions in appendix A, use them. In cases or activities that are primarily designed to where no fit is possible between the state deter, reduce, or eliminate substance abuse services and the services on the form, use or chemical dependence. Except for initial item number 29—the other services category. detoxification services, medical and residen- Please list all services reported under item tial services may be included but only as an 29, using a separate sheet if necessary. The integral but subordinate part of the service. state’s definition of these services must ap- Component substance abuse services or ac- pear in the state’s annual report. tivities may include a comprehensive range of personal and family counseling methods, Recipient Data methadone treatment for opiate abusers, or In reporting the following data: detoxification treatment for alcohol abusers. • Each state should use its own definitions Services may be provided in alternative liv- of the terms ‘‘adult’’ and ‘‘child.’’ These defi- ing arrangements such as institutional set- nitions should be described elsewhere in the tings and community-based halfway houses. annual report. If the definitions of adult and 28. Transportation Services child vary by services, all such definitions must be included. Transportation services are those services • States should, if possible, consider as the or activities that provide or arrange for the ‘‘recipient’’ of the service the individual to travel, including travel costs, of individuals whom the service is provided. This means in order to access services, or obtain medical that the child would be considered the recipi- care or employment. Component services or ent of child day care services, even if such activities may include special travel ar- services are provided to allow the child’s rangements such as special modes of trans- adult caretaker to pursue employment. portation and personnel to accompany or as- Similarly, an adult who receives counseling sist individuals or families to utilize trans- services should be considered as the recipi- portation. ent of that service, even if the service is provided as part of a child’s protective services 29. Other Services plan. In cases where each member of a fam- Other Services are services that do not fall ily, for example, receives an individual serv- within the definitions of the preceding 28 ice such as counseling, each family member services. The definition used by the State for should be considered as a separate recipient.

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• States should, if possible, consider as a ing fiscal year to the following fiscal year. service, i.e., a count of one, any service pro- The SSBG statute permits states two years vided to a single recipient for the duration of to expend SSBG funds. the reporting period (one year), or any frac- d. ‘‘Carry Over’’ should show funds carried tion thereof. In cases where an individual re- from a previous fiscal year into the current ceived a service during the reporting period, reporting year. then discontinued the service, and then re- e. ‘‘Administrative Costs’’ should show all ceived the service again, the individual other non-service use of SSBG funds—e.g., should only be counted once, if possible. funds expended for training, licensing activi- • The criteria applied in determining eligi- ties, or overhead costs. bility for each service—such as income eligi- f. This column should be totaled, and the bility guidelines, sliding fee scales, the effect sum placed at the bottom of the column in of public assistance benefits, and any re- the ‘‘Totals’’ box. quirements for enrollment in school or train- 13. Under ‘‘Provisions Method—Public/Pri- ing programs—should be described elsewhere vate’’ enter a check mark on ‘‘X’’ in the ap- in the annual report. propriate column(s) to indicate whether a 5. Under ‘‘Number of Recipients—Adults’’ service was provided by public agencies or enter the number of adults who have re- private agencies. In some cases, a given serv- ceived each service funded in whole or part ice may have been provided by both methods, under the SSBG. in which case both columns would be 6. Under ‘‘Number of Recipients—Children’’ checked for that service. enter the number of children who have re- 14. Enter the name, title, and telephone ceived each service funded in whole or part number of a contact person who can answer under the SSBG. questions about the data. 7. Under ‘‘Number of Recipients—Total’’ 15. Code Column: enter the total number of recipients of each Six of the columns on this form have a ‘‘C’’ service. This should be the sum of the adults column to the right of them. These are and children reported in the preceding ‘‘Code’’ columns to permit a state to indi- ‘‘adult’’ and ‘‘children’’ columns. cate, for expenditure data, whether each cell of data is A (actual), E (estimated), or S Expenditure Data (sampled), and for recipient data, whether 8. Under ‘‘Expenditures—Total $’’ enter all the data is based on an unduplicated (U) or funds that the state expends on each service. duplicated (D) count of recipients. These This should include SSBG funds as well as codes will permit the Department to deter- funds from other federal sources, state funds, mine the relative degree of statistical valid- and local funds. A listing of the sources of ity of the data. Actual recipient counts and these funds, and the amounts allocated, expenditure amounts must be used when should appear elsewhere in the annual re- available. If actual counts are not available, port. sampling and/or estimating may be used to 9. Under ‘‘Expenditures—SSBG $’’ enter derive the numbers in this report. A descrip- the total SSBG funds expended for each serv- tion of the sampling and/or estimation meth- ice. This column should be totaled, and the ods used to derive any data must appear else- sum placed at the bottom of the column in where in the annual report. the ‘‘Totals’’ box. Report Submission Using PC Diskettes 10. Under ‘‘Expenditures—Per Adult’’ enter the average amount of SSBG funds expended States with personal computer (PC) equip- on each adult recipient of each service. ment may submit this data using PC disk- 11. Under ‘‘Expenditures—Per Child’’ enter ettes in addition to the hardcopy form which the average amount of SSBG funds expended will be included in the complete annual re- on each child recipient of each service. port. Diskettes may be either 51⁄4Prime; or 12. Item 30 in the ‘‘Total SSBG $’’ column 31⁄2Prime;; data may be submitted using should contain other expenditures and in- Lotus 1–2–3, Quattro Pro, DBase III or IV, come as follows: Wordstar, Word Perfect, or ASCII formats. a. ‘‘Transfers In’’ should contain funds Use of Lotus 1–2–3 is preferred, but any of the transferred from other federal block grants other formats listed may be used. If a state to the SSBG program. A listing of the wishes to use a format other than one listed source(s) of block grant funds and their here, please call Bryant Tudor on (202) 401– amounts should appear elsewhere in the an- 5535 or Frank Burns on (202) 401–5536, or write nual report. to the Office of Community Services, Admin- b. ‘‘Transfers Out’’ should show funds istration for Children and Families, Fourth transferred from the SSBG program to other Floor—East Wing, 370 L’Enfant Promenade, federal block grants. A listing of the pro- SW., Washington, DC 10447. Use of diskettes gram(s) to which SSBG funds were trans- can greatly reduce transcription errors and ferred, and the amounts, should appear else- also facilitate processing of the data once re- where in the annual report. ceived. We anticipate that many states will c. ‘‘Carry Forward’’ should show funds the want to avail themselves of this method of state intends to carry over from the report- reporting.

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[58 FR 60128, Nov. 15, 1993]

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PART 97—CONSOLIDATION OF (1) Preventive Health and Health GRANTS TO THE INSULAR AREAS Services, 42 U.S.C. 300w–300w–10.1 (2) Alcohol and Drug Abuse and Men- Sec. tal Health Services, 42 U.S.C. 300x– 97.10 What is a consolidated grant? 300x–9.2 97.11 Which jurisdictions may apply for a (3) Maternal and Child Health Serv- consolidated grant? ices, 42 U.S.C. 701–709.3 97.12 Which grants may be consolidated? (4) Social Services, 42 U.S.C. 1397– 97.13 How does an insular area apply for a 1397f. consolidated grant? (5) Community Services, 42 U.S.C. 97.14 How will grant awards be made? 9901–9912. 97.15 For what purposes can grant funds be used? (6) Low-Income Home Energy Assist- 97.16 What fiscal, matching and administra- ance, 42 U.S.C. 8621–8629. tive requirements apply to grantees? (7) Community Youth Activity, 42 U.S.C. 11841.4 AUTHORITY: Sec. 501, Pub. L. 95–134, as amended, 48 U.S.C. 1469a. (c) Other Grants. (1) Child Welfare Services, 42 U.S.C. SOURCE: 47 FR 56468, Dec. 16, 1982, unless otherwise noted. 620, et seq. (2) Developmental Disabilities, 42 § 97.10 What is a consolidated grant? U.S.C. 6021–6030. (3) Aging Supportive Services and As used in this part, a consolidated Senior Centers, 42 U.S.C. 3030d. grant means a grant award to an insular area, the funds of which are derived (4) Congregate Meals for the Elderly, from the allocations under two or more 42 U.S.C. 3030e. of the programs specified in § 97.12. (5) Home Delivered Meals for the El- derly, 42 U.S.C. 3030f. § 97.11 Which jurisdictions may apply (6) Child Abuse and Neglect State for a consolidated grant? Grants, 42 U.S.C. 5103(b). The following jurisdictions (insular (7) Dependent Care Planning and De- areas), as appropriate with respect to velopment State Grants, 42 U.S.C. 9871, each block and formula grant program, et. seq. may apply for a consolidated grant (8) Family Violence Prevention and under this Part: the Virgin Islands; Services, 42 U.S.C. 10401, et seq. Guam; American Samoa, the Common- (9) Children’s Justice Act, 42 U.S.C. wealth of the Northern Mariana Is- 5101, et seq. lands; and the Trust Territory of the (10) Child Development Associate Pacific Islands (the Republic of Palau). Scholarship Assistance Act, 42 U.S.C. In addition, the Federated States of 10901, et seq. Micronesia and the Republic of the (11) Emergency Community Services Marshall Islands may apply for a con- Homeless, 42 U.S.C. 11301. solidated grant for certain PHS pro- (12) Community Food and Nutrition, grams as indicated in § 97.12. 42 U.S.C. 9910a. [56 FR 38346, Aug. 13, 1991] (13) Protection and Advocacy for Mentally Ill Individuals, 42 U.S.C. 9501. § 97.12 Which grants may be consoli- (14) Projects for Assistance in Transi- dated? tion from Homelessness, 42 U.S.C. 290 (a) These regulations apply to the (cc–21) et seq. consolidation of grants under the programs listed in paragraphs (b) and (c) [56 FR 38346, Aug. 13, 1991] of this section and to any additional program(s) as determined by the Sec- 1 Certain Public Health Service programs retary. The list of programs will be pe- for which the Federated States of Micronesia riodically updated in the Code of Fed- and the Republic of the Marshall Islands eral Regulations through publication may apply for a consolidated grant. 2 See footnote 1 in § 97.12(a)(1). in the FEDERAL REGISTER. 3 See footnote 1 in § 97.12(a)(1). (b) Block Grants. 4 See footnote 1 in § 97.12(a)(1).

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§ 97.13 How does an insular area apply not exceed the amount for which the for a consolidated grant? insular area is eligible under the pro- (a) An insular area may apply for a grams that are being consolidated, the consolidated grant in lieu of filing an amount of the award will equal the individual application for any of the amount requested in the application. programs listed in § 97.12 for which the insular area is eligible. § 97.15 For what purposes can grant funds be used? (b) The chief executive officer or his designee may submit a consolidated Funds awarded under a consolidated grant application at any time prior to grant must be used for purposes au- expenditure of the funds proposed for thorized by the statutes and regula- consolidation. The application must tions of the programs included in the specify the amount of funds proposed consolidated grant. In its application for consolidation, the titles of the pro- for a consolidated grant the insular grams that are the sources of funds area is to indicate the amount of funds that are to be consolidated and the ti- that will be allocated to the eligible tles of the programs under whose stat- programs. utory authority the funds are to be expended. § 97.16 What fiscal, matching and ad- (c) The application must contain the ministrative requirements apply to assurances, certifications, and other grantees? information required by the statutes (a) An insular area receiving a con- and regulations applicable to those solidated grant must comply with the programs under which funds will be ex- statutes and regulations applicable to pended. If any of the requirements for the programs under which the funds these latter programs are substantially are to be used, except as otherwise pro- the same, they may be met by a single vided in this part. assurance, certification, or narrative, (b) In regard to programs included in as appropriate. The application need a consolidated grant, an insular area not meet the application or other re- need not comply with any of the statu- quirements for programs which are tory or regulatory provisions requiring sources of funds for the consolidated recipients to match federal funds with grant but under whose authority no their own or other funds. funds will be expended. (c) A single report may be submitted (d) If after receiving a consolidated in lieu of any individual reports that grant, an insular area wishes to use may be required under the programs funds for a purpose authorized by an el- included in a consolidated grant. igible program that is not included in the consolidated grant, or by an eligi- PART 98—CHILD CARE AND ble program that was included in the DEVELOPMENT FUND grant but was not intended as a program under which funds would be ex- Subpart A—Goals, Purposes and pended, the insular area must submit Definitions an amended application indicating the proposed change and containing the as- Sec. surances, certifications and other in- 98.1 Goals and purposes. formation applicable to that program. 98.2 Definitions. 98.3 Effect on State law. § 97.14 How will grant awards be made? Subpart B—General Application Procedures The Secretary, or his designee, will award a consolidated grant to each in- 98.10 Lead Agency responsibilities. sular area that applies for a consoli- 98.11 Administration under contracts and dated grant and meets the require- agreements. ments of this Part and of the statutes 98.12 Coordination and consultation. 98.13 Applying for Funds. and regulations applicable to the pro- 98.14 Plan process. grams under whose authority the con- 98.15 Assurances and certifications. solidated grant funds will be expended. 98.16 Plan provisions. As long as the amount requested does 98.17 Period covered by Plan.

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98.18 Approval and disapproval of Plans and 98.82 Coordination. Plan amendments. 98.83 Requirements for tribal programs. 98.84 Construction and renovation of child Subpart C—Eligibility for Services care facilities.

98.20 A child’s eligibility for child care serv- Subpart J—Monitoring, Non-Compliance ices. and Complaints Subpart D—Program Operations (Child 98.90 Monitoring. Care Services)—Parental Rights and 98.91 Non-compliance. Responsibilities 98.92 Penalties and sanctions. 98.93 Complaints. 98.30 Parental choice. 98.31 Parental access. 98.32 Parental complaints. Subpart K—Error Rate Reporting 98.33 Consumer education. 98.34 Parental rights and responsibilities. 98.100 Error Rate Report. 98.101 Case Review Methodology. Subpart E—Program Operations (Child 98.102 Content of Error Rate Reports. Care Services)—Lead Agency and Provider Requirements AUTHORITY: 42 U.S.C. 618, 9858. SOURCE: 63 FR 39981, July 24, 1998, unless 98.40 Compliance with applicable State and otherwise noted. local regulatory requirements. 98.41 Health and safety requirements. 98.42 Sliding fee scales. Subpart A—Goals, Purposes and 98.43 Equal access. Definitions 98.44 Priority for child care services. 98.45 List of providers. § 98.1 Goals and purposes. 98.46 Nondiscrimination in admissions on the basis of religion. (a) The goals of the CCDF are to: 98.47 Nondiscrimination in employment on (1) Allow each State maximum flexi- the basis of religion. bility in developing child care programs and policies that best suit the Subpart F—Use of Child Care and needs of children and parents within Development Funds the State; 98.50 Child care services. (2) Promote parental choice to em- 98.51 Activities to improve the quality of power working parents to make their child care. own decisions on the child care that 98.52 Administrative costs. best suits their family’s needs; 98.53 Matching fund requirements. (3) Encourage States to provide con- 98.54 Restrictions on the use of funds. sumer education information to help 98.55 Cost allocation. parents make informed choices about Subpart G—Financial Management child care; (4) Assist States to provide child care 98.60 Availability of funds. to parents trying to achieve independ- 98.61 Allotments from the Discretionary ence from public assistance; and Fund. (5) Assist States in implementing the 98.62 Allotments from the Mandatory Fund. 98.63 Allotments from the Matching Fund. health, safety, licensing, and registra- 98.64 Reallotment and redistribution of tion standards established in State reg- funds. ulations. 98.65 Audits and financial reporting. (b) The purpose of the CCDF is to in- 98.66 Disallowance procedures. crease the availability, affordability, 98.67 Fiscal requirements. and quality of child care services. The program offers Federal funding to Subpart H—Program Reporting States, Territories, Indian Tribes, and Requirements tribal organizations in order to: 98.70 Reporting requirements. (1) Provide low-income families with 98.71 Content of reports. the financial resources to find and afford quality child care for their chil- Subpart I—Indian Tribes dren; 98.80 General procedures and requirements. (2) Enhance the quality and increase 98.81 Application and Plan procedures. the supply of child care for all families,

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including those who receive no direct lies, Department of Health and Human assistance under the CCDF; Services; (3) Provide parents with a broad Caregiver means an individual who range of options in addressing their provides child care services directly to child care needs; an eligible child on a person-to-person (4) Strengthen the role of the family; basis; (5) Improve the quality of, and co- Categories of care means center-based ordination among, child care programs child care, group home child care, fam- and early childhood development pro- ily child care and in-home care; grams; and Center-based child care provider means (6) Increase the availability of early a provider licensed or otherwise au- childhood development and before- and thorized to provide child care services after-school care services. for fewer than 24 hours per day per (c) The purpose of these regulations child in a non-residential setting, un- is to provide the basis for administra- less care in excess of 24 hours is due to tion of the Fund. These regulations the nature of the parent(s)’ work; provide that Lead Agencies: (1) Maximize parental choice through Child care certificate means a certifi- the use of certificates and through cate (that may be a check, or other dis- grants and contracts; bursement) that is issued by a grantee (2) Include in their programs a broad directly to a parent who may use such range of child care providers, including certificate only as payment for child center-based care, family child care, care services or as a deposit for child in-home care, care provided by rel- care services if such a deposit is re- atives and sectarian child care pro- quired of other children being cared for viders; by the provider, pursuant to § 98.30. (3) Provide quality child care that Nothing in this part shall preclude the meets applicable requirements; use of such certificate for sectarian (4) Coordinate planning and delivery child care services if freely chosen by of services at all levels; the parent. For the purposes of this (5) Design flexible programs that pro- part, a child care certificate is assist- vide for the changing needs of recipient ance to the parent, not assistance to families; the provider; (6) Administer the CCDF responsibly Child Care and Development Fund to ensure that statutory requirements (CCDF) means the child care programs are met and that adequate information conducted under the provisions of the regarding the use of public funds is pro- Child Care and Development Block vided; and Grant Act, as amended. The Fund con- (7) Design programs that provide un- sists of Discretionary Funds authorized interrupted service to families and pro- under section 658B of the amended Act, viders, to the extent statutorily pos- and Mandatory and Matching Funds sible. appropriated under section 418 of the Social Security Act; § 98.2 Definitions. Child care provider that receives assist- For the purpose of this part and part ance means a child care provider that 99: receives Federal funds under the CCDF The Act refers to the Child Care and pursuant to grants, contracts, or loans, Development Block Grant Act of 1990, but does not include a child care pro- section 5082 of the Omnibus Budget vider to whom Federal funds under the Reconciliation Act of 1990, Pub. L. 101– CCDF are directed only through the op- 508, as amended and codified at 42 eration of a certificate program; U.S.C. 9858 et seq. Child care services, for the purposes of ACF means the Administration for § 98.50, means the care given to an eligi- Children and Families; ble child by an eligible child care pro- Application is a request for funding vider; that includes the information required Construction means the erection of a at § 98.13; facility that does not currently exist; Assistant Secretary means the Assist- The Department means the Depart- ant Secretary for Children and Fami- ment of Health and Human Services;

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Discretionary funds means the funds Settlement Act (43 U.S.C. § 1601 et seq.) authorized under section 658B of the that is recognized as eligible for the Child Care and Development Block special programs and services provided Grant Act. The Discretionary funds by the United States to Indians be- were formerly referred to as the Child cause of their status as Indians; Care and Development Block Grant; In-home child care provider means an Eligible child means an individual who individual who provides child care meets the requirements of § 98.20; services in the child’s own home; Eligible child care provider means: Lead Agency means the State, terri- (1) A center-based child care pro- torial or tribal entity designated under vider, a group home child care pro- §§ 98.10 and 98.16(a) to which a grant is vider, a family child care provider, an awarded and that is accountable for in-home child care provider, or other the use of the funds provided. The Lead provider of child care services for com- Agency is the entire legal entity even pensation that— if only a particular component of the (i) Is licensed, regulated, or reg- entity is designated in the grant award istered under applicable State or local document. law as described in § 98.40; and Licensing or regulatory requirements (ii) Satisfies State and local require- means requirements necessary for a ments, including those referred to in provider to legally provide child care § 98.41 applicable to the child care serv- services in a State or locality, includ- ices it provides; or ing registration requirements estab- (2) A child care provider who is 18 lished under State, local or tribal law; years of age or older who provides child Liquidation period means the applica- care services only to eligible children ble time period during which a fiscal who are, by marriage, blood relation- year’s grant shall be liquidated pursu- ship, or court decree, the grandchild, ant to the requirements at § 98.60.; great grandchild, sibling (if such pro- Major renovation means: (1) structural vider lives in separate residence), changes to the foundation, roof, floor, niece, or nephew of such provider, and exterior or load-bearing walls of a fa- complies with any applicable require- cility, or the extension of a facility to ments that govern child care provided increase its floor area; or (2) extensive by the relative involved; alteration of a facility such as to sig- Facility means real property or mod- nificantly change its function and pur- ular unit appropriate for use by a pose, even if such renovation does not grantee to carry out a child care pro- include any structural change; gram; Mandatory funds means the general Family child care provider means one entitlement child care funds described individual who provides child care at section 418(a)(1) of the Social Secu- services for fewer than 24 hours per day rity Act; per child, as the sole caregiver, in a Matching funds means the remainder private residence other than the child’s of the general entitlement child care residence, unless care in excess of 24 funds that are described at section hours is due to the nature of the par- 418(a)(2) of the Social Security Act; ent(s)’ work; Modular unit means a portable struc- Group home child care provider means ture made at another location and two or more individuals who provide moved to a site for use by a grantee to child care services for fewer than 24 carry out a child care program; hours per day per child, in a private Obligation period means the applica- residence other than the child’s resi- ble time period during which a fiscal dence, unless care in excess of 24 hours year’s grant shall be obligated pursu- is due to the nature of the parent(s)’ ant to § 98.60; work; Parent means a parent by blood, mar- Indian Tribe means any Indian Tribe, riage or adoption and also means a band, nation, or other organized group legal guardian, or other person stand- or community, including any Alaska ing in loco parentis; Native village or regional or village The Plan means the Plan for the im- corporation as defined in or established plementation of programs under the pursuant to the Alaska Native Claims CCDF;

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Program period means the time period 418(a)(4) of the Social Security Act. for using a fiscal year’s grant and does The funds consist of between one and not extend beyond the last day to liq- two percent of the aggregate Manda- uidate funds; tory and Matching child care funds re- Programs refers generically to all ac- served by the Secretary in each fiscal tivities under the CCDF, including year for payments to Indian Tribes and child care services and other activities tribal organizations; pursuant to § 98.50 as well as quality Tribal organization means the recog- and availability activities pursuant to nized governing body of any Indian § 98.51; Tribe, or any legally established orga- Provider means the entity providing nization of Indians, including a consor- child care services; tium, which is controlled, sanctioned, The regulation refers to the actual or chartered by such governing body or regulatory text contained in parts 98 which is democratically elected by the and 99 of this chapter; adult members of the Indian commu- Real property means land, including nity to be served by such organization land improvements, structures and ap- and which includes the maximum par- purtenances thereto, excluding mov- ticipation of Indians in all phases of its able machinery and equipment; activities: Provided, that in any case Secretary means the Secretary of the where a contract is let or grant is made Department of Health and Human to an organization to perform services Services; benefiting more than one Indian Tribe, Sectarian organization or sectarian the approval of each such Indian Tribe child care provider means religious orga- shall be a prerequisite to the letting or nizations or religious providers gen- making of such contract or grant; and erally. The terms embrace any organi- Types of providers means the different zation or provider that engages in reli- classes of providers under each cat- gious conduct or activity or that seeks egory of care. For the purposes of the to maintain a religious identity in CCDF, types of providers include non- some or all of its functions. There is no profit providers, for-profit providers, requirement that a sectarian organiza- sectarian providers and relatives who tion or provider be managed by clergy provide care. or have any particular degree of religious management, control, or content; § 98.3 Effect on State law. Sectarian purposes and activities means (a) Nothing in the Act or this part any religious purpose or activity, in- shall be construed to supersede or mod- cluding but not limited to religious ify any provision of a State constitu- worship or instruction; tion or State law that prohibits the ex- Services for which assistance is provided penditure of public funds in or by sec- means all child care services funded tarian organizations, except that no under the CCDF, either as assistance provision of a State constitution or directly to child care providers through State law shall be construed to pro- grants, contracts, or loans, or indi- hibit the expenditure in or by sectarian rectly as assistance to parents through institutions of any Federal funds pro- child care certificates; vided under this part. Sliding fee scale means a system of (b) If a State law or constitution cost sharing by a family based on in- would prevent CCDF funds from being come and size of the family, in accord- expended for the purposes provided in ance with § 98.42; the Act, without limitation, then State means any of the States, the States shall segregate State and Fed- District of Columbia, the Common- eral funds. wealth of Puerto Rico, the Virgin Is- lands of the United States, Guam, American Samoa, the Commonwealth Subpart B—General Application of the Northern Mariana Islands, and Procedures includes Tribes unless otherwise specified; § 98.10 Lead Agency responsibilities. Tribal mandatory funds means the The Lead Agency, as designated by child care funds set aside at section the chief executive officer of the State

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(or by the appropriate Tribal leader or (7) Fulfill the responsibilities of any applicant), shall: subgrantee in any: disallowance under (a) Administer the CCDF program, subpart G; complaint or compliance ac- directly or through other govern- tion under subpart J; or hearing or ap- mental or non-governmental agencies, peal action under part 99 of this chap- in accordance with § 98.11; ter; and (b) Apply for funding under this part, (8) Ensure that all State and local or pursuant to § 98.13; non-governmental agencies through (c) Consult with appropriate rep- which the State administers the pro- resentatives of local government in de- gram, including agencies and contrac- veloping a Plan to be submitted to the tors that determine individual eligi- Secretary pursuant to § 98.14(b); bility, operate according to the rules (d) Hold at least one public hearing established for the program. in accordance with § 98.14(c); and (e) Coordinate CCDF services pursu- § 98.12 Coordination and consultation. ant to § 98.12. The Lead Agency shall: (a) Coordinate the provision of serv- § 98.11 Administration under contracts ices for which assistance is provided and agreements. under this part with the agencies listed (a) The Lead Agency has broad au- in § 98.14(a). thority to administer the program (b) Consult, in accordance with through other governmental or non- § 98.14(b), with representatives of gen- governmental agencies. In addition, eral purpose local government during the Lead Agency can use other public the development of the Plan; and or private local agencies to implement (c) Coordinate, to the maximum ex- the program; however: tent feasible, with any Indian Tribes in (1) The Lead Agency shall retain the State receiving CCDF funds in ac- overall responsibility for the adminis- cordance with subpart I of this part. tration of the program, as defined in paragraph (b) of this section; § 98.13 Applying for Funds. (2) The Lead Agency shall serve as The Lead Agency of a State or Terri- the single point of contact for issues tory shall apply for Child Care and De- involving the administration of the velopment funds by providing the fol- grantee’s CCDF program; and lowing: (3) Administrative and implementa- (a) The amount of funds requested at tion responsibilities undertaken by such time and in such manner as pre- agencies other than the Lead Agency scribed by the Secretary. shall be governed by written agree- (b) The following assurances or cer- ments that specify the mutual roles tifications: and responsibilities of the Lead Agency (1) An assurance that the Lead Agen- and the other agencies in meeting the cy will comply with the requirements requirements of this part. of the Act and this part; (b) In retaining overall responsibility (2) A lobbying certification that for the administration of the program, assures that the funds will not be used the Lead Agency shall: for the purpose of influencing pursuant (1) Determine the basic usage and to 45 CFR part 93, and, if necessary, a priorities for the expenditure of CCDF Standard Form LLL (SF-LLL) that dis- funds; closes lobbying payments; (2) Promulgate all rules and regula- (3) An assurance that the Lead Agen- tions governing overall administration cy provides a drug-free workplace pur- of the Plan; suant to 45 CFR 76.600, or a statement (3) Submit all reports required by the that such an assurance has already Secretary; been submitted for all HHS grants; (4) Ensure that the program complies (4) A certification that no principals with the approved Plan and all Federal have been debarred pursuant to 45 CFR requirements; 76.500; (5) Oversee the expenditure of funds (5) Assurances that the Lead Agency by subgrantees and contractors; will comply with the applicable provi- (6) Monitor programs and services; sions regarding nondiscrimination at 45

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CFR part 80 (implementing title VI of (3) In advance of the hearing required the Civil Rights Act of 1964, as amend- by this section, the Lead Agency shall ed), 45 CFR part 84 (implementing sec- make available to the public the con- tion 504 of the Rehabilitation Act of tent of the Plan as described in § 98.16 1973, as amended), 45 CFR part 86 (im- that it proposes to submit to the Sec- plementing title IX of the Education retary. Amendments of 1972, as amended) and 45 CFR part 91 (implementing the Age § 98.15 Assurances and certifications. Discrimination Act of 1975, as amend- (a) The Lead Agency shall include ed), and; the following assurances in its CCDF (6) Assurances that the Lead Agency Plan: will comply with the applicable provi- (1) Upon approval, it will have in ef- sions of Public Law 103–277, Part C— fect a program that complies with the Environmental Tobacco Smoke, also provisions of the CCDF Plan, and that known as the Pro-Children Act of 1994, is administered in accordance with the regarding prohibitions on smoking. Child Care and Development Block (c) The Child Care and Development Grant Act of 1990, as amended, section Fund Plan, at times and in such man- 418 of the Social Security Act, and all ner as required in § 98.17; and other applicable Federal laws and regu- (d) Such other information as speci- lations; fied by the Secretary. (2) The parent(s) of each eligible child within the area served by the § 98.14 Plan process. Lead Agency who receives or is offered In the development of each Plan, as child care services for which financial required pursuant to § 98.17, the Lead assistance is provided is given the op- Agency shall: tion either: (i) To enroll such child with a child (a)(1) Coordinate the provision of care provider that has a grant or con- services funded under this Part with tract for the provision of the service; other Federal, State, and local child or care and early childhood development (ii) To receive a child care certificate programs, including such programs for as defined in § 98.2; the benefit of Indian children. The (3) In cases in which the parent(s), Lead Agency shall also coordinate with pursuant to § 98.30, elects to enroll the State, and if applicable, tribal their child with a provider that has a agencies responsible for: grant or contract with the Lead Agen- (A) Public health, including the agency, the child will be enrolled with the cy responsible for immunizations; eligible provider selected by the parent (B) Employment services/workforce to the maximum extent practicable; development; (4) In accordance with § 98.30, the (C) Public education; and child care certificate offered to parents (D) Providing Temporary Assistance shall be of a value commensurate with for Needy Families. the subsidy value of child care services (2) Provide a description of the re- provided under a grant or contract; sults of the coordination with each of (5) With respect to State and local these agencies in the CCDF Plan. regulatory requirements (or tribal reg- (b) Consult with appropriate rep- ulatory requirements), health and safe- resentatives of local governments; ty requirements, payment rates, and (c)(1) Hold at least one hearing in the registration requirements, State or State, after at least 20 days of state- local (or tribal) rules, procedures or wide public notice, to provide to the other requirements promulgated for public an opportunity to comment on the purpose of the CCDF will not sig- the provision of child care services nificantly restrict parental choice from under the Plan. among categories of care or types of (2) The hearing required by para- providers, pursuant to § 98.30(f). graph (c)(1) shall be held before the (6) That if expenditures for pre-Kin- Plan is submitted to ACF, but no ear- dergarten services are used to meet the lier than nine months before the Plan maintenance-of-effort requirement, the becomes effective. State has not reduced its level of effort

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in full-day/full-year child care services, § 98.16 Plan provisions. pursuant to § 98.53(h)(1). A CCDF Plan shall contain the fol- (b) The Lead Agency shall include lowing: the following certifications in its (a) Specification of the Lead Agency CCDF Plan: whose duties and responsibilities are (1) In accordance with § 98.31, it has delineated in § 98.10; procedures in place to ensure that pro- (b) The assurances and certifications viders of child care services for which listed under § 98.15; assistance is provided under the CCDF, (c)(1) A description of how the CCDF afford parents unlimited access to their program will be administered and im- children and to the providers caring for plemented, if the Lead Agency does not their children, during the normal hours directly administer and implement the of operations and whenever such chil- program; dren are in the care of such providers; (2) Identification of the public or pri- (2) As required by § 98.32, the State vate entities designated to receive private donated funds and the purposes maintains a record of substantiated pa- for which such funds will be expended, rental complaints and makes informa- pursuant to Sec. 98.53(f); tion regarding such complaints avail- (d) A description of the coordination able to the public on request; and consultation processes involved in (3) It will collect and disseminate to the development of the Plan, including parents of eligible children and the a description of public-private partner- general public, consumer education in- ship activities that promote business formation that will promote informed involvement in meeting child care child care choices, as required by needs pursuant to § 98.14(a) and (b); § 98.33; (e) A description of the public hear- (4) There are in effect licensing re- ing process, pursuant to § 98.14(c); quirements applicable to child care (f) Definitions of the following terms services provided within the State (or for purposes of determining eligibility, area served by Tribal Lead Agency), pursuant to §§ 98.20(a) and 98.44: pursuant to § 98.40; (1) Special needs child; (5) There are in effect within the (2) Physical or mental incapacity (if State (or other area served by the Lead applicable); (3) Attending (a job training or edu- Agency), under State or local (or trib- cational program); al) law, requirements designed to pro- (4) Job training and educational protect the health and safety of children gram; that are applicable to child care pro- (5) Residing with; viders that provide services for which (6) Working; assistance is made available under the (7) Protective services (if applicable), CCDF, pursuant to § 98.41; including whether children in foster (6) In accordance with § 98.41, proce- care are considered in protective serv- dures are in effect to ensure that child ices for purposes of child care eligi- care providers of services for which as- bility; and whether respite care is pro- sistance is provided under the CCDF vided to custodial parents of children comply with all applicable State or in protective services. local (or tribal) health and safety re- (8) Very low income; and quirements; and (9) in loco parentis. (7) Payment rates for the provision of (g) For child care services pursuant child care services, in accordance with to § 98.50: (1) A description of such services and § 98.43, are sufficient to ensure equal ac- activities; cess for eligible children to comparable (2) Any limits established for the pro- child care services in the State or sub- vision of in-home care and the reasons State area that are provided to chil- for such limits pursuant to dren whose parents are not eligible to § 98.30(e)(1)(iv); receive assistance under this program (3) A list of political subdivisions in or under any other Federal or State which such services and activities are child care assistance programs. offered, if such services and activities

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are not available throughout the entire dial parent caring for a child under age service area; six; (4) A description of how the Lead (q)(1) When any Matching funds Agency will meet the needs of certain under § 98.53(b) are claimed, a descrip- families specified at § 98.50(e). tion of the efforts to ensure that pre- (5) Any additional eligibility criteria, Kindergarten programs meet the needs priority rules and definitions estab- of working parents; lished pursuant to § 98.20(b); (2) When State pre-Kindergarten ex- (h) A description of the activities to penditures are used to meet more than provide comprehensive consumer edu- 10% of the amount required at cation, to increase parental choice, and § 98.53(c)(1), or for more than 10% of the to improve the quality and availability funds available at § 98.53(b), or both, a of child care, pursuant to § 98.51; description of how the State will co- (i) A description of the sliding fee ordinate its pre-Kindergarten and child scale(s) (including any factors other care services to expand the availability than income and family size used in es- of child care; and tablishing the fee scale(s)) that pro- (r) Such other information as speci- vide(s) for cost sharing by the families fied by the Secretary. that receive child care services for [63 FR 39981, July 24, 1998, as amended at 72 which assistance is provided under the FR 27979, May 18, 2007] CCDF, pursuant to § 98.42; (j) A description of the health and § 98.17 Period covered by Plan. safety requirements, applicable to all (a) For States, Territories, and In- providers of child care services for dian Tribes the Plan shall cover a pe- which assistance is provided under the riod of two years. CCDF, in effect pursuant to § 98.41; (b) The Lead Agency shall submit a (k) A description of the child care new Plan prior to the expiration of the certificate payment system(s), includ- time period specified in paragraph (a) ing the form or forms of the child care of this section, at such time as re- certificate, pursuant to § 98.30(c); quired by the Secretary in written in- (l) Payment rates and a summary of structions. the facts, including a biennial local market rate survey, relied upon to de- § 98.18 Approval and disapproval of termine that the rates provided are Plans and Plan amendments. sufficient to ensure equal access pursu- (a) Plan approval. The Assistant Sec- ant to § 98.43; retary will approve a Plan that satis- (m) A detailed description of how the fies the requirements of the Act and State maintains a record of substan- this part. Plans will be approved not tiated parental complaints and how it later than the 90th day following the makes information regarding those date on which the Plan submittal is re- complaints available to the public on ceived, unless a written agreement to request, pursuant to § 98.32; extend that period has been secured. (n) A detailed description of the pro- (b) Plan amendments. Approved Plans cedures in effect for affording parents shall be amended whenever a substan- unlimited access to their children tial change in the program occurs. A whenever their children are in the care Plan amendment shall be submitted of the provider, pursuant to § 98.31; within 60 days of the effective date of (o) A detailed description of the li- the change. Plan amendments will be censing requirements applicable to approved not later than the 90th day child care services provided, and a de- following the date on which the amend- scription of how such licensing requirement is received, unless a written ments are effectively enforced, pursu- agreement to extend that period has ant to § 98.40; been secured. (p) Pursuant to § 98.33(b), the defini- (c) Appeal of disapproval of a Plan or tions or criteria used to implement the Plan amendment. (1) An applicant or exception, provided in section 407(e)(2) Lead Agency dissatisfied with a deter- of the Social Security Act, to indi- mination of the Assistant Secretary vidual penalties in the TANF work re- pursuant to paragraphs (a) or (b) of quirement applicable to a single custo- this section with respect to any Plan

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or amendment may, within 60 days other than the parent(s) described in after the date of receipt of notification paragraph (a)(3)(i) of this section. of such determination, file a petition (A) At grantee option, the require- with the Assistant Secretary asking ments in paragraph (a)(2) of this sec- for reconsideration of the issue of tion and in § 98.42 may be waived for whether such Plan or amendment con- families eligible for child care pursuant forms to the requirements for approval to this paragraph, if determined to be under the Act and pertinent Federal necessary on a case-by-case basis by, or regulations. in consultation with, an appropriate (2) Within 30 days after receipt of protective services worker. such petition, the Assistant Secretary (B) At grantee option, the provisions shall notify the applicant or Lead in (A) apply to children in foster care Agency of the time and place at which when defined in the Plan, pursuant to the hearing for the purpose of reconsid- § 98.16(f)(7). ering such issue will be held. (b) Pursuant to § 98.16(g)(5), a grantee (3) Such hearing shall be held not less or other administering agency may es- than 30 days, nor more than 90 days, tablish eligibility conditions or pri- after the notification is furnished to ority rules in addition to those speci- the applicant or Lead Agency, unless fied in this section and § 98.44 so long as the Assistant Secretary and the appli- they do not: cant or Lead Agency agree in writing (1) Discriminate against children on on another time. the basis of race, national origin, eth- (4) Action pursuant to an initial de- nic background, sex, religious affili- termination by the Assistant Secretary ation, or disability; described in paragraphs (a) and (b) of (2) Limit parental rights provided this section that a Plan or amendment under Subpart D; or is not approvable shall not be stayed (3) Violate the provisions of this sec- pending the reconsideration, but in the tion, § 98.44, or the Plan. In particular, event that the Assistant Secretary sub- such conditions or priority rules may sequently determines that the original not be based on a parent’s preference decision was incorrect, the Assistant for a category of care or type of pro- Secretary shall certify restitution vider. In addition, such additional con- forthwith in a lump sum of any funds ditions or rules may not be based on a incorrectly withheld or otherwise de- parent’s choice of a child care certifi- nied. The hearing procedures are de- cate. scribed in part 99 of this chapter. Subpart D—Program Operations Subpart C—Eligibility for Services (Child Care Services)—Paren- § 98.20 A child’s eligibility for child tal Rights and Responsibilities care services. § 98.30 Parental choice. (a) In order to be eligible for services under § 98.50, a child shall: (a) The parent or parents of an eligi- (1)(i) Be under 13 years of age; or, ble child who receives or is offered (ii) At the option of the Lead Agency, child care services shall be offered a be under age 19 and physically or men- choice: tally incapable of caring for himself or (1) To enroll the child with an eligi- herself, or under court supervision; ble child care provider that has a grant (2) Reside with a family whose in- or contract for the provision of such come does not exceed 85 percent of the services, if such services are available; State’s median income for a family of or the same size; and (2) To receive a child care certificate (3)(i) Reside with a parent or parents as defined in § 98.2. Such choice shall be (as defined in § 98.2) who are working or offered any time that child care serv- attending a job training or educational ices are made available to a parent. program; or (b) When a parent elects to enroll the (ii) Receive, or need to receive, pro- child with a provider that has a grant tective services and reside with a par- or contract for the provision of child ent or parents (as defined in § 98.2) care services, the child will be enrolled

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with the provider selected by the par- mulgated for purposes of the CCDF sig- ent to the maximum extent prac- nificantly restrict parental choice by: ticable. (1) Expressly or effectively excluding: (c) In cases in which a parent elects (i) Any category of care or type of to use a child care certificate, such cer- provider, as defined in § 98.2; or tificate: (ii) Any type of provider within a cat- (1) Will be issued directly to the par- egory of care; or ent; (2) Having the effect of limiting pa- (2) Shall be of a value commensurate rental access to or choice from among with the subsidy value of the child care such categories of care or types of pro- services provided under paragraph viders, as defined in § 98.2; or (a)(1) of this section; (3) Excluding a significant number of (3) May be used as a deposit for child providers in any category of care or of care services if such a deposit is re- any type as defined in § 98.2. quired of other children being cared for by the provider; § 98.31 Parental access. (4) May be used for child care services The Lead Agency shall have in effect provided by a sectarian organization or procedures to ensure that providers of agency, including those that engage in child care services for which assistance religious activities, if those services is provided afford parents unlimited ac- are chosen by the parent; cess to their children, and to the pro- (5) May be expended by providers for viders caring for their children, during any sectarian purpose or activity that normal hours of provider operation and is part of the child care services, in- whenever the children are in the care cluding sectarian worship or instruc- of the provider. The Lead Agency shall tion; provide a detailed description of such (6) Shall not be considered a grant or procedures. contract to a provider but shall be considered assistance to the parent. § 98.32 Parental complaints. (d) Child care certificates shall be The State shall: made available to any parents offered (a) Maintain a record of substan- child care services. tiated parental complaints; (e)(1) For child care services, certifi- (b) Make information regarding such cates under paragraph (a)(2) of this sec- parental complaints available to the tion shall permit parents to choose public on request; and from a variety of child care categories, (c) The Lead Agency shall provide a including: detailed description of how such record (i) Center-based child care; is maintained and is made available. (ii) Group home child care; (iii) Family child care; and § 98.33 Consumer education. (iv) In-home child care, with limita- The Lead Agency shall: tions, if any, imposed by the Lead (a) Certify that it will collect and Agency and described in its Plan at disseminate to parents and the general § 98.16(g)(2). Under each of the above public consumer education information categories, care by a sectarian provider that will promote informed child care may not be limited or excluded. choices including, at a minimum, in- (2) Lead Agencies shall provide infor- formation about mation regarding the range of provider (1) The full range of providers avail- options under paragraph (e)(1) of this able, and section, including care by sectarian (2) Health and safety requirements; providers and relatives, to families of- (b) Inform parents who receive TANF fered child care services. benefits about the requirement at sec- (f) With respect to State and local tion 407(e)(2) of the Social Security Act regulatory requirements under § 98.40, that the TANF agency make an excep- health and safety requirements under tion to the individual penalties associ- § 98.41, and payment rates under § 98.43, ated with the work requirement for CCDF funds will not be available to a any single custodial parent who has a Lead Agency if State or local rules, demonstrated inability to obtain need- procedures or other requirements pro- ed child care for a child under six years

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of age. The information may be pro- stringent standards and licensing or vided directly by the Lead Agency, or, regulatory requirements on child care pursuant to § 98.11, other entities, and providers of services for which assist- shall include: ance is provided under the CCDF than (1) The procedures the TANF agency the standards or requirements imposed uses to determine if the parent has a on other child care providers. demonstrated inability to obtain need- (2) Any such additional requirements ed child care; shall be consistent with the safeguards (2) The criteria or definitions applied for parental choice in § 98.30(f). by the TANF agency to determine whether the parent has a demonstrated § 98.41 Health and safety require- inability to obtain needed child care, ments. including: (a) Although the Act specifically (i) ‘‘Appropriate child care’’; states it does not require the establish- (ii) ‘‘Reasonable distance’’; ment of any new or additional require- (iii) ‘‘Unsuitability of informal child ments if existing requirements comply care’’; with the requirements of the statute, (iv) ‘‘Affordable child care arrange- each Lead Agency shall certify that ments’’; there are in effect, within the State (or (3) The clarification that assistance other area served by the Lead Agency), received during the time an eligible under State, local or tribal law, re- parent receives the exception referred quirements designed to protect the to in paragraph (b) of this section will health and safety of children that are count toward the time limit on Federal applicable to child care providers of benefits required at section 408(a)(7) of services for which assistance is pro- the Social Security Act. vided under this part. Such require- (c) Include in the biennial Plan the ments shall include: definitions or criteria the TANF agen- (1) The prevention and control of in- cy uses in implementing the exception fectious diseases (including immuniza- to the work requirement specified in tions). With respect to immunizations, paragraph (b) of this section. the following provisions apply: (i) As part of their health and safety § 98.34 Parental rights and responsibilities. provisions in this area, States and Ter- ritories shall assure that children re- Nothing under this part shall be con- ceiving services under the CCDF are strued or applied in any manner to in- age-appropriately immunized. Those fringe on or usurp the moral and legal health and safety provisions shall in- rights and responsibilities of parents or corporate (by reference or otherwise) legal guardians. the latest recommendation for childhood immunizations of the respective Subpart E—Program Operations State or territorial public health agen- (Child Care Services)—Lead cy. Agency and Provider Re- (ii) Notwithstanding paragraph quirements (a)(1)(i) of this section, Lead Agencies may exempt: § 98.40 Compliance with applicable (A) Children who are cared for by rel- State and local regulatory require- atives (defined as grandparents, great ments. grandparents, siblings (if living in a (a) Lead Agencies shall: separate residence), aunts, and uncles); (1) Certify that they have in effect li- (B) Children who receive care in their censing requirements applicable to own homes; child care services provided within the (C) Children whose parents object to area served by the Lead Agency; immunization on religious grounds; (2) Provide a detailed description of and the requirements under paragraph (D) Children whose medical condition (a)(1) of this section and of how they contraindicates immunization; are effectively enforced. (iii) Lead Agencies shall establish a (b)(1) This section does not prohibit a grace period in which children can re- Lead Agency from imposing more ceive services while families are taking

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the necessary actions to comply with ance under any other Federal, State, or the immunization requirements; tribal programs. (2) Building and physical premises (b) The Lead Agency shall provide a safety; and summary of the facts relied on to de- (3) Minimum health and safety train- termine that its payment rates ensure ing appropriate to the provider setting. equal access. At a minimum, the sum- (b) Lead Agencies may not set health mary shall include facts showing: and safety standards and requirements (1) How a choice of the full range of under paragraph (a) of this section that providers, e.g., center, group, family, are inconsistent with the parental and in-home care, is made available; choice safeguards in § 98.30(f). (2) How payment rates are adequate (c) The requirements in paragraph (a) based on a local market rate survey of this section shall apply to all pro- conducted no earlier than two years viders of child care services for which prior to the effective date of the cur- assistance is provided under this part, rently approved Plan; within the area served by the Lead (3) How copayments based on a slid- Agency, except the relatives specified ing fee scale are affordable, as stipu- in paragraph (e) of this section. lated at § 98.42. (d) Each Lead Agency shall certify (c) A Lead Agency may not establish that procedures are in effect to ensure different payment rates based on a that child care providers of services for family’s eligibility status or cir- which assistance is provided under this cumstances. part, within the area served by the (d) Payment rates under paragraph Lead Agency, comply with all applica- (a) of this section shall be consistent ble State, local, or tribal health and with the parental choice requirements safety requirements described in para- in § 98.30. graph (a) of this section. (e) Nothing in this section shall be (e) For the purposes of this section, construed to create a private right of the term ‘‘child care providers’’ does action. not include grandparents, great grandparents, siblings (if such providers live § 98.44 Priority for child care services. in a separate residence), aunts, or uncles, pursuant to § 98.2. Lead Agencies shall give priority for services provided under § 98.50(a) to: § 98.42 Sliding fee scales. (a) Children of families with very low (a) Lead Agencies shall establish, and family income (considering family periodically revise, by rule, a sliding size); and fee scale(s) that provides for cost shar- (b) Children with special needs. ing by families that receive CCDF child care services. § 98.45 List of providers. (b) A sliding fee scale(s) shall be If a Lead Agency does not have a reg- based on income and the size of the istration process for child care pro- family and may be based on other fac- viders who are unlicensed or unregu- tors as appropriate. lated under State, local, or tribal law, (c) Lead Agencies may waive con- it is required to maintain a list of the tributions from families whose incomes names and addresses of unlicensed or are at or below the poverty level for a unregulated providers of child care family of the same size. services for which assistance is provided under this part. § 98.43 Equal access. (a) The Lead Agency shall certify § 98.46 Nondiscrimination in admis- that the payment rates for the provisions on the basis of religion. sion of child care services under this (a) Child care providers (other than part are sufficient to ensure equal ac- family child care providers, as defined cess, for eligible families in the area in § 98.2) that receive assistance served by the Lead Agency, to child through grants and contracts under the care services comparable to those pro- CCDF shall not discriminate in admis- vided to families not eligible to receive sions against any child on the basis of CCDF assistance or child care assist- religion.

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(b) Paragraph (a) of this section does (b) Notwithstanding paragraph (a) of not prohibit a child care provider from this section, a sectarian organization selecting children for child care slots may require that employees adhere to that are not funded directly (i.e., the religious tenets and teachings of through grants or contracts to pro- such organization and to rules forbid- viders) with assistance provided under ding the use of drugs or alcohol. the CCDF because such children or (c) Notwithstanding paragraph (b) of their family members participate on a this section, if 80 percent or more of regular basis in other activities of the the operating budget of a child care organization that owns or operates provider comes from Federal and State such provider. funds, including direct and indirect as- (c) Notwithstanding paragraph (b) of sistance under the CCDF, the Lead this section, if 80 percent or more of Agency shall assure that, before any the operating budget of a child care further CCDF assistance is given to the provider comes from Federal or State provider, funds, including direct or indirect as- (1) The grant or contract relating to sistance under the CCDF, the Lead the assistance, or (2) The employment policies of the Agency shall assure that before any provider specifically provide that no further CCDF assistance is given to the person with responsibilities in the op- provider, eration of the child care program will (1) The grant or contract relating to discriminate, on the basis of religion, the assistance, or in the employment of any individual as (2) The admission policies of the pro- a caregiver, as defined in § 98.2. vider specifically provide that no person with responsibilities in the operation of the child care program, Subpart F—Use of Child Care and project, or activity will discriminate, Development Funds on the basis of religion, in the admis- § 98.50 Child care services. sion of any child. (a) Of the funds remaining after ap- § 98.47 Nondiscrimination in employ- plying the provisions of paragraphs (c), ment on the basis of religion. (d) and (e) of this section the Lead Agency shall spend a substantial por- (a) In general, except as provided in tion to provide child care services to paragraph (b) of this section, nothing low-income working families. in this part modifies or affects the pro- (b) Child care services shall be provision of any other applicable Federal vided: law and regulation relating to dis- (1) To eligible children, as described crimination in employment on the in § 98.20; basis of religion. (2) Using a sliding fee scale, as de- (1) Child care providers that receive scribed in § 98.42; assistance through grants or contracts (3) Using funding methods provided under the CCDF shall not discriminate, for in § 98.30; and on the basis of religion, in the employ- (4) Based on the priorities in § 98.44. ment of caregivers as defined in § 98.2. (c) Of the aggregate amount of funds (2) If two or more prospective em- expended (i.e., Discretionary, Manda- ployees are qualified for any position tory, and Federal and State share of with a child care provider, this section Matching Funds), no less than four per- shall not prohibit the provider from cent shall be used for activities to im- employing a prospective employee who prove the quality of child care as de- is already participating on a regular scribed at § 98.51. basis in other activities of the organi- (d) Of the aggregate amount of funds zation that owns or operates the pro- expended (i.e., Discretionary, Manda- vider. tory, and Federal and State share of (3) Paragraphs (a)(1) and (2) of this Matching Funds), no more than five section shall not apply to employees of percent may be used for administrative child care providers if such employees activities as described at § 98.52. were employed with the provider on (e) Not less than 70 percent of the November 5, 1990. Mandatory and Matching Funds shall

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be used to meet the child care needs of (iv) Providing training and technical families who: assistance in areas appropriate to the (1) Are receiving assistance under a provision of child care services, such as State program under Part A of title IV training in health and safety, nutri- of the Social Security Act, tion, first aid, the recognition of com- (2) Are attempting through work ac- municable diseases, child abuse detec- tivities to transition off such assist- tion and prevention, and care of chil- ance program, and dren with special needs; (3) Are at risk of becoming dependent (v) Improving salaries and other com- on such assistance program. pensation (such as fringe benefits) for (f) Pursuant to § 98.16(g)(4), the Plan full-and part-time staff who provide shall specify how the State will meet child care services for which assistance the child care needs of families de- is provided under this part; and scribed in paragraph (e) of this section. (vi) Any other activities that are § 98.51 Activities to improve the qual- consistent with the intent of this sec- ity of child care. tion. (b) Pursuant to § 98.16(h), the Lead (a) No less than four percent of the aggregate funds expended by the Lead Agency shall describe in its Plan the Agency for a fiscal year, and including activities it will fund under this sec- the amounts expended in the State pur- tion. suant to § 98.53(b), shall be expended for (c) Non-Federal expenditures re- quality activities. quired by § 98.53(c) (i.e., the mainte- (1) These activities may include but nance-of-effort amount) are not subject are not limited to: to the requirement at paragraph (a) of (i) Activities designed to provide this section. comprehensive consumer education to parents and the public; § 98.52 Administrative costs. (ii) Activities that increase parental (a) Not more than five percent of the choice; and aggregate funds expended by the Lead (iii) Activities designed to improve Agency from each fiscal year’s allot- the quality and availability of child ment, including the amounts expended care, including, but not limited to in the State pursuant to § 98.53(b), shall those described in paragraph (2) of this be expended for administrative activi- section. ties. These activities may include but (2) Activities to improve the quality are not limited to: of child care services may include, but (1) Salaries and related costs of the are not limited to: staff of the Lead Agency or other agen- (i) Operating directly or providing fi- cies engaged in the administration and nancial assistance to organizations (in- implementation of the program pursu- cluding private non-profit organiza- ant to § 98.11. Program administration tions, public organizations, and units and implementation include the fol- of general purpose local government) lowing types of activities: for the development, establishment, (i) Planning, developing, and design- expansion, operation, and coordination ing the Child Care and Development of resource and referral programs spe- Fund program; cifically related to child care; (ii) Making grants or providing loans (ii) Providing local officials and the to child care providers to assist such public with information about the pro- providers in meeting applicable State, gram, including the conduct of public local, and tribal child care standards, hearings; including applicable health and safety (iii) Preparing the application and requirements, pursuant to §§ 98.40 and Plan; 98.41; (iv) Developing agreements with ad- (iii) Improving the monitoring of ministering agencies in order to carry compliance with, and enforcement of, out program activities; applicable State, local, and tribal re- (v) Monitoring program activities for quirements pursuant to §§ 98.40 and compliance with program require- 98.41; ments;

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(vi) Preparing reports and other doc- (c) In order to receive Federal match- uments related to the program for sub- ing funds for a fiscal year under para- mission to the Secretary; graph (a) of this section: (vii) Maintaining substantiated com- (1) States shall also expend an plaint files in accordance with the re- amount of non-Federal funds for child quirements of § 98.32; care activities in the State that is at (viii) Coordinating the provision of least equal to the State’s share of ex- Child Care and Development Fund serv- penditures for fiscal year 1994 or 1995 ices with other Federal, State, and (whichever is greater) under sections local child care, early childhood devel- 402(g) and (i) of the Social Security Act opment programs, and before-and after- as these sections were in effect before school care programs; October 1, 1995; and (ix) Coordinating the resolution of (2) The expenditures shall be for al- audit and monitoring findings; lowable services or activities, as de- (x) Evaluating program results; and scribed in the approved State Plan if (xi) Managing or supervising persons appropriate, that meet the goals and with responsibilities described in para- purposes of the Act. graphs (a)(1)(i) through (x) of this sec- (3) All Mandatory Funds are obli- tion; gated in accordance with § 98.60(d)(2)(i). (2) Travel costs incurred for official (d) The same expenditure may not be business in carrying out the program; used to meet the requirements under (3) Administrative services, including both paragraphs (b) and (c) of this sec- such services as accounting services, tion in a fiscal year. performed by grantees or subgrantees (e) An expenditure in the State for or under agreements with third parties; purposes of this subpart may be: (1) Public funds when the funds are: (4) Audit services as required at (i) Appropriated directly to the Lead § 98.65; Agency specified at § 98.10, or trans- (5) Other costs for goods and services ferred from another public agency to required for the administration of the that Lead Agency and under its admin- program, including rental or purchase istrative control, or certified by the of equipment, utilities, and office sup- contributing public agency as rep- plies; and resenting expenditures eligible for Fed- (6) Indirect costs as determined by an eral match; indirect cost agreement or cost alloca- (ii) Not used to match other Federal tion plan pursuant to § 98.55. funds; and (b) The five percent limitation at (iii) Not Federal funds, or are Federal paragraph (a) of this section applies funds authorized by Federal law to be only to the States and Territories. The used to match other Federal funds; or amount of the limitation at paragraph (2) Donated from private sources (a) of this section does not apply to when the donated funds: Tribes or tribal organizations. (i) Are donated without any restric- (c) Non-Federal expenditures re- tion that would require their use for a quired by § 98.53(c) (i.e., the mainte- specific individual, organization, facil- nance-of-effort amount) are not subject ity or institution; to the five percent limitation at para- (ii) Do not revert to the donor’s facil- graph (a) of this section. ity or use; (iii) Are not used to match other Fed- § 98.53 Matching fund requirements. eral funds; (a) Federal matching funds are avail- (iv) Shall be certified both by the able for expenditures in a State based Lead Agency and by the donor (if funds upon the formula specified at § 98.63(a). are donated directly to the Lead Agen- (b) Expenditures in a State under cy) or the Lead Agency and the entity paragraph (a) of this section will be designated by the State to receive do- matched at the Federal medical assist- nated funds pursuant to § 98.53(f) (if ance rate for the applicable fiscal year funds are donated directly to the des- for allowable activities, as described in ignated entity) as available and rep- the approved State Plan, that meet the resenting funds eligible for Federal goals and purposes of the Act. match; and

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(v) Shall be subject to the audit re- (i) Matching funds are subject to the quirements in § 98.65 of these regula- obligation and liquidation require- tions. ments at § 98.60(d)(3). (f) Donated funds need not be trans- [63 FR 39981, July 24, 1998, as amended at 72 ferred to or under the administrative FR 27979, May 18, 2007] control of the Lead Agency in order to qualify as an expenditure eligible to re- § 98.54 Restrictions on the use of ceive Federal match under this sub- funds. section. They may be given to the pub- (a) General. (1) Funds authorized lic or private entities designated by the under section 418 of the Social Security State to implement the child care pro- Act and section 658B of the Child Care gram in accordance with § 98.11 pro- and Development Block Grant Act, and vided that such entities are identified all funds transferred to the Lead Agen- and designated in the State Plan to re- cy pursuant to section 404(d) of the So- ceive donated funds in accordance with cial Security Act, shall be expended § 98.16(c)(2). consistent with these regulations. (g) The following are not counted as Funds transferred pursuant to section an eligible State expenditure under 404(d) of the Social Security Act shall this Part: be treated as Discretionary Funds; (1) In-kind contributions; and (2) Funds shall be expended in accord- (2) Family contributions to the cost ance with applicable State and local of care as required by § 98.42. laws, except as superseded by § 98.3. (h) Public pre-kindergarten (pre-K) (b) Construction. (1) For State and expenditures: local agencies and nonsectarian agen- (1) May be used to meet the mainte- cies or organizations, no funds shall be nance-of-effort requirement only if the expended for the purchase or improve- State has not reduced its expenditures ment of land, or for the purchase, con- for full-day/full-year child care serv- struction, or permanent improvement ices; and of any building or facility. However, (2) May be eligible for Federal match funds may be expended for minor re- if the State includes in its Plan, as pro- modeling, and for upgrading child care vided in § 98.16(q), a description of the facilities to assure that providers meet efforts it will undertake to ensure that State and local child care standards, pre-K programs meet the needs of including applicable health and safety working parents. requirements. (3) In any fiscal year, a State may (2) For sectarian agencies or organi- use public pre-K funds for up to 20% of zations, the prohibitions in paragraph the funds serving as maintenance-of-ef- (b)(1) of this section apply; however, fort under this subsection. In addition, funds may be expended for minor re- in any fiscal year, a State may use modeling only if necessary to bring the other public pre-K funds as expendi- facility into compliance with the tures serving as State matching funds health and safety requirements estab- under this subsection; such public pre- lished pursuant to § 8.41. K funds used as State expenditures (3) Tribes and tribal organizations may not exceed 30% of the amount of a are subject to the requirements at State’s expenditures required to draw § 98.84 regarding construction and ren- down the State’s full allotment of Fed- ovation. eral matching funds available under (c) Tuition. Funds may not be ex- this subsection. pended for students enrolled in grades 1 (4) If applicable, the CCDF Plan shall through 12 for: reflect the State’s intent to use public (1) Any service provided to such stu- pre-K funds in excess of 10%, but not dents during the regular school day; for more than 20% of its maintenance- (2) Any service for which such stu- of-effort or 30% of its State matching dents receive academic credit toward funds in a fiscal year. Also, the Plan graduation; or shall describe how the State will co- (3) Any instructional services that ordinate its pre-K and child care serv- supplant or duplicate the academic ices to expand the availability of child program of any public or private care. school.

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(d) Sectarian purposes and activities. for the provision of technical assist- Funds provided under grants or con- ance; and tracts to providers may not be ex- (2) Will award the remaining CCDF pended for any sectarian purpose or ac- funds to grantees that have an ap- tivity, including sectarian worship or proved application and Plan. instruction. Pursuant to § 98.2, assist- (c) The Secretary may make pay- ance provided to parents through cer- ments in installments, and in advance tificates is not a grant or contract. or by way of reimbursement, with nec- Funds provided through child care cer- essary adjustments due to overpay- tificates may be expended for sectarian purposes or activities, including sec- ments or underpayments. tarian worship or instruction when (d) The following obligation and liq- provided as part of the child care serv- uidation provisions apply to States and ices. Territories: (e) The CCDF may not be used as the (1) Discretionary Fund allotments non-Federal share for other Federal shall be obligated in the fiscal year in grant programs. which funds are awarded or in the succeeding fiscal year. Unliquidated obli- § 98.55 Cost allocation. gations as of the end of the succeeding (a) The Lead Agency and subgrantees fiscal year shall be liquidated within shall keep on file cost allocation plans one year. or indirect cost agreements, as appro- (2)(i) Mandatory Funds for States re- priate, that have been amended to in- questing Matching Funds per § 98.53 clude costs allocated to the CCDF. shall be obligated in the fiscal year in (b) Subgrantees that do not already which the funds are granted and are have a negotiated indirect rate with available until expended. the Federal government should prepare and keep on file cost allocation plans (ii) Mandatory Funds for States that or indirect cost agreements, as appro- do not request Matching Funds are priate. available until expended. (c) Approval of the cost allocation (3) Both the Federal and non-Federal plans or indirect cost agreements is share of the Matching Fund shall be not specifically required by these regu- obligated in the fiscal year in which lations, but these plans and agree- the funds are granted and liquidated no ments are subject to review. later than the end of the succeeding fiscal year. Subpart G—Financial (4) Except for paragraph (d)(5) of this Management section, determination of whether funds have been obligated and liq- § 98.60 Availability of funds. uidated will be based on: (a) The CCDF is available, subject to (i) State or local law; or, the availability of appropriations, in (ii) If there is no applicable State or accordance with the apportionment of local law, the regulation at 45 CFR 92.3, funds from the Office of Management Obligations and Outlays (expenditures). and Budget as follows: (5) Obligations may include sub- (1) Discretionary Funds are available grants or contracts that require the to States, Territories, and Tribes, payment of funds to a third party (e.g., (2) Mandatory and Matching Funds subgrantee or contractor). However, are available to States; the following are not considered third (3) Tribal Mandatory Funds are avail- party subgrantees or contractors: able to Tribes. (b) Subject to the availability of ap- (i) A local office of the Lead Agency; propriations, in accordance with the (ii) Another entity at the same level apportionment of funds from the Office of government as the Lead Agency; or of Management and Budget, the Sec- (iii) A local office of another entity retary: at the same level of government as the (1) May withhold no more than one- Lead Agency. quarter of one percent of the CCDF (6) For purposes of the CCDF, funds funds made available for a fiscal year for child care services provided through

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a child care certificate will be consid- this section, be used for activities spec- ered obligated when a child care cer- ified in the Lead Agency’s approved tificate is issued to a family in writing plan and must be obligated by the end that indicates: of the obligation period; or (i) The amount of funds that will be (2) if received after the end of the ap- paid to a child care provider or family, plicable obligation period described at and paragraphs (d) and (e) of this section, (ii) The specific length of time cov- be returned to the Federal government. ered by the certificate, which is lim- (h) Repayment of loans, pursuant to ited to the date established for redeter- § 98.51(a)(2)(ii), may be made in cash or mination of the family’s eligibility, in services provided in-kind. Payment but shall be no later than the end of provided in-kind shall be based on fair the liquidation period. market value. All loans shall be fully (7) Any funds not obligated during repaid. the obligation period specified in para- (i) Lead Agencies shall recover child graph (d) of this section will revert to care payments that are the result of the Federal government. Any funds not fraud. These payments shall be recov- liquidated by the end of the applicable ered from the party responsible for liquidation period specified in para- committing the fraud. graph (d) of this section will also revert to the Federal government. § 98.61 Allotments from the Discre- (e) The following obligation and liq- tionary Fund. uidation provisions apply to Tribal Dis- (a) To the 50 States, the District of cretionary and Tribal Mandatory Columbia, and the Commonwealth of Funds: Puerto Rico an amount equal to the (1) Tribal grantees shall obligate all funds appropriated for the Child Care funds by the end of the fiscal year fol- and Development Block Grant, less lowing the fiscal year for which the amounts reserved for technical assist- grant is awarded. Any funds not obli- ance and amounts reserved for the Ter- gated during this period will revert to ritories and Tribes, pursuant to the Federal government. § 98.60(b) and paragraphs (b) and (c) of (2) Obligations that remain unliqui- this section, shall be allotted based dated at the end of the succeeding fis- upon the formula specified in section cal year shall be liquidated within the 658O(b) of the Act. next fiscal year. Any tribal funds that (b) For the U.S. Territories of Guam, remain unliquidated by the end of this American Samoa, the Virgin Islands of period will also revert to the Federal the United States, and the Common- government. wealth of the Northern Mariana Islands (f) Cash advances shall be limited to an amount up to one-half of one per- the minimum amounts needed and cent of the amount appropriated for shall be timed to be in accord with the the Child Care and Development Block actual, immediate cash requirements Grant shall be reserved. of the State Lead Agency, its sub- (1) Funds shall be allotted to these grantee or contractor in carrying out Territories based upon the following the purpose of the program in accord- factors: ance with 31 CFR part 205. (i) A Young Child factor—the ratio of (g) Funds that are returned (e.g., the number of children in the Territory loan repayments, funds deobligated by under five years of age to the number cancellation of a child care certificate, of such children in all Territories; and unused subgrantee funds) as well as (ii) An Allotment Proportion factor— program income (e.g., contributions determined by dividing the per capita made by families directly to the Lead income of all individuals in all the Ter- Agency or subgrantee for the cost of ritories by the per capita income of all care where the Lead Agency or sub- individuals in the Territory. grantee has made a full payment to the (A) Per capita income shall be: child care provider) shall, (1) Equal to the average of the annual (1) if received by the Lead Agency per capita incomes for the most recent during the applicable obligation period, period of three consecutive years for described in paragraphs (d) and (e) of which satisfactory data are available

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at the time such determination is of all Indian children living on or near made; and tribal reservations or other appropriate (2) Determined every two years. area served by the tribal grantee, pur- (B) Per capita income determined, suant to § 98.80(e). pursuant to paragraph (b)(1)(ii)(A) of (2) Grants to Tribes with fewer than this section, will be applied in estab- 50 Indian children that apply as part of lishing the allotment for the fiscal a consortium, pursuant to § 98.80(b)(1), year for which it is determined and for are equal to the sum of: the following fiscal year. (i) A portion of the base amount, pur- (C) If the Allotment Proportion fac- suant to paragraph (c)(1)(i) of this sector determined at paragraph (b)(1)(ii) tion, that bears the same ratio as the of this section: number of Indian children in the Tribe (1) Exceeds 1.2, then the Allotment living on or near the reservation, or Proportion factor of the Territory shall other appropriate area served by the be considered to be 1.2; or tribal grantee, pursuant to § 98.80(e), (2) Is less than 0.8, then the Allot- does to 50; and ment Proportion factor of the Terri- (ii) An additional amount per Indian tory shall be considered to be 0.8. child, pursuant to paragraph (c)(1)(ii) (2)(i) The formula used in calculating of this section. a Territory’s allotment is as follows: (3) Tribal consortia will receive grants that are equal to the sum of the YCF× APF amount reserved for individual grants of their members. tt× Territories at paragraph ( × ) (d) All funds reserved for Territories ∑ YCFtt APF (a) of this section. at paragraph (b) of this section will be (ii) For purposes of the formula speci- allotted to Territories, and all funds fied at paragraph (b)(2)(i) of this sec- reserved for Tribes at paragraph (c) of tion, the term ‘‘YCFt’’ means the Terri- this section will be allotted to tribal tory’s Young Child factor as defined at grantees. Any funds that are returned paragraph (b)(1)(i) of this section. by the Territories after they have been (iii) For purposes of the formula allotted will revert to the Federal gov- specified at paragraph (b)(2)(i) of this ernment. section, the term ‘‘APFt’’ means the (e) For other organizations, up to Territory’s Allotment Proportion fac- $2,000,000 may be reserved from the tor as defined at paragraph (b)(1)(ii) of tribal funds reserved at paragraph (c) this section. of this section. From this amount the (c) For Indian Tribes and tribal orga- Secretary may award a grant to a Na- nizations, including any Alaskan Na- tive Hawaiian Organization, as defined tive Village or regional or village cor- in section 4009(4) of the Augustus F. poration as defined in or established Hawkins-Robert T. Stafford Elemen- pursuant to the Alaska Native Claims tary and Secondary School Improve- Settlement Act (43 U.S.C. 1601 et seq) an ment Amendments of 1988 (20 U.S.C. amount up to two percent of the 4909(4)) and to a private non-profit or- amount appropriated for the Child Care ganization established for the purpose and Development Block Grant shall be of serving youth who are Indians or Na- reserved. tive Hawaiians. The Secretary will es- (1) Except as specified in paragraph tablish selection criteria and proce- (c)(2) of this section, grants to indi- dures for the award of grants under vidual tribal grantees will be equal to this subsection by notice in the FED- the sum of: ERAL REGISTER. (i) A base amount as set by the Sec- retary; and § 98.62 Allotments from the Mandatory (ii) An additional amount per Indian Fund. child under age 13 (or such similar age (a) Each of the 50 States and the Dis- as determined by the Secretary from trict of Columbia will be allocated the best available data), which is deter- from the funds appropriated under sec- mined by dividing the amount of funds tion 418(a)(3) of the Social Security available, less amounts set aside for el- Act, less the amounts reserved for igible Tribes, pursuant to paragraph technical assistance pursuant to (c)(1)(i) of this section, by the number § 98.60(b)(1) and the amount reserved for

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Tribes pursuant to paragraph (b) of § 98.63 Allotments from the Matching this section, an amount of funds equal Fund. to the greater of: (a) To each of the 50 States and the (1) the Federal share of its child care District of Columbia there is allocated expenditures under subsections (g) and an amount equal to its share of the (i) of section 402 of the Social Security total available under section 418(a)(3) Act (as in effect before October 1, 1995) of the Social Security Act. That for fiscal year 1994 or 1995 (whichever is amount is based on the same ratio as greater); or the number of children under age 13 re- (2) the average of the Federal share siding in the State bears to the na- of its child care expenditures under the tional total of children under age 13. subsections referred to in subparagraph The number of children under 13 is de- (a)(1) of this section for fiscal years rived from the best data available to 1992 through 1994. the Secretary for the second preceding (b) For Indian Tribes and tribal orga- fiscal year. nizations up to 2 percent of the amount (b) For purposes of this subsection, appropriated under section 418(a)(3) of the amounts available under section the Social Security Act shall be allo- 418(a)(3) of the Social Security Act ex- cated according to the formula at para- cludes the amounts reserved and allo- graph (c) of this section. In Alaska, cated under § 98.60(b)(1) for technical only the following 13 entities shall re- assistance and under § 98.62(a) and (b) ceive allocations under this subpart, in for the Mandatory Fund. accordance with the formula at para- (c) Amounts under this subsection graph (c) of this section: are available pursuant to the require- (1) The Metlakatla Indian Commu- ments at § 98.53(c). nity of the Annette Islands Reserve: (2) Arctic Slope Native Association; § 98.64 Reallotment and redistribution of funds. (3) Kawerak, Inc.; (4) Maniilaq Association; (a) According to the provisions of (5) Association of Village Council this section State and Tribal Discre- Presidents; tionary Funds are subject to reallotment, and State Matching Funds are (6) Tanana Chiefs Conference; subject to redistribution. State funds (7) Cook Inlet Tribal Council; are reallotted or redistributed only to (8) Bristol Bay Native Association; States as defined for the original allo- (9) Aleutian and Pribilof Islands As- cation. Tribal funds are reallotted only sociation; to Tribes. Funds granted to the Terri- (10) Chugachmuit; tories are not subject to reallotment. (11) Tlingit and Haida Central Coun- Any funds granted to the Territories cil; that are returned after they have been (12) Kodiak Area Native Association; allotted will revert to the Federal gov- and ernment. (13) Copper River Native Association. (b) Any portion of a State’s Discre- (c)(1) Grants to individual Tribes tionary Fund allotment that is not re- with 50 or more Indian children, and to quired to carry out its Plan, in the pe- Tribes with fewer than 50 Indian chil- riod for which the allotment is made dren that apply as part of a consortium available, shall be reallotted to other pursuant to § 98.80(b)(1), will be equal to States in proportion to the original al- an amount per Indian child under age lotments. For purposes of this para- 13 (or such similar age as determined graph the term ‘‘State’’ means the 50 by the Secretary from the best avail- States, the District of Columbia, and able data), which is determined by di- the Commonwealth of Puerto Rico. The viding the amount of funds available, other Territories and the Tribes may by the number of Indian children in not receive reallotted State Discre- each Tribe’s service area pursuant to tionary Funds. § 98.80(e). (1) Each year, the State shall report (2) Tribal consortia will receive to the Secretary either the dollar grants that are equal to the sum of the amount from the previous year’s grant individual grants of their members. that it will be unable to obligate by the

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end of the obligation period or that all (3) The amount of Matching Funds funds will be obligated during such granted to a State that will be made time. Such report shall be postmarked available for redistribution will be by April 1st. based on the State’s financial report to (2) Based upon the reallotment re- ACF for the Child Care and Develop- ports submitted by States, the Sec- ment Fund (ACF–696) and is subject to retary will reallot funds. the monetary limits at paragraph (b)(2) (i) If the total amount available for of this section. reallotment is $25,000 or more, funds (4) A State eligible to receive redis- will be reallotted to States in propor- tributed Matching Funds shall also use tion to each State’s allotment for the the ACF–696 to request its share of the applicable fiscal year’s funds, pursuant redistributed funds, if any. to § 98.61(a). (5) A State’s share of redistributed (ii) If the amount available for real- Matching Funds is based on the same lotment is less than $25,000, the Sec- ratio as the number of children under retary will not reallot any funds, and 13 residing in the State to the number such funds will revert to the Federal of children residing in all States eligi- government. ble to receive and that request the re- (iii) If an individual reallotment distributed Matching Funds. amount to a State is less than $500, the (6) Redistributed funds are considered Secretary will not issue the award, and part of the grant for the fiscal year in such funds will revert to the Federal which the redistribution occurs. government. (d) Any portion of a Tribe’s allot- (3) If a State does not submit a real- ment of Discretionary Funds that is lotment report by the deadline for re- not required to carry out its Plan, in port submittal, either: the period for which the allotment is (i) The Secretary will determine that made available, shall be reallotted to the State does not have any funds other tribal grantees in proportion to available for reallotment; or their original allotments. States and (ii) In the case of a report post- Territories may not receive reallotted marked after April 1st, any funds re- tribal funds. ported to be available for reallotment (1) Each year, the Tribe shall report shall revert to the Federal government. to the Secretary either the dollar (4) States receiving reallotted funds amount from the previous year’s grant shall obligate and expend these funds that it will be unable to obligate by the in accordance with § 98.60. The reallot- end of the obligation period or that all ment of funds does not extend the obli- funds will be obligated during such gation period or the program period for time. Such report shall be postmarked expenditure of such funds. by a deadline established by the Sec- (c)(1) Any portion of the Matching retary. Fund granted to a State that is not ob- (2) Based upon the reallotment re- ligated in the period for which the ports submitted by Tribes, the Sec- grant is made shall be redistributed. retary will reallot Tribal Discretionary Funds, if any, will be redistributed on Funds among the other Tribes. the request of, and only to, those other (i) If the total amount available for States that have met the requirements reallotment is $25,000 or more, funds of § 98.53(c) in the period for which the will be reallotted to other tribal grant- grant was first made. For purposes of ees in proportion to each Tribe’s origi- this paragraph the term ‘‘State’’ means nal allotment for the applicable fiscal the 50 States and the District of Co- year pursuant to § 98.62(c). lumbia. Territorial and tribal grantees (ii) If the total amount available for may not receive redistributed Match- reallotment is less than $25,000, the ing Funds. Secretary will not reallot any funds, (2) Matching Funds allotted to a and such funds will revert to the Fed- State under § 98.63(a), but not granted, eral government. shall also be redistributed in the man- (iii) If an individual reallotment ner described in paragraph (1) of this amount to an applicant Tribe is less section. than $500, the Secretary will not issue

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the award, and such funds will revert an agency that is independent of the to the Federal government. State, Territory or Tribe as defined by (3) If a Tribe does not submit a real- generally accepted government audit- lotment report by the deadline for re- ing standards issued by the Comp- port submittal, either: troller General, or a public accountant (i) The Secretary will determine that who meets such independent standards. Tribe does not have any funds available (g) The Secretary shall require finan- for reallotment; or cial reports as necessary. (ii) In the case of a report received after the deadline established by the § 98.66 Disallowance procedures. Secretary, any funds reported to be (a) Any expenditures not made in ac- available for reallotment shall revert cordance with the Act, the imple- to the Federal government. menting regulations, or the approved (4) Tribes receiving reallotted funds Plan, will be subject to disallowance. shall obligate and expend these funds (b) If the Department, as the result of in accordance with § 98.60. The reallot- an audit or a review, finds that expend- ment of funds does not extend the obli- itures should be disallowed, the De- gation period or the program period for partment will notify the Lead Agency expenditure of such funds. of this decision in writing. § 98.65 Audits and financial reporting. (c)(1) If the Lead Agency agrees with the finding that amounts were not ex- (a) Each Lead Agency shall have an pended in accordance with the Act, audit conducted after the close of each these regulations, or the Plan, the program period in accordance with Lead Agency shall fulfill the provisions OMB Circular A–133 and the Single of the disallowance notice and repay Audit Act Amendments of 1996. any amounts improperly expended; or (b) Lead Agencies are responsible for (2) The Lead Agency may appeal the ensuring that subgrantees are audited finding: in accordance with appropriate audit requirements. (i) By requesting reconsideration (c) Not later than 30 days after the from the Assistant Secretary, pursuant completion of the audit, Lead Agencies to paragraph (f) of this section; or shall submit a copy of their audit re- (ii) By following the procedure in port to the legislature of the State or, paragraph (d) of this section. if applicable, to the Tribal Council(s). (d) A Lead Agency may appeal the Lead Agencies shall also submit a copy disallowance decision to the Depart- of their audit report to the HHS In- mental Appeals Board in accordance spector General for Audit Services, as with 45 CFR part 16. well as to their cognizant agency, if ap- (e) The Lead Agency may appeal a plicable. disallowance of costs that the Depart- (d) Any amounts determined through ment has determined to be unallowable an audit not to have been expended in under an award. A grantee may not ap- accordance with these statutory or reg- peal the determination of award ulatory provisions, or with the Plan, amounts or disposition of unobligated and that are subsequently disallowed balances. by the Department shall be repaid to (f) The Lead Agency’s request for re- the Federal government, or the Sec- consideration in (c)(2)(i) of this section retary will offset such amounts against shall be postmarked no later than 30 any other CCDF funds to which the days after the receipt of the disallow- Lead Agency is or may be entitled. ance notice. A Lead Agency may re- (e) Lead Agencies shall provide ac- quest an extension within the 30-day cess to appropriate books, documents, time frame. The request for reconsider- papers and records to allow the Sec- ation, pursuant to (c)(2)(i) of this secretary to verify that CCDF funds have tion, need not follow any prescribed been expended in accordance with the form, but it shall contain: statutory and regulatory requirements (1) The amount of the disallowance; of the program, and with the Plan. (2) The Lead Agency’s reasons for be- (f) The audit required in paragraph lieving that the disallowance was im- (a) of this section shall be conducted by proper; and

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(3) A copy of the disallowance deci- Subpart H—Program Reporting sion issued pursuant to paragraph (b) Requirements of this section. (g)(1) Upon receipt of a request for re- § 98.70 Reporting requirements. consideration, pursuant to (c)(2)(i) of (a) Quarterly Case-level Report— this section, the Assistant Secretary or (1) State and territorial Lead Agen- the Assistant Secretary’s designee will cies that receive assistance under the inform the Lead Agency that the re- CCDF shall prepare and submit to the quest is under review. Department, in a manner specified by (2) The Assistant Secretary or the the Secretary, a quarterly case-level designee will review any material sub- report of monthly family case-level mitted by the Lead Agency and any data. Data shall be collected monthly other necessary materials. and submitted quarterly. States may (3) If the reconsideration decision is submit the data monthly if they choose to do so. adverse to the Lead Agency’s position, (2) The information shall be reported the response will include a notification for the three-month federal fiscal pe- of the Lead Agency’s right to appeal to riod preceding the required report. The the Departmental Appeals Board, pur- first report shall be submitted no later suant to paragraph (d) of this section. than August 31, 1998, and quarterly (h) If a Lead Agency refuses to repay thereafter. The first report shall in- amounts after a final decision has been clude data from the third quarter of made, the amounts will be offset FFY 1998 (April 1998 through June against future payments to the Lead 1998). States and Territorial Lead Agency. Agencies which choose to submit case- (i) The appeals process in this section level data monthly must submit their is not applicable if the disallowance is report for April 1998 no later than July part of a compliance review, pursuant 30, 1998. Following reports must be sub- to § 98.90, the findings of which have mitted every thirty days thereafter. been appealed by the Lead Agency. (3) State and territorial Lead Agen- (j) Disallowances under the CCDF cies choosing to submit data based on a sample shall submit a sampling plan to program are subject to interest regula- ACF for approval 60 days prior to the tions at 45 CFR part 30. Interest will submission of the first quarterly re- begin to accrue from the date of notifi- port. States are not prohibited from cation. submitting case-level data for the entire population receiving CCDF serv- § 98.67 Fiscal requirements. ices. (a) Lead Agencies shall expend and (4) Quarterly family case-level re- account for CCDF funds in accordance ports to the Secretary shall include the with their own laws and procedures for information listed in § 98.71(a). expending and accounting for their own (b) Annual Report— funds. (1) State and territorial Lead Agen- (b) Unless otherwise specified in this cies that receive assistance under part, contracts that entail the expendi- CCDF shall prepare and submit to the ture of CCDF funds shall comply with Secretary an annual report. The report the laws and procedures generally ap- shall be submitted, in a manner speci- plicable to expenditures by the con- fied by the Secretary, by December 31 tracting agency of its own funds. of each year and shall cover the most recent federal fiscal year (October (c) Fiscal control and accounting pro- through September). cedures shall be sufficient to permit: (2) The first annual aggregate report (1) Preparation of reports required by shall be submitted no later than De- the Secretary under this subpart and cember 31, 1997, and every twelve under subpart H; and months thereafter. (2) The tracing of funds to a level of (3) Biennial reports to Congress by expenditure adequate to establish that the Secretary shall include the infor- such funds have not been used in viola- mation listed in § 98.71(b). tion of the provisions of this part. (c) Tribal Annual Report—

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(1) Tribal Lead Agencies that receive (11) The total expected dollar amount assistance under CCDF shall prepare per month to be received by the pro- and submit to the Secretary an annual vider for each child; aggregate report. (12) The total hours per month of (2) The report shall be submitted in such care; the manner specified by the Secretary (13) Social Security Number of the by December 31 of each year and shall head of the family unit receiving child cover services for children and families care assistance; served with CCDF funds during the pre- (14) Reasons for receiving care; and ceding Federal Fiscal Year. (15) Any additional information that (3) Biennial reports to Congress by the Secretary shall require. the Secretary shall include the information listed in § 98.71(c). (b) At a minimum, a State or territorial Lead Agency’s annual aggregate § 98.71 Content of reports. report to the Secretary, as required in (a) At a minimum, a State or terri- § 98.70(b), shall include the following in- torial Lead Agency’s quarterly case- formation on services provided through level report to the Secretary, as re- all CCDF grant funds, including Fed- quired in § 98.70, shall include the fol- eral Discretionary (which includes any lowing information on services pro- funds transferred from the TANF Block vided under CCDF grant funds, includ- Grant), Mandatory, and Matching ing Federal Discretionary (which in- Funds; and State Matching and MOE cludes any funds transferred from the Funds: TANF Block Grant), Mandatory, and (1) The number of child care pro- Matching Funds; and State Matching viders that received funding under and Maintenance-of-Effort (MOE) CCDF as separately identified based on Funds: the types of providers listed in section (1) The total monthly family income 658P(5) of the amended Child Care and for determining eligibility; Development Block Grant Act; (2) County of residence; (2) The number of children served by (3) Gender and month/year of birth of payments through certificates or children; vouchers, contracts or grants, and cash (4) Ethnicity and race of children; under public benefit programs, listed (5) Whether the head of the family is by the primary type of child care serv- a single parent; ices provided during the last month of (6) The sources of family income, the report period (or the last month of from employment (including self-em- service for those children leaving the ployment), cash or other assistance program before the end of the report under the Temporary Assistance for period); Needy Families program under Part A (3) The manner in which consumer of title IV of the Social Security Act, education information was provided to cash or other assistance under a State parents and the number of parents to program for which State spending is whom such information was provided; counted toward the maintenance of ef- (4) The total number (without dupli- fort requirement under section 409(a)(7) cation) of children and families served of the Social Security Act, housing as- under CCDF; and sistance, assistance under the Food Stamp Act of 1977; and other assistance (5) Any additional information that programs; the Secretary shall require. (7) The month/year child care assist- (c) At a minimum, a Tribal Lead ance to the family started; Agency’s annual report to the Sec- (8) The type(s) of child care in which retary, as required in § 98.70(c), shall in- the child was enrolled (such as family clude the following information on child care, in-home care, or center- services provided through all CCDF based child care); tribal grant awards: (9) Whether the child care provider (1) Unduplicated number of families involved was a relative; and children receiving services; (10) The total monthly child care co- (2) Children served by age; payment by the family; (3) Children served by reason for care;

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(4) Children served by payment meth- in this part, or that would otherwise od (certificate/voucher or contract/ meet the eligibility requirements if the grants); Tribe or tribal organization had at (5) Average number of hours of care least 50 children under 13 years of age; provided per week; and (6) Average hourly amount paid for (3) All the participating consortium care; members are in geographic proximity (7) Children served by level of family to one another (including operation in income; and a multi-State area) or have an existing (8) Children served by type of child consortium arrangement; and care providers. (4) The consortium demonstrates that it has the managerial, technical Subpart I—Indian Tribes and administrative staff with the ability to administer government funds, § 98.80 General procedures and re- manage a CCDF program and comply quirements. with the provisions of the Act and of An Indian Tribe or tribal organiza- this part. tion (as described in Subpart G of these (d) The awarding of a grant under regulations) may be awarded grants to this section shall not affect the eligi- plan and carry out programs for the bility of any Indian child to receive purpose of increasing the availability, CCDF services provided by the State or affordability, and quality of child care States in which the Indian Tribe is lo- and childhood development programs cated. subject to the following conditions: (e) For purposes of the CCDF, the de- (a) An Indian Tribe applying for or termination of the number of children receiving CCDF funds shall be subject in the Tribe, pursuant to paragraph to all the requirements under this part, (b)(1) of this section, shall include In- unless otherwise indicated. dian children living on or near reserva- (b) An Indian Tribe applying for or tions, with the exception of Tribes in receiving CCDF funds shall: Alaska, California and Oklahoma. (1) Have at least 50 children under 13 (f) In determining eligibility for serv- years of age (or such similar age, as de- ices pursuant to § 98.20(a)(2), a tribal termined by the Secretary from the program may use either: best available data) in order to be eligi- (1) 85 percent of the State median in- ble to operate a CCDF program. This come for a family of the same size; or limitation does not preclude an Indian (2) 85 percent of the median income Tribe with fewer than 50 children under for a family of the same size residing in 13 years of age from participating in a the area served by the Tribal Lead consortium that receives CCDF funds; Agency. and (2) Demonstrate its current service § 98.81 Application and Plan proce- delivery capability, including skills, dures. personnel, resources, community support, and other necessary components (a) In order to receive CCDF funds, a to satisfactorily carry out the proposed Tribal Lead Agency shall apply for program. funds pursuant to § 98.13, except that (c) A consortium representing more the requirement at § 98.13(b)(2) does not than one Indian Tribe may be eligible apply. to receive CCDF funds on behalf of a (b) A Tribal Lead Agency shall sub- particular Tribe if: mit a CCDF Plan, as described at (1) The consortium adequately dem- § 98.16, with the following additions and onstrates that each participating Tribe exceptions: authorizes the consortium to receive (1) The Plan shall include the basis CCDF funds on behalf of each Tribe or for determining family eligibility pur- tribal organization in the consortium; suant to § 98.80(f). and (2) For purposes of determining eligi- (2) The consortium consists of Tribes bility, the following terms shall also be that each meet the eligibility require- defined: ments for the CCDF program as defined (i) Indian child; and

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(ii) Indian reservation or tribal serv- States in which the applicant will ice area. carry out the CCDF program; and (3) The Tribal Lead Agency shall also (b) With other Federal, State, local, assure that: and tribal child care and childhood de- (i) The applicant shall coordinate, to velopment programs. the maximum extent feasible, with the Lead Agency in the State in which the § 98.83 Requirements for tribal pro- applicant shall carry out CCDF programs. grams or activities, pursuant to § 98.82; (a) The grantee shall designate an and agency, department, or unit to act as (ii) In the case of an applicant lo- the Tribal Lead Agency to administer cated in a State other than Alaska, the CCDF program. California, or Oklahoma, CCDF pro- (b) With the exception of Alaska, grams and activities shall be carried California, and Oklahoma, programs out on an Indian reservation for the and activities shall be carried out on benefit of Indian children, pursuant to an Indian reservation for the benefit of § 98.83(b). Indian children. (4) The Plan shall include any infor- (c) In the case of a tribal grantee mation, as prescribed by the Secretary, that is a consortium: necessary for determining the number (1) A brief description of the direct of children in accordance with child care services funded by CCDF for §§ 98.61(c), 98.62(c), and 98.80(b)(1). each of their participating Tribes shall (5) Plans for those Tribes specified at be provided by the consortium in their § 98.83(f) (i.e., Tribes with small grants) two-year CCDF Plan; and are not subject to the requirements in (2) Variations in CCDF programs or § 98.16(g)(2) or § 98.16(k) unless the Tribe requirements and in child care licens- chooses to include such services, and, ing, regulatory and health and safety therefore, the associated requirements, requirements shall be specified in writ- in its program. ten agreements between the consor- (6) The Plan is not subject to require- tium and the Tribe. ments in § 98.16(f)(8) or § 98.16(g)(4). (3) If a Tribe elects to participate in (7) In its initial Plan, an Indian Tribe a consortium arrangement to receive shall describe its current service deliv- one part of the CCDF (e.g., Discre- ery capability pursuant to § 98.80(b)(2). tionary Funds), it may not join an- (8) A consortium shall also provide other consortium or apply as a direct the following: grantee to receive the other part of the (i) A list of participating or con- CCDF (e.g. Tribal Mandatory Funds). stituent members, including dem- (4) If a Tribe relinquishes its mem- onstrations from these members pursu- bership in a consortium at any time ant to § 98.80(c)(1); during the fiscal year, CCDF funds (ii) A description of how the consor- awarded on behalf of the member Tribe tium is coordinating services on behalf will remain with the tribal consortium of its members, pursuant to § 98.83(c)(1); to provide direct child care services to and other consortium members for that fis- (iii) As part of its initial Plan, the cal year. additional information required at (d) Tribal Lead Agencies shall not be § 98.80(c)(4). subject to the requirements at (c) When initially applying under §§ 98.41(a)(1)(i), 98.44(a), 98.50(e), 98.52(a), paragraph (a) of this section, a Tribal 98.53 and 98.63. Lead Agency shall include a Plan that (e) The base amount of any tribal meets the provisions of this part and grant is not subject to the administra- shall be for a two-year period, pursuant tive cost limitation at paragraph (g) of to § 98.17(a). this section or the quality expenditure requirement at § 98.51(a). The base § 98.82 Coordination. amount may be expended for any costs Tribal applicants shall coordinate as consistent with the purposes and re- required by §§ 98.12 and 98.14 and: quirements of the CCDF. (a) To the maximum extent feasible, (f) Tribal Lead Agencies whose total with the Lead Agency in the State or CCDF allotment pursuant to §§ 98.61(c)

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and 98.62(b) is less than an amount es- ices provided by the Tribal Lead Agen- tablished by the Secretary shall not be cy as compared to the level of services subject to the following requirements: provided by the Tribal Lead Agency in (1) The assurance at § 98.15(a)(2); the preceding fiscal year. (2) The requirement for certificates (c)(1) Tribal Lead Agency may use at § 98.30(a) and (d); and CCDF funds for reasonable and nec- (3) The requirements for quality ex- essary planning costs associated with penditures at § 98.51(a). assessing the need for construction or (g) Not more than 15 percent of the renovation or for preparing a request, aggregate CCDF funds expended by the in accordance with the uniform proce- Tribal Lead Agency from each fiscal dures established by program instruc- year’s (including amounts used for con- tion, to spend CCDF funds on construc- struction and renovation in accordance tion or major renovation. with § 98.84, but not including the base (2) A Tribal Lead Agency may only amount provided under § 98.83(e)) shall use CCDF funds to pay for the costs of be expended for administrative activi- an architect, engineer, or other con- ties. Amounts used for construction sultant for a project that is subse- and major renovation in accordance quently approved by the Secretary. If with § 98.84 are not considered adminis- the project later fails to gain the Sec- trative costs. retary’s approval, the Tribal Lead (h)(1) CCDF funds are available for Agency must pay for the architectural, costs incurred by the Tribal Lead engineering or consultant costs using Agency only after the funds are made non-CCDF funds. available by Congress for Federal obli- (d) Tribal Lead Agencies that receive gation unless costs are incurred for approval from the Secretary to use planning activities related to the sub- CCDF funds for construction or major mission of an initial CCDF Plan. renovation shall comply with the fol- (2) Federal obligation of funds for lowing: planning costs, pursuant to paragraph (1) Federal share requirements and (h)(1) of this section is subject to the use of property requirements at 45 CFR actual availability of the appropria- 92.31; tion. (2) Transfer and disposition of property requirements at 45 CFR 92.31(c); § 98.84 Construction and renovation of child care facilities. (3) Title requirements at 45 CFR 92.31(a); (a) Upon requesting and receiving ap- (4) Cost principles and allowable cost proval from the Secretary, Tribal Lead requirements at 45 CFR 92.22; Agencies may use amounts provided (5) Program income requirements at under §§ 98.61(c) and 98.62(b) to make 45 CFR 92.25; payments for construction or major renovation of child care facilities (in- (6) Procurement procedures at 45 cluding paying the cost of amortizing CFR 92.36; and; the principal and paying interest on (7) Any additional requirements es- loans). tablished by program instruction, in- (b) To be approved by the Secretary, cluding requirements concerning: a request shall be made in accordance (i) The recording of a Notice of Fed- with uniform procedures established by eral Interest in the property; program instruction and, in addition, (ii) Rights and responsibilities in the shall demonstrate that: event of a grantee’s default on a mort- (1) Adequate facilities are not other- gage; wise available to enable the Tribal (iii) Insurance and maintenance; Lead Agency to carry out child care (iv) Submission of plans, specifica- programs; tions, inspection reports, and other (2) The lack of such facilities will in- legal documents; and hibit the operation of child care pro- (v) Modular units. grams in the future; and (e) In lieu of obligation and liquida- (3) The use of funds for construction tion requirements at § 98.60(e), Tribal or major renovation will not result in a Lead Agencies shall liquidate CCDF decrease in the level of child care serv- funds used for construction or major

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renovation by the end of the second fis- period as may be agreed upon between cal year following the fiscal year for the Lead Agency and the Secretary). which the grant is awarded. (c) Pursuant to an investigation con- (f) Tribal Lead Agencies may expend ducted under paragraph (a) of this sec- funds, without requesting approval tion, a Lead Agency shall make appro- pursuant to paragraph (a) of this sec- priate books, documents, papers, tion, for minor renovation. manuals, instructions, and records (g) A new tribal grantee (i.e., one available to the Secretary, or any duly that did not receive CCDF funds the authorized representatives, for exam- preceding fiscal year) may spend no ination or copying on or off the prem- more than an amount equivalent to its ises of the appropriate entity, includ- Tribal Mandatory allocation on construction and renovation. A new tribal ing subgrantees and contractors, upon grantee must spend an amount equiva- reasonable request. lent to its Discretionary allocation on (d)(1) Lead Agencies and subgrantees activities other than construction or shall retain all CCDF records, as speci- renovation (i.e., direct services, quality fied in paragraph (c) of this section, activities, or administrative costs). and any other records of Lead Agencies (h) A construction or renovation and subgrantees that are needed to project that requires and receives ap- substantiate compliance with CCDF re- proval by the Secretary must include quirements, for the period of time spec- as part of the construction and renova- ified in paragraph (e) of this section. tion costs: (2) Lead Agencies and subgrantees (1) planning costs as allowed at shall provide through an appropriate § 98.84(c); provision in their contracts that their (2) labor, materials and services nec- contractors will retain and permit ac- essary for the functioning of the facil- cess to any books, documents, papers, ity; and and records of the contractor that are (3) initial equipment for the facility. directly pertinent to that specific con- Equipment means items which are tan- tract. gible, nonexpendable personal property (e) Length of retention period. (1) Ex- having a useful life of more than five cept as provided in paragraph (e)(2) of years. this section, records specified in paragraph (c) of this section shall be re- Subpart J—Monitoring, Non- tained for three years from the day the compliance and Complaints Lead Agency or subgrantee submits the Financial Reports required by the Sec- § 98.90 Monitoring. retary, pursuant to § 98.65(g), for the (a) The Secretary will monitor pro- program period. grams funded under the CCDF for com- (2) If any litigation, claim, negotia- pliance with: tion, audit, disallowance action, or (1) The Act; other action involving the records has (2) The provisions of this part; and been started before the expiration of (3) The provisions and requirements the three-year retention period, the set forth in the CCDF Plan approved records shall be retained until comple- under § 98.18; tion of the action and resolution of all (b) If a review or investigation re- issues that arise from it, or until the veals evidence that the Lead Agency, end of the regular three-year period, or an entity providing services under whichever is later. contract or agreement with the Lead Agency, has failed to substantially § 98.91 Non-compliance. comply with the Plan or with one or more provisions of the Act or imple- (a) If after reasonable notice to a menting regulations, the Secretary Lead Agency, pursuant to § 98.90 or will issue a preliminary notice to the § 98.93, a final determination is made Lead Agency of possible non-compli- that: ance. The Secretary shall consider (1) There has been a failure by the comments received from the Lead Lead Agency, or by an entity providing Agency within 60 days (or such longer services under contract or agreement

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with the Lead Agency, to comply sub- Lead Agency has failed to implement a stantially with any provision or re- provision of the Act, these regulations, quirement set forth in the Plan ap- or the Plan required under § 98.16; proved under § 98.16; or (ii) This penalty will be withheld no (2) If in the operation of any program earlier than the second full quarter fol- for which funding is provided under the lowing the quarter in which the Lead CCDF, there is a failure by the Lead Agency was notified of the proposed Agency, or by an entity providing serv- penalty; ices under contract or agreement with (iii) This penalty will not be applied the Lead Agency, to comply substan- if the Lead Agency corrects the failure tially with any provision of the Act or or violation before the penalty is to be this part, the Secretary will provide to applied or if it submits a plan for cor- the Lead Agency a written notice of a rective action that is acceptable to the finding of non-compliance. This notice Secretary; or will be issued within 60 days of the pre- (iv) The Lead Agency may show liminary notification in § 98.90(b), or cause to the Secretary why the amount within 60 days of the receipt of addi- of the penalty, if applied, should be re- tional comments from the Lead Agen- duced. cy, whichever is later, and will provide (c) If a Lead Agency is subject to ad- the opportunity for a hearing, pursuant ditional sanctions as provided under to part 99. paragraph (b) of this section, specific (b) The notice in paragraph (a) of this identification of any additional sanc- section will include all relevant find- tions being imposed will be provided in ings, as well as any penalties or sanc- the notice provided pursuant to § 98.91. tions to be applied, pursuant to § 98.92. (c) Issues subject to review at the (d) Nothing in this section, or in hearing include the finding of non-com- § 98.90 or § 98.91, will preclude the Lead pliance, as well as any penalties or Agency and the Department from in- sanctions to be imposed pursuant to formally resolving a possible compli- § 98.92. ance issue without following all of the steps described in §§ 98.90, 98.91 and § 98.92 Penalties and sanctions. 98.92. Penalties and/or sanctions, as described in paragraphs (a) and (b) of this (a) Upon a final determination that section, may nevertheless be applied, the Lead Agency has failed to substan- even though the issue is resolved infor- tially comply with the Act, the imple- mally. menting regulations, or the Plan, one of the following penalties will be ap- (e) It is at the Secretary’s sole discre- plied: tion to choose the penalty to be im- (1) The Secretary will disallow the posed under paragraphs (a) and (b) of improperly expended funds; this section. (2) An amount equal to or less than § 98.93 Complaints. the improperly expended funds will be deducted from the administrative por- (a) This section applies to any com- tion of the State allotment for the fol- plaint (other than a complaint alleging lowing fiscal year; or violation of the nondiscrimination pro- (3) A combination of the above op- visions) that a Lead Agency has failed tions will be applied. to use its allotment in accordance with (b) In addition to imposing the pen- the terms of the Act, the implementing alties described in paragraph (a) of this regulations, or the Plan. The Secretary section, the Secretary may impose is not required to consider a complaint other appropriate sanctions, including: unless it is submitted as required by (1) Disqualification of the Lead Agen- this section. Complaints with respect cy from the receipt of further funding to discrimination should be referred to under the CCDF; or the Office of Civil Rights of the Depart- (2)(i) A penalty of not more than four ment. percent of the funds allotted under (b) Complaints with respect to the § 98.61 (i.e., the Discretionary Funds) CCDF shall be submitted in writing to for a Fiscal Year shall be withheld if the Assistant Secretary for Children the Secretary determines that the and Families, 370 L’Enfant Promenade,

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SW., Washington, DC 20447. The comments in the sample compared to the plaint shall identify the provision of total dollar amount of payments made the Plan, the Act, or this part that was in the sample); the average amount of allegedly violated, specify the basis for improper payment; and the estimated alleging the violation(s), and include annual amount of improper payments. all relevant information known to the The report also will provide strategies person submitting it. for reducing their error rates and allow (c) The Department shall promptly States, the District of Columbia and furnish a copy of any complaint to the Puerto Rico to set target error rates affected Lead Agency. Any comments for the next cycle. received from the Lead Agency within (c) Error Defined—For purposes of 60 days (or such longer period as may this subpart, an ‘‘error’’ shall mean be agreed upon between the Lead Agen- any violation or misapplication of stat- cy and Department) shall be considered utory, contractual, administrative, or by the Department in responding to other legally applicable requirements the complaint. The Department will governing the administration of CCDF conduct an investigation of com- grant funds, regardless of whether such plaints, where appropriate. violation results in an improper pay- (d) The Department will provide a ment. written response to complaints within (d) Improper Payment Defined—For 180 days after receipt. If a final resolu- purposes of this subpart, ‘‘improper tion cannot be provided at that time, payment.’’ the response will state the reasons why (1) Means any payment of CCDF additional time is necessary. grant funds that should not have been (e) Complaints that are not satisfac- made or that was made in an incorrect torily resolved through communication amount (including overpayments and with the Lead Agency will be pursued underpayments) under statutory, con- through the process described in § 98.90. tractual, administrative, or other legally applicable requirements gov- Subpart K—Error Rate Reporting erning the administration of CCDF grant funds; and SOURCE: 72 FR 50898, Sept. 5, 2007, unless (2) Includes any payment of CCDF otherwise noted. grant funds to an ineligible recipient, any payment of CCDF grant funds for § 98.100 Error Rate Report. an ineligible service, any duplicate (a) Applicability—The requirements of payment of CCDF grant funds and pay- this subpart apply to the fifty States, ments of CCDF grant funds for services the District of Columbia and Puerto not received. Rico. (e) Costs of Preparing the Error Rate (b) Generally—States, the District of Report—Provided the error rate cal- Columbia and Puerto Rico shall calculations and reports focus on client culate, prepare and submit to the De- eligibility, expenses incurred by the partment, a report of errors occurring States, the District of Columbia and in the administration of CCDF grant Puerto Rico in complying with this funds, at times and in a manner speci- rule, including preparation of required fied by the Secretary in instructions. reports, shall be considered a cost of di- States, the District of Columbia and rect service related to eligibility deter- Puerto Rico must use this report to mination and therefore is not subject calculate their error rates, which is de- to the five percent limitation on CCDF fined as the percentage of cases with an administrative costs pursuant to Sec- error (expressed as the total number of tion 98.52(a). cases with an error compared to the total number of cases); the percentage § 98.101 Case Review Methodology. of cases with an improper payment (ex- (a) Case Reviews and Sampling—In pre- pressed as the total number of cases paring the error reports required by with an improper payment compared to this subpart, States, the District of Co- the total number of cases); the percent- lumbia and Puerto Rico shall conduct age of improper payments (expressed as comprehensive reviews of case records the total amount of improper pay- using a methodology established by the

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Secretary. For purposes of the case re- Funds and State Matching and Mainte- views, States, the District of Columbia nance-of-Effort (MOE Funds): and Puerto Rico shall select a random (1) Percentage of cases with an error sample of case records which is esti- (regardless of whether such error re- mated to achieve the calculation of an sulted in an over or under payment), estimated annual amount of improper expressed as the total number of cases payments with a 90 percent confidence in the sample with an error compared interval of ±5.0 percent. to the total number of cases in the (b) Methodology and Forms—States, sample; the District of Columbia and Puerto (2) Percentage of cases with an im- Rico must prepare and submit forms proper payment (both over and under issued by the Secretary, following the payments), expressed as the total num- accompanying instructions setting ber of cases in the sample with an im- forth the methodology to be used in proper payment compared to the total conducting case reviews and calcu- number of cases in the sample; lating the error rates. (3) Percentage of improper payments (c) Reporting Frequency and Cycle— (both over and under payments), ex- States, the District of Columbia and pressed as the total dollar amount of Puerto Rico shall conduct case reviews improper payments in the sample com- and submit error rate reports to the pared to the total dollar amount of Department according to a staggered payments made in the sample; three-year cycle established by the (4) Average amount of improper pay- Secretary such that each State, the ments (gross over and under payments, District of Columbia, and Puerto Rico divided by the total number of cases in will be selected once, and only once, in the sample that had an improper pay- every three years. ment (both over and under payments)); (d) Access to Federal Staff—States, the (5) Estimated annual amount of im- District of Columbia and Puerto Rico proper payments (which is a projection must provide access to Federal staff to participate and provide oversight in of the results from the sample to the case reviews and error rate calcula- universe of cases statewide during the tions, including access to forms related 12-month review period) calculated by to determining error rates. multiplying the percentage of improper payments by the total dollar amount of (e) Record Retention—Records perti- child care payments that the State, the nent to the case reviews and submis- District of Columbia or Puerto Rico sion of error rate reports shall be retained for a period of five years from paid during the 12-month review period the date of submission of the applica- (6) For each category of data listed ble error rate report or, if the error above, targets for errors and improper rate report was revised, from the date payments in the next reporting cycle; of submission of the revision. Records (7) Summary of methodology used to must be made available to Federal arrive at estimate, including fieldwork staff upon request. preparation, sample generation, record review and error rate computation § 98.102 Content of Error Rate Re- processes; ports. (8) Discussion of the causes of im- (a) Baseline Submission Report—At a proper payments identified and actions minimum, States, the District of Co- that will be taken to correct those lumbia and Puerto Rico shall submit causes in order to reduce the error an initial error rate report to the De- rates; partment, as required in § 98.100, which (9) Description of the information includes the following information on systems and other infrastructure that errors and resulting improper pay- assist the State, the District of Colum- ments occurring in the administration bia and Puerto Rico in identifying and of CCDF grant funds, including Federal reducing improper payments, or if the Discretionary Funds (which includes State, the District of Columbia or any funds transferred from the TANF Puerto Rico does not have these tools, Block Grant), Mandatory and Matching a description of actions that will be

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taken to acquire the necessary infor- 99.4 Suspension of rules. mation systems and other infrastruc- 99.5 Filing and service of papers. ture; and (10) Such other information as speci- Subpart B—Preliminary Matters—Notice fied by the Secretary. and Parties (b) Standard Report—At a minimum, 99.11 Notice of hearing or opportunity for the State, the District of Columbia and hearing. Puerto Rico shall submit an error rate 99.12 Time of hearing. report to the Department, as required 99.13 Place. in § 98.100, made subsequent to the 99.14 Issues at hearing. baseline submission report as set forth 99.15 Request to participate in hearing. in § 98.102(a) which includes the fol- Subpart C—Hearing Procedures lowing information on errors and resulting improper payments occurring 99.21 Authority of presiding officer. in the administration of CCDF grant 99.22 Rights of parties. funds, including Federal Discretionary 99.23 Discovery. Funds (which includes any funds trans- 99.24 Evidentiary purpose. 99.25 Evidence. ferred from the TANF Block Grant), 99.26 Unsponsored written material. Mandatory and Matching Funds and 99.27 Official transcript. State Matching and Maintenance-of- 99.28 Record for decision. Effort (MOE Funds): (1) All the information reported in Subpart D—Posthearing Procedures, the baseline submission, as set forth in Decisions § 98.102(a), updated for the current cycle; 99.31 Posthearing briefs. 99.32 Decisions following hearing. (2) For each category of data listed in 99.33 Effective date of Assistant Secretary’s § 98.102(a)(1) through (5), States, the decision. District of Columbia and Puerto Rico must include data and targets from the AUTHORITY: 42 U.S.C. 618, 9858. prior cycle in addition to data from the SOURCE: 57 FR 34428, Aug. 4, 1992, unless current cycle and targets for the next otherwise noted. cycle; EDITORIAL NOTE: Nomenclature changes to (3) Description of whether the State, part 99 appear at 63 FR 39998, July 24, 1998. the District of Columbia or Puerto Rico met error rate targets set in the Subpart A—General prior cycle and, if not, an explanation of why not; § 99.1 Scope of rules. (4) Discussion of the causes of im- (a) The rules of procedure in this sec- proper payments identified in the prior tion govern the practice for hearings cycle and actions that were taken to afforded by the Department to Lead correct those causes, in addition to a Agencies pursuant to §§ 98.18(c) or 98.91, discussion on the causes of improper and the practice relating to the deci- payments identified in the current sions of such hearings. cycle and actions that will be taken to (b) Nothing in this part is intended to correct those causes in order to reduce preclude or limit negotiations between the error rates; and the Department and the Lead Agency, (5) Such other information as speci- whether before, during, or after the fied by the Secretary. hearing, to resolve the issues which are, or otherwise would be, considered at the hearing. Such negotiations and PART 99—PROCEDURE FOR HEAR resolution of issues are not part of the INGS FOR THE CHILD CARE AND hearing and are not governed by the DEVELOPMENT FUND rules in this part, except as expressly provided herein. Subpart A—General § 99.2 Presiding officer. Sec. 99.1 Scope of rules. (a) (1) The presiding officer at a hear- 99.2 Presiding officer. ing shall be the Assistant Secretary or 99.3 Records to be public. the Assistant Secretary’s designee.

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(2) The designation of the presiding § 99.12 Time of hearing. officer shall be in writing. A copy of The hearing shall be scheduled not the designation shall be served on all less than 30 days nor more than 90 days parties. after the date of the notice of the hear- (b) The presiding officer, for all hearing furnished to the applicant or Lead ings, shall be bound by all applicable Agency, unless otherwise agreed to, in laws and regulations. writing, by the parties.

§ 99.3 Records to be public. § 99.13 Place. All pleadings, correspondence, exhib- The hearing shall be held in the city its, transcripts of testimony, excep- in which the regional office of the De- tions, briefs, decisions, and other docu- partment responsible for oversight of ments filed in the docket in any pro- the Lead Agency is located or in such ceeding may be inspected and copied in other place as the Assistant Secretary determines, considering both the cir- the office of the Assistant Secretary. cumstances of the case and the conven- Inquiries may be made at the Adminis- ience and necessity of the parties or tration for Children and Families, 370 their representatives. L’Enfant Promenade SW., Washington, DC 20447. § 99.14 Issues at hearing. (a) The Assistant Secretary may, § 99.4 Suspension of rules. prior to a hearing under § 98.91 of this With notice to all parties, the Assist- part, notify the Lead Agency in writing ant Secretary for Children and Fami- of additional issues which will be con- lies or the presiding officer, with re- sidered at the hearing. Such notice spect to pending matters, may modify shall be published in the FEDERAL REG- or waive any rule in this part upon de- ISTER. If such notice is received by the termination that no party will be un- Lead Agency less than 20 days before duly prejudiced and the ends of justice the date of the hearing, a postpone- will thereby be served. ment of the hearing shall be granted at the request of the Lead Agency or any § 99.5 Filing and service of papers. other party. The hearing shall be held on a date 20 days after such notice was (a) An original and two copies of all received, or on such later date as papers in the proceedings shall be filed agreed to by the Assistant Secretary. with the presiding officer. For exhibits (b) If, as a result of negotiations be- and transcripts of testimony, only the tween the Department and the Lead originals need be filed. Agency, the submittal of a Plan (b) All papers in the proceedings shall amendment, a change in the Lead be served on all parties by personal de- Agency program, or other action by livery or by certified mail. Service on the Lead Agency, any issue is resolved the party’s designated attorney will be in whole or in part, but new or modi- deemed service on the party. fied issues are presented, as specified by the Assistant Secretary, the hearing shall proceed on such new or modified Subpart B—Preliminary Matters— issues. A notice of such new or modi- Notice and Parties fied issues shall be published in the FEDERAL REGISTER. If such notice is re- § 99.11 Notice of hearing or oppor- ceived by the Lead Agency less than 20 tunity for hearing. days before the date of the hearing, a Proceedings commence when the As- postponement of the hearing shall be sistant Secretary mails a notice of granted at the request of the Lead hearing or opportunity for hearing to Agency or any other party. The hear- the Lead Agency. The notice shall ing shall be held on a date 20 days after state the time and place for the hear- such notice was received, or on such ing, and the issues which will be con- later date as agreed to by the Assistant sidered. A copy of the notice shall be Secretary. published in the FEDERAL REGISTER. (c)(1) If, at any time, the Assistant Secretary finds that the Lead Agency

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has come into compliance with Federal (i) Petitioner’s interest in the pro- statutes and regulations on any issue, ceeding; in whole or in part, the Assistant Sec- (ii) Who will appear for petitioner; retary shall remove such issue from (iii) The issues on which petitioner the proceedings, in whole or in part, as wishes to participate; and may be appropriate. If all issues are re- (iv) Whether petitioner intends to moved, the Assistant Secretary shall present witnesses. terminate the hearing. (3) Any party may, within 5 days of (2) Prior to the removal of any issue receipt of such petition, file comments from the hearing, in whole or in part, on it. the Assistant Secretary shall provide (4) The presiding officer shall all parties other than the Department promptly determine whether each peti- and the Lead Agency (see § 99.15(b)) tioner has the requisite interest in the with written notice of the intention, proceedings and shall permit or deny and the reasons for it. Such notice participation accordingly. Where peti- shall include a copy of the proposed tions to participate as parties are made CCDF Plan provision on which the by individuals or groups with common Lead Agency and Assistant Secretary interests, at the presiding officer’s dis- have settled. The parties shall have 15 cretion, the presiding officer may re- days from the receipt of such notice to quest that all such petitioners des- file their views or any information on ignate a single representative or may the merits of the proposed Plan provi- recognize one or more of such peti- sion and the merits of the Assistant tioners to represent all such peti- Secretary’s reasons for removing the tioners. The presiding officer shall give issue from the hearing. each petitioner written notice of the (d) The issues considered at the hear- decision on the petition, and if the pe- ing shall be limited to those issues of tition is denied, the presiding officer which the Lead Agency is notified, as shall briefly state the grounds for de- provided in paragraph (a) of this sec- nial. If the petition is denied, the pre- tion, and new or modified issues de- siding officer may recognize the peti- scribed in paragraph (b) of this section; tioner as an amicus curiae. they shall not include issues or parts of (c)(1) Any interested person or orga- issues removed from the proceedings nization wishing to participate as an pursuant to paragraph (c) of this sec- amicus curiae shall file a petition with tion. the presiding officer before the commencement of the hearing. Such peti- § 99.15 Request to participate in hear- tion shall concisely state: ing. (i) The petitioner’s interest in the (a) The Department and the Lead hearing; Agency are parties to the hearing with- (ii) Who will represent the petitioner; out making a specific request to par- and ticipate. (iii) The issues on which petitioner (b)(1) Other individuals or groups intends to present argument. may be recognized as parties, if the An amicus curiae is not a party but issues to be considered at the hearing may participate as provided in this have directly caused them injury and paragraph. their interest is immediately within (2) The presiding officer may grant the zone of interests to be protected by the petition upon finding that the peti- the governing Federal statute and reg- tioner has a legitimate interest in the ulations. proceedings, that such participation (2) Any individual or group wishing will not unduly delay the outcome, and to participate as a party shall file a pe- it may contribute materially to the tition with the presiding officer within proper disposition of the issues. 15 days after notice of the hearing has (3) An amicus curiae may present a been published in the FEDERAL REG- brief oral statement at the hearing, at ISTER and shall serve a copy on each the point in the proceedings specified party of record at that time, in accord- by the presiding officer. The amicus cu- ance with § 99.5(b). Such petition shall riae may submit a written statement concisely state: of position to the presiding officer

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prior to the beginning of a hearing and with the provisions of 5 U.S.C. 551 shall serve a copy on each party. The through 559. amicus curiae may also submit a brief (b) The presiding officer does not or written statement at such time as have authority to compel by subpoena the parties submit briefs and shall the production of witnesses, papers, or serve a copy on each party. other evidence. Subpart C—Hearing Procedures § 99.22 Rights of parties. All parties may: § 99.21 Authority of presiding officer. (a) Appear by counsel or other au- (a) The presiding officer shall have thorized representative, in all hearing the duty to conduct a fair hearing, to proceedings; avoid delay, maintain order, and make (b) Participate in any prehearing a record of the proceedings. The pre- conference held by the presiding offi- siding officer shall have all powers nec- cer; essary to accomplish these ends, in- (c) Agree to stipulations as to facts cluding, but not limited to, the power which will be made a part of the to: record; (1) Change the date, time, and place (d) Make opening statements at the of the hearing, upon due notice to the hearing; parties. This authority includes the (e) Present relevant evidence on the power to continue the hearing in whole or in part; issues at the hearing; (2) Hold conferences to settle or sim- (f) Present witnesses who then must plify the issues in a proceeding, or to be available for cross-examination by consider other matters that may aid in all other parties; the expeditious disposition of the pro- (g) Present oral arguments at the ceeding; hearing; and (3) Regulate participation of parties (h) Submit written briefs, proposed and amici curiae and require parties and findings of fact, and proposed conclu- amici curiae to state their position with sions of law, after the hearing. respect to the various issues in the proceeding; § 99.23 Discovery. (4) Administer oaths and affirma- The Department, the Lead Agency, tions; and any individuals or groups recog- (5) Rule on all pending motions and nized as parties shall have the right to other procedural items including conduct discovery (including deposi- issuance of protective orders or other tions) against opposing parties. Rules relief to a party against whom dis- 26–37 of the Federal Rules of Civil Pro- covery is sought; cedure shall apply to such proceedings; (6) Regulate the course of the hearing there will be no fixed rule on priority and conduct of counsel therein; of discovery. Upon written motion, the (7) Examine witnesses; presiding officer shall promptly rule (8) Receive, rule on, exclude or limit upon any objection to such discovery evidence or discovery; action initiated pursuant to this sec- (9) Fix the time for filing motions, tion. The presiding officer shall also petitions, briefs, or other items in mat- have the power to grant a protective ters pending; order or relief to any party against (10) If the presiding officer is the As- whom discovery is sought and to re- sistant Secretary, make a final deci- strict or control discovery so as to pre- sion; vent undue delay in the conduct of the (11) If the presiding officer is not the hearing. Upon the failure of any party Assistant Secretary, certify the entire to make discovery, the presiding offi- record including the recommended cer may, at the presiding officer’s dis- findings and proposed decision to the cretion, issue any order and impose Assistant Secretary; and any sanction (other than contempt or- (12) Take any action authorized by ders) authorized by rule 37 of the Fed- the rules in this part or in conformance eral Rules of Civil Procedure.

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§ 99.24 Evidentiary purpose. § 99.27 Official transcript. The purpose of the hearing is to re- The Department will designate the ceive factual evidence and expert opin- official reporter for all hearings. The ion testimony related to the issues in official transcripts of testimony taken, the proceeding. Argument will not be together with any stipulations, exhib- received in evidence; rather, it should its, briefs, or memoranda of law filed be presented in statements, memo- therewith shall be filed with the De- randa, or briefs, as determined by the partment. Transcripts of testimony in presiding officer. Brief opening state- hearings may be obtained from the of- ments, which shall be limited to state- ficial reporter by the parties and the ment of the party’s position and what public at rates not to exceed the max- the party intends to prove, may be imum rates fixed by the contract be- made at hearings. tween the Department and the reporter. Upon notice to all parties, the § 99.25 Evidence. presiding officer may authorize correc- (a) Testimony. Testimony shall be tions to the transcript which involve given orally under oath or affirmation matters of substance. by witnesses at the hearing. Witnesses § 99.28 Record for decision. shall be available at the hearing for cross-examination by all parties. The transcript of testimony, exhib- (b) Stipulations and exhibits. Two or its, and all papers and requests filed in more parties may agree to stipulations the proceedings, except the correspond- of fact. Such stipulations, or any ex- ence section of the docket, including hibit proposed by any party, shall be rulings and any recommended or initial exchanged at the prehearing con- decision, shall constitute the exclusive ference or otherwise prior to the hear- record for decision. ing if the presiding officer so requires. (c) Rules of evidence. Technical rules Subpart D—Posthearing of evidence shall not apply to hearings Procedures, Decisions conducted pursuant to this part, but rules or principles designed to assure § 99.31 Posthearing briefs. production of the most credible evi- The presiding officer shall fix the dence available and to subject testi- time for filing posthearing briefs, mony to test by cross-examination which may contain proposed findings of shall be applied where reasonably nec- fact and conclusions of law. The pre- essary by the presiding officer. A wit- siding officer shall also fix the time for ness may be cross-examined on any reply briefs, if permitted. matter material to the proceeding without regard to the scope of direct § 99.32 Decisions following hearing. examination. The presiding officer may (a) If the Assistant Secretary is the exclude irrelevant, immaterial, or un- presiding officer, the Assistant Sec- duly repetitious evidence. All docu- retary shall issue the decision within ments and other evidence offered or 60 days after the time for submission of taken for the record shall be open to posthearing briefs has expired. examination by the parties, and oppor- (b)(1) If the presiding officer is not tunity shall be given to refute facts the Assistant Secretary, the presiding and arguments advanced on either side officer shall certify the entire record, of the issues. including the recommended findings and proposed decision, to the Assistant § 99.26 Unsponsored written material. Secretary within 60 days after the time Letters expressing views or urging for submission of posthearing briefs action and other unsponsored written has expired. The Assistant Secretary material regarding matters at issue in shall serve a copy of the recommended a hearing will be placed in the cor- findings and proposed decision upon all respondence section of the docket of parties, and amici, if any. the proceeding. These data are not (2) Any party may, within 20 days of deemed part of the evidence or record receipt of the recommended findings in the hearing. and proposed decision, file exceptions

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and a supporting brief or statement 100.9 How does the Secretary receive and re- with the Assistant Secretary. spond to comments? (3) The Assistant Secretary shall 100.10 How does the Secretary make efforts thereupon review the recommended de- to accommodate intergovernmental con- cision and, within 45 days after the re- cerns? ceipt of the exceptions to the rec- 100.11 What are the Secretary’s obligations in interstate situations? ommended findings and proposed deci- 100.12 How may a state simplify, consoli- sion, issue the decision. date, or substitute federally required (c) The decision of the Assistant Sec- state plans? retary under this section shall be the 100.13 May the Secretary waive any provi- final decision of the Secretary and sion of these regulations? shall constitute ‘‘final agency action’’ within the meaning of 5 U.S.C. 704. The AUTHORITY: Executive Order 12372, July 14, 1982 (47 FR 30959), as amended April 8, 1983 (48 Assistant Secretary’s decision shall be FR 15887): sec. 401, Intergovernmental Co- promptly served on all parties, and operation Act of 1968, as amended (31 U.S.C. amici, if any. 6506); sec. 204, Demonstration Cities and Met- ropolitan Development Act of 1966, as § 99.33 Effective date of Assistant Sec- amended (42 U.S.C. 3334). retary’s decision. SOURCE: 48 FR 29200, June 24, 1983, unless If, in the case of a hearing pursuant otherwise noted. to § 98.18(b) of this chapter, the Assist- ant Secretary concludes that a Plan § 100.1 What is the purpose of these amendment does not comply with the regulations? Federal statutes and regulations, the (a) The regulations in this part im- decision that further payments will not plement Executive Order 12372, ‘‘Inter- be made to the Lead Agency, or payments will be limited to categories governmental Review of Federal Pro- under other parts of the CCDF Plan not grams,’’ issued July 14, 1982 and amend- affected, shall specify the effective ed on April 8, 1983. These regulations date for the withholding of Federal also implement applicable provisions of funds. section 401 of the Intergovernmental Cooperation Act of 1968 and section 204 of the Demonstration Cities and Metro- PART 100—INTERGOVERNMENTAL politan Development Act of 1966. REVIEW OF DEPARTMENT OF (b) These regulations are intended to HEALTH AND HUMAN SERVICES foster an intergovernmental partner- PROGRAMS AND ACTIVITIES ship and a strengthened Federalism by relying on state processes and on state, Sec. areawide, regional and local coordina- 100.1 What is the purpose of these regulation for review of proposed Federal fi- tions? 100.2 What definitions apply to these regu- nancial assistance and direct Federal lations? development. 100.3 What programs and activities of the (c) These regulations are intended to Department are subject to these regula- aid the internal management of the De- tions? partment, and are not intended to cre- 100.4 [Reserved] ate any right or benefit enforceable at 100.5 What is the Secretary’s obligation law by a party against the Department with respect to Federal interagency co- or its officers. ordination? 100.6 What procedures apply to the selection of programs and activities under these § 100.2 What definitions apply to these regulations? regulations? 100.7 How does the Secretary communicate Department means the U.S. Depart- with state and local officials concerning ment of Health and Human Services the Department’s programs and activi- (HHS). ties? 100.8 How does the Secretary provide states Order means Executive Order 12372, an opportunity to comment on proposed issued July 14, 1982, and amended April Federal financial assistance and direct 8, 1983 and titled ‘‘Intergovernmental Federal development? Review of Federal Programs.’’

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Secretary means the Secretary of HHS lines by which states are required to or an official or employee of the De- inform the Secretary of changes in partment acting for the Secretary their program selections. under a delegation of authority. (d) The Secretary uses a state’s proc- State means any of the 50 states, the ess as soon as feasible, depending on in- District of Columbia, the Common- dividual programs and activities, after wealth of Puerto Rico, the Common- the Secretary is notified of its selec- wealth of the Northern Mariana Is- tions. lands, Guam, American Samoa, the U.S. Virgin Islands, or the Trust Terri- § 100.7 How does the Secretary com- tory of the Pacific Islands. municate with state and local officials concerning the Department’s § 100.3 What programs and activities programs and activities? of the Department are subject to (a) For those programs and activities these regulations? selected by a state process under § 100.6, The Secretary publishes in the FED- the Secretary, to the extent permitted ERAL REGISTER a list of the Depart- by law: ment’s programs and activities that (1) Uses the state process to detemine are subject to these regulations and views of state and local elected offi- identifies which of these are subject to cials; and, the requirements of section 204 of the (2) Communicates with state and Demonstration Cities and Metropolitan local elected officials, through the Development Act. state process, as early in a program planning cycle as is reasonably feasible § 100.4 [Reserved] to explain specific plans and actions. (b) The Secretary provides notice to § 100.5 What is the Secretary’s obliga- directly affected state, areawide, re- tion with respect to Federal inter- gional, and local entities in a state of agency coordination? proposed Federal finanical assistance The Secretary, to the extent prac- or direct Federal development if: ticable, consults with and seeks advice (1) The state has not adopted a proc- from all other substantially affected ess under the Order; or Federal departments and agencies in (2) The assistance or development an effort to assure full coordination be- invovles a program or activity not se- tween such agencies and the Depart- lected for the state process. ment regarding programs and activi- This notice may be made by publica- ties covered under these regulations. tion in the FEDERAL REGISTER or other appropriate means, which the Depart- § 100.6 What procedures apply to the selection of programs and activities ment in its discretion deems appro- under these regulations? priate. (a) A state may select any program § 100.8 How does the Secretary pro- or activity published in the FEDERAL vide states an opportunity to com- REGISTER in accordance with § 100.3 of ment on proposed Federal financial this part for intergovernmental review assistance and direct Federal devel- under these regulations. Each state, opment? before selecting programs and activi- (a) Except in unusal circumstances, ties, shall consult with local elected of- the Secretary gives state processes or ficials. directly affected state, areawide, re- (b) Each state that adopts a process gional and local officials and entities: shall notify the Secretary of the De- (1) At least 30 days from the date es- partment’s programs and activities se- tablished by the Secretary to comment lected for that process. on proposed direct Federal develop- (c) A state may notify the Secretary ment or Federal financial assistance in of changes in its selections at any the form of noncompeting continuation time. For each change, the state shall awards; and submit to the Secretary an assurance (2) At least 60 days from the date es- that the state has consulted with local tablished by the Secretary to comment elected officials regarding the change. on proposed direct Federal develop- The Department may establish dead- ment or Federal financial assistance

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other than noncompeting continuation when such comments are provided by a awards. single point of contact, by the appli- (b) This section also applies to com- cant, or directly to the Department by ments in cases in which the review, co- a commenting party. ordination, and communication with (f) If an applicant receives comments the Department have been delegated. under § 100.9(a)(2), (c) or (d) of this part, (c) Applicants for programs and ac- it must forward such comments to the tivities subject to section 204 of the Department with its application mate- Demonstration Cities and Metropolitan rials. Act shall allow areawide agencies a 60- day opportunity for review and com- § 100.10 How does the Secretary make ment. efforts to accommodate intergovernmental concerns? § 100.9 How does the Secretary receive (a) If a state process provides a state and respond to comments? process recommendation to the Depart- (a) The Secretary follows the proce- ment through its single point of con- dures in § 100.10 if: tact, the Secretary either: (1) A state office or official is des- (1) Accepts the recommendation; ignated to act as a single point of con- (2) Reaches a mutually agreeable so- tact between a state process and all lution with the state process; or Federal agencies, and (3) Provides the single point of con- (2) That office or official transmits a tact with such written explanation of state process recommendation for a the decision as the Secretary in this or program selected under § 100.6. her discretion deems appropriate. The (b)(1) The single point of contract is Secretary may also supplement the not obligated to transmit comments written explanation by providing the from state, areawide, regional or local explanation to the single point of con- officials and entities where there is no tact by telephone, other telecommuni- state process recommendation. cation, or other means. (2) If a state process recommendation (b) In any explanation under para- is transmitted by a single point of con- graph (a)(3) of this section, the Sec- tact, all comments from state, retary informs the single point of con- areawide, regional, and local officials tact that: and entities that differ from it must (1) The Department will not imple- also be transmitted. ment its decision for at least ten days (c) If a state has not established a after the single point of contact re- process, or is unable to submit a state ceives the explanation; or process recommendation, state, areawide, regional and local officials (2) The Secretary has reviewed the and entities may submit comments ei- decision and determined that, because ther to the applicant or to the Depart- of unsual circumstances, the waiting ment. period of at least ten days is not fea- (d) If a program or activity is not se- sible. lected for review under a state process, (c) For purposes of computing the state, areawide, regional and local offi- waiting period under paragraph (b)(1) cials and entities may submit com- of this section, a single point of con- ments either to the applicant or to the tact is presumed to have received writ- Department. In addition, if a state ten explanation 5 days after the date process recommendation for a non- such notification is dated. selected program or activity is transmitted to the Department by the single § 100.11 What are the Secretary’s obligations in interstate situations? point of contact, the Secretary follows the procedures of § 100.10 of this part. (a) The Secretary is responsible for: (e) The Secretary considers com- (1) Identifying proposed Federal fi- ments which do not constitute a state nancial assistance and direct Federal process recommendation submitted development that have an impact on under these regulations and for which interstate areas; the Secretary is not required to apply (2) Notifying appropriate officials the procedures of § 100.10 of this part, and entities in states which have

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adopted a process and which select the submission date, and select the plan- Department’s program or activity. ning period for a state plan. (3) Making efforts to identify and no- (2) Consolidate means that a state tify the affected state, areawide, re- may meet statutory and regulatory regional, and local officials and entities quirements by combining two or more in those states that have not adopted a plans into one document and that the process under the Order or do not se- state can select the format, submission lect the Department’s program or ac- date, and planning period for the con- tivity; solidated plan. (4) Responding pursuant to § 100.10 of (3) Substitute means that a state may this part if the Secretary receives a use a plan or other document that it recommendation from a designated has developed for its own purposes to areawide agency transmitted by a sin- meet Federal requirements. gle point of contact, in cases in which (b) If not inconsistent with law, a the review, coordination, and commu- state may decide to try to simplify, nication with the Department have consolidate, or substitute federally re- been delegated. quired state plans without prior ap- (b) The Secretary uses the procedures proval by the Secretary. in § 100.10 if a state process provides a (c) The Secretary reviews each state state process recommendation to the plan that a state has simplified, con- Department through a single point of solidated, or substituted and accepts contact. the plan only if its contents meet Fed- eral requirements. § 100.12 How may a state simplify, consolidate, or substitute federally re- § 100.13 May the Secretary waive any quired state plans? provision of these regulations? (a) As used in this section: In an emergency, the Secretary may (1) Simplify means that a state may waive any provision of these regula- develop its own format, choose its own tions.

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PARTS 140–143 [RESERVED] the renewability of all health insurance coverage in the individual mar- PART 144—REQUIREMENTS RELAT- ket, and provide certain protections for ING TO HEALTH INSURANCE mothers and newborns with respect to coverage for hospital stays in connec- COVERAGE tion with childbirth, and to provide certain protections for patients who Subpart A—General Provisions elect breast reconstruction in connec- Sec. tion with a mastectomy. 144.101 Basis and purpose. (c) Part 150 of this subchapter imple- 144.102 Scope and applicability. ments the enforcement provisions of 144.103 Definitions. sections 2722 and 2761 of the PHS Act Subpart B [Reserved] with respect to the following: (1) States that fail to substantially AUTHORITY: Secs. 2701 through 2763, 2791, enforce one or more provisions of part and 2792 of the Public Health Service Act, 42 146 concerning group health insurance U.S.C. 300gg through 300gg-63, 300gg-91, 30gg- or the requirements of part 148 of this 92 as amended by HIPAA (Public Law 104–191, subchapter concerning individual 110 Stat. 1936), MHPA (Public Law 104–204, health insurance. 110 Stat. 2944, as amended by Public Law 107– 116, 115 Stat. 2177), NMHPA (Public Law 104– (2) Insurance issuers in States de- 204, 110 Stat. 2935), WHCRA (Public Law 105– scribed in paragraph (c)(1) of this sec- 277, 112 Stat. 2681–436), and section 103(c)(4) of tion. HIPAA. (3) Group health plans that are non- SOURCE: 62 FR 16955, Apr. 8, 1997, unless Federal governmental plans. otherwise noted. (d) Sections 2791 and 2792 of the PHS Act define terms used in the regula- Subpart A—General Provisions tions in this subchapter and provide the basis for issuing these regulations. § 144.101 Basis and purpose. [64 FR 45795, Aug. 20, 1999] (a) Part 146 of this subchapter implements sections 2701 through 2723 of the § 144.102 Scope and applicability. Public Health Service Act (PHS Act, 42 (a) For purposes of 45 CFR parts 144 U.S.C. 300gg, et seq.). Its purpose is to improve access to group health insur- through 148, all health insurance cov- ance coverage, guarantee the renew- erage is generally divided into two ability of all coverage in the group markets—the group market (set forth market, provide certain protections for in 45 CFR part 146) and the individual mothers and newborns with respect to market (set forth in 45 CFR part 148). coverage for hospital stays in connec- 45 CFR part 146 limits the group mar- tion with childbirth, and provide parity ket to insurance sold to employment- between the application of annual and related group health plans and further lifetime dollar limits to mental health divides the group market into the large benefits and those limits for other group market and the small group mar- health benefits and to provide certain ket. Federal law further defines the protections for patients who elect small group market as insurance sold breast reconstruction in connection to employer plans with 2 to 50 employ- with a mastectomy. ees. State law, however, may expand (b) Part 148 of this subchapter imple- the definition of the small group mar- ments sections 2741 through 2763 of the ket to include certain coverage that PHS Act. Its purpose is to improve ac- would otherwise, under the Federal cess to individual health insurance cov- law, be considered coverage in the erage for certain individuals who pre- large group market or the individual viously had group coverage, guarantee market.

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(b) The protections afforded under 45 sioner or official or officials designated CFR parts 144 through 148 to individ- by the State to enforce the require- uals and employers (and other sponsors ments of 45 CFR parts 146 and 148 for of health insurance offered in connec- the State involved with respect to the tion with a group health plan) are de- issuer. termined by whether the coverage in- Beneficiary has the meaning given the volved is obtained in the small group term under section 3(8) of the Em- market, the large group market, or the ployee Retirement Income Security individual market. Small employers, Act of 1974 (ERISA), which states, ‘‘a and individuals who are eligible to en- person designated by a participant, or roll under the employer’s plan, are by the terms of an employee benefit guaranteed availability of insurance plan, who is or may become entitled to coverage sold in the small group mar- a benefit’’ under the plan. ket. Small and large employers are Bona fide association means, with re- guaranteed the right to renew their spect to health insurance coverage of- group coverage, subject to certain ex- fered in a State, an association that ceptions. Eligible individuals are guar- meets the following conditions: anteed availability of coverage sold in (1) Has been actively in existence for the individual market, and all coverage at least 5 years. in the individual market must be guar- (2) Has been formed and maintained anteed renewable. All coverage issued in good faith for purposes other than in the small or large group market, and obtaining insurance. in the individual market, must provide (3) Does not condition membership in certain protections for mothers and the association on any health status- newborns with respect to coverage for related factor relating to an individual hospital stays in connection with (including an employee of an employer childbirth. or a dependent of any employee). (c) Coverage that is provided to asso- (4) Makes health insurance coverage ciations, but is not related to employ- offered through the association avail- ment, is not considered group coverage able to all members regardless of any under 45 CFR parts 144 through 148. The health status-related factor relating to coverage is considered coverage in the the members (or individuals eligible for individual market, regardless of wheth- coverage through a member). er it is considered group coverage (5) Does not make health insurance under State law. coverage offered through the associa- (d) Provisions relating to CMS en- tion available other than in connection forcement of one or more provisions of with a member of the association. part 146 or the requirements of part 148, (6) Meets any additional require- or both, are contained in part 150 of ments that may be imposed under this subchapter. State law. [62 FR 16955, Apr. 8, 1997, as amended at 63 Church plan means a Church plan FR 57558, Oct. 27, 1998; 64 FR 45795, Aug. 20, within the meaning of section 3(33) of 1999] ERISA. COBRA definitions: § 144.103 Definitions. (1) COBRA means Title X of the Con- For purposes of parts 146 (group mar- solidated Omnibus Budget Reconcili- ket), 148 (individual market), and 150 ation Act of 1985, as amended. (enforcement) of this subchapter, the (2) COBRA continuation coverage following definitions apply unless oth- means coverage, under a group health erwise provided: plan, that satisfies an applicable Affiliation period means a period of COBRA continuation provision. time that must expire before health in- (3) COBRA continuation provision surance coverage provided by an HMO means sections 601–608 of the Employee becomes effective, and during which Retirement Income Security Act, sec- the HMO is not required to provide tion 4980B of the Internal Revenue benefits. Code of 1986 (other than paragraph Applicable State authority means, with (f)(1) of such section 4980B insofar as it respect to a health insurance issuer in relates to pediatric vaccines), or Title a State, the State insurance commis- XXII of the PHS Act.

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(4) Continuation coverage means cov- entity to remit premiums on a timely erage under a COBRA continuation basis; provision or a similar State program. (ii) When the individual no longer re- Coverage provided by a plan that is sides, lives or works in a service area of subject to a COBRA continuation pro- an HMO or similar program (whether vision or similar State program, but or not within the choice of the indi- that does not satisfy all the require- vidual) and there is no other continu- ments of that provision or program, ation coverage available to the indi- will be deemed to be continuation cov- vidual; or erage if it allows an individual to elect (iii) When the individual incurs a to continue coverage for a period of at claim that would meet or exceed a life- least 18 months. Continuation coverage time limit on all benefits and there is does not include coverage under a con- no other continuation coverage avail- version policy required to be offered to able to the individual. an individual upon exhaustion of con- Condition means a medical condition. tinuation coverage, nor does it include Creditable coverage has the meaning continuation coverage under the Fed- given the term in 45 CFR 146.113(a). eral Employees Health Benefits Pro- Dependent means any individual who gram. is or may become eligible for coverage (5) Exhaustion of COBRA continuation under the terms of a group health plan coverage means that an individual’s because of a relationship to a partici- COBRA continuation coverage ceases pant. for any reason other than either failure Eligible individual, for purposes of— of the individual to pay premiums on a (1) The group market provisions in 45 timely basis, or for cause (such as mak- CFR part 146, subpart E, is defined in 45 ing a fraudulent claim or an inten- CFR 146.150(b); and tional misrepresentation of a material (2) The individual market provisions fact in connection with the plan). An in 45 CFR part 148, is defined in 45 CFR individual is considered to have ex- 148.103. hausted COBRA continuation coverage Employee has the meaning given the if such coverage ceases— term under section 3(6) of ERISA, (i) Due to the failure of the employer which states, ‘‘any individual employed or other responsible entity to remit by an employer.’’ premiums on a timely basis; Employer has the meaning given the (ii) When the individual no longer re- term under section 3(5) of ERISA, sides, lives, or works in the service which states, ‘‘any person acting di- area of an HMO or similar program rectly as an employer, or indirectly in (whether or not within the choice of the interest of an employer, in relation the individual) and there is no other to an employee benefit plan; and in- COBRA continuation coverage avail- cludes a group or association of em- able to the individual; or ployers acting for an employer in such (iii) When the individual incurs a capacity.’’ claim that would meet or exceed a life- Enroll means to become covered for time limit on all benefits and there is benefits under a group health plan no other COBRA continuation coverage (that is, when coverage becomes effec- available to the individual. tive), without regard to when the indi- (6) Exhaustion of continuation coverage vidual may have completed or filed any means that an individual’s continu- forms that are required in order to be- ation coverage ceases for any reason come covered under the plan. For this other than either failure of the indi- purpose, an individual who has health vidual to pay premiums on a timely coverage under a group health plan is basis, or for cause (such as making a enrolled in the plan regardless of fraudulent claim or an intentional mis- whether the individual elects coverage, representation of a material fact in the individual is a dependent who be- connection with the plan). An indi- comes covered as a result of an election vidual is considered to have exhausted by a participant, or the individual be- continuation coverage if— comes covered without an election. (i) Coverage ceases due to the failure Enrollment date definitions (enrollment of the employer or other responsible date, first day of coverage, and waiting

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period) are set forth in 45 CFR insurance coverage, and short-term, 146.111(a)(3)(i) through (iii). limited-duration insurance. ERISA stands for the Employee Re- Health insurance issuer or issuer means tirement Income Security Act of 1974, an insurance company, insurance serv- as amended (29 U.S.C. 1001 et seq.). ice, or insurance organization (includ- Excepted benefits, consistent for pur- ing an HMO) that is required to be li- poses of the— censed to engage in the business of in- (1) Group market provisions in 45 surance in a State and that is subject CFR part 146 subpart D, is defined in 45 to State law that regulates insurance CFR 146.145(c); and (within the meaning of section 514(b)(2) (2) Individual market provisions in 45 of ERISA). This term does not include CFR part 148, is defined in 45 CFR a group health plan. 148.220. Health maintenance organization or HMO means— Federal governmental plan means a (1) A Federally qualified health governmental plan established or maintenance organization (as defined maintained for its employees by the in section 1301(a) of the PHS Act); Government of the United States or by (2) An organization recognized under any agency or instrumentality of such State law as a health maintenance or- Government. ganization; or means informa- Genetic information (3) A similar organization regulated tion about genes, gene products, and under State law for solvency in the inherited characteristics that may de- same manner and to the same extent as rive from the individual or a family such a health maintenance organiza- member. This includes information re- tion. garding carrier status and information Health status-related factor is any fac- derived from laboratory tests that tor identified as a health factor in 45 identify mutations in specific genes or CFR 146.121(a). chromosomes, physical medical exami- Individual health insurance coverage nations, family histories, and direct means health insurance coverage of- analysis of genes or chromosomes. fered to individuals in the individual Governmental plan means a govern- market, but does not include short- mental plan within the meaning of sec- term, limited-duration insurance. Indi- tion 3(32) of ERISA. vidual health insurance coverage can Group health insurance coverage include dependent coverage. means health insurance coverage of- Individual market means the market fered in connection with a group health for health insurance coverage offered plan. to individuals other than in connection Group health plan or plan means a with a group health plan. Unless a group health plan within the meaning State elects otherwise in accordance of 45 CFR 146.145(a). with section 2791(e)(1)(B)(ii) of the PHS Group market means the market for Act, such term also includes coverage health insurance coverage offered in offered in connection with a group connection with a group health plan. health plan that has fewer than two (However, certain very small plans participants who are current employ- may be treated as being in the indi- ees on the first day of the plan year. vidual market, rather than the group Internal Revenue Code means the In- market; see the definition of individual ternal Revenue Code of 1986, as amend- market in this section.) ed (Title 26, United States Code). Health insurance coverage means bene- Issuer means a health insurance issuer. fits consisting of medical care (pro- Large employer means, in connection vided directly, through insurance or re- with a group health plan with respect imbursement, or otherwise) under any to a calendar year and a plan year, an hospital or medical service policy or employer who employed an average of certificate, hospital or medical service at least 51 employees on business days plan contract, or HMO contract offered during the preceding calendar year and by a health insurance issuer. Health in- who employs at least 2 employees on surance coverage includes group health the first day of the plan year, unless insurance coverage, individual health otherwise provided under State law.

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Large group market means the health a legal obligation for total or partial insurance market under which individ- support of a child by a person with uals obtain health insurance coverage whom the child has been placed in an- (directly or through any arrangement) ticipation of the child’s adoption. The on behalf of themselves (and their de- child’s placement for adoption with pendents) through a group health plan such person ends upon the termination maintained by a large employer, unless of such legal obligation. otherwise provided under State law. Plan sponsor has the meaning given Late enrollment definitions (late en- the term under section 3(16)(B) of rollee and late enrollment) are set forth ERISA, which states, ‘‘(i) the employer in 45 CFR 146.111(a)(3)(v) and (vi). in the case of an employee benefit plan Medical care means amounts paid established or maintained by a single for— employer, (ii) the employee organiza- (1) The diagnosis, cure, mitigation, tion in the case of a plan established or treatment, or prevention of disease, or maintained by an employee organiza- amounts paid for the purpose of affect- tion, or (iii) in the case of a plan estab- ing any structure or function of the lished or maintained by two or more body; employers or jointly by one or more (2) Transportation primarily for and employers and one or more employee essential to medical care referred to in organizations, the association, com- paragraph (1) of this definition; and mittee, joint board of trustees, or other (3) Insurance covering medical care similar group of representatives of the referred to in paragraphs (1) and (2) of parties who establish or maintain the this definition. plan.’’ Medical condition or condition means Plan year means the year that is des- any condition, whether physical or ignated as the plan year in the plan mental, including, but not limited to, document of a group health plan, ex- any condition resulting from illness, cept that if the plan document does not injury (whether or not the injury is ac- designate a plan year or if there is no cidental), pregnancy, or congenital plan document, the plan year is— malformation. However, genetic infor- (1) The deductible or limit year used mation is not a condition. under the plan; Network plan means health insurance (2) If the plan does not impose coverage of a health insurance issuer deductibles or limits on a yearly basis, under which the financing and delivery then the plan year is the policy year; of medical care (including items and (3) If the plan does not impose services paid for as medical care) are deductibles or limits on a yearly basis, provided, in whole or in part, through a and either the plan is not insured or defined set of providers under contract the insurance policy is not renewed on with the issuer. an annual basis, then the plan year is Non-Federal governmental plan means the employer’s taxable year; or a governmental plan that is not a Fed- (4) In any other case, the plan year is eral governmental plan. the calendar year. Participant has the meaning given the Preexisting condition exclusion has the term under section 3(7) of ERISA, meaning given the term in 45 CFR which States, ‘‘any employee or former 146.111(a)(1), with respect to group employee of an employer, or any mem- health plans and group health insur- ber or former member of an employee ance coverage. With respect to indi- organization, who is or may become el- vidual market health insurance issuers igible to receive a benefit of any type or other entities providing coverage to from an employee benefit plan which federally eligible individuals pursuant covers employees of such employer or to 45 CFR part 148, preexisting condi- members of such organization, or tion exclusion means a limitation or whose beneficiaries may be eligible to exclusion of benefits relating to a con- receive any such benefit.’’ dition based on the fact that the condi- PHS Act stands for the Public Health tion was present before the first day of Service Act (42 U.S.C. 201 et seq.). coverage, whether or not any medical Placement, or being placed, for adoption advice, diagnosis, care, or treatment means the assumption and retention of was recommended or received before

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that day. A preexisting condition ex- Subpart B [Reserved] clusion includes any exclusion applicable to an individual as a result of information that is obtained relating to an PART 145 [RESERVED] individual’s health status before the individual’s first day of coverage, such as PART 146—REQUIREMENTS FOR THE a condition identified as a result of a GROUP HEALTH INSURANCE pre-enrollment questionnaire or phys- MARKET ical examination given to the individual, or review of medical records re- Subpart A—General Provisions lating to the pre-enrollment period. Public health plan has the meaning Sec. given the term in 45 CFR 146.101 Basis and scope. 146.113(a)(1)(ix). Subpart B—Requirements Relating to Ac- Short-term, limited-duration insurance cess and Renewability of Coverage, means health insurance coverage provided pursuant to a contract with an and Limitations on Preexisting Condi- issuer that has an expiration date spection Exclusion Periods ified in the contract (taking into ac- 146.111 Limitations on preexisting condition count any extensions that may be exclusion periods. elected by the policyholder without the 146.113 Rules relating to creditable cov- issuer’s consent) that is less than 12 erage. months after the original effective date 146.115 Certification and disclosure of pre- of the contract. vious coverage. Significant break in coverage has the 146.117 Special enrollment periods. meaning given the term in 45 CFR 146.119 HMO affiliation period as an alternative to preexisting condition exclu- 146.113(b)(2)(iii). sion. Small employer means, in connection 146.120 Interaction with the Family and with a group health plan with respect Medical Leave Act. [Reserved] to a calendar year and a plan year, an 146.121 Prohibiting discrimination against employer who employed an average of participants and beneficiaries based on a at least 2 but not more than 50 employ- health factor. ees on business days during the pre- 146.125 Applicability dates. ceding calendar year and who employs at least 2 employees on the first day of Subpart C—Requirements Related to the plan year, unless otherwise pro- Benefits vided under State law. 146.130 Standards relating to benefits for Small group market means the health mothers and newborns. insurance market under which individ- 146.136 Parity in the application of certain uals obtain health insurance coverage limits to mental health benefits. (directly or through any arrangement) on behalf of themselves (and their de- Subpart D—Preemption and Special Rules pendents) through a group health plan 146.143 Preemption; State flexibility; con- maintained by a small employer. struction. Special enrollment means enrollment 146.145 Special rules relating to group in a group health plan or group health health plans. insurance coverage under the rights described in 45 CFR 146.117. Subpart E—Provisions Applicable to Only State means each of the several Health Insurance Issuers States, the District of Columbia, Puer- 146.150 Guaranteed availability of coverage to Rico, the Virgin Islands, Guam, for employers in the small group market. American Samoa, and the Northern 146.152 Guaranteed renewability of coverage Mariana Islands. for employers in the group market. State health benefits risk pool has the 146.160 Disclosure of information. meaning given the term in 45 CFR § 146.113(a)(1)(vii). Subpart F—Exclusion of Plans and Waiting period has the meaning given Enforcement the term in 45 CFR 146.111(a)(3)(iii). 146.180 Treatment of non-Federal govern- [69 FR 78781, Dec. 30, 2004] mental plans.

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AUTHORITY: Secs. 2705, 2791, and 2792 of the (3) Subpart D. Subpart D of this part PHS Act (42 U.S.C. 300gg–5, 300gg–91, and sets forth exceptions to the require- 300gg–92) ments of Subpart B for certain plans SOURCE: 62 FR 16958, Apr. 8, 1997, unless and certain types of benefits. otherwise noted. (4) Subpart E. Subpart E of this part implements sections 2711 through 2713 Subpart A—General Provisions of the PHS Act, which set forth requirements that apply only to health § 146.101 Basis and scope. insurance issuers offering health insur- (a) Statutory basis. This part imple- ance coverage in connection with a ments sections 2701 through 2723 of the group health plan. PHS Act. Its purpose is to improve ac- (5) Subpart F. Subpart F of this part cess to group health insurance cov- addresses the treatment of non-Federal erage, to guarantee the renewability of governmental plans, and sets forth en- all coverage in the group market, and forcement procedures. to provide certain protections for mothers and newborns with respect to [62 FR 16958, Apr. 8, 1997, as amended at 63 coverage for hospital stays in connec- FR 57559, Oct. 27, 1998; 71 FR 75046, Dec. 13, tion with childbirth. Sections 2791 and 2006] 2792 of the PHS Act define terms used in the regulations in this subchapter Subpart B—Requirements Relating and provide the basis for issuing these to Access and Renewability regulations, respectively. of Coverage, and Limitations (b) Scope. A group health plan or on Preexisting Condition Ex- health insurance issuer offering group health insurance coverage may provide clusion Periods greater rights to participants and bene- § 146.111 Limitations on preexisting ficiaries than those set forth in this condition exclusion period. part. (1) Subpart B. Subpart B of this part (a) Preexisting condition exclusion—(1) sets forth minimum requirements for Defined—(i) A preexisting condition ex- group health plans and health insur- clusion means a limitation or exclusion ance issuers offering group health in- of benefits relating to a condition surance coverage concerning: based on the fact that the condition (i) Limitations on a preexisting con- was present before the effective date of dition exclusion period. coverage under a group health plan or (ii) Certificates and disclosure of pre- group health insurance coverage, vious coverage. whether or not any medical advice, di- (iii) Methods of counting creditable agnosis, care, or treatment was rec- coverage. ommended or received before that day. (iv) Special enrollment periods. A preexisting condition exclusion in- (v) Use of an affiliation period by an cludes any exclusion applicable to an HMO as an alternative to a preexisting individual as a result of information condition exclusion. relating to an individual’s health sta- (vi) Prohibiting discrimination tus before the individual’s effective against participants and beneficiaries date of coverage under a group health based on a health factor. plan or group health insurance cov- (2) Subpart C. Subpart C of this part erage, such as a condition identified as sets forth the requirements that apply a result of a pre-enrollment question- to plans and issuers with respect to naire or physical examination given to coverage for hospital stays in connec- the individual, or review of medical tion with childbirth. It also sets forth records relating to the pre-enrollment the regulations governing parity be- period. tween medical/surgical benefits and (ii) Examples. The rules of this para- mental health benefits in group health graph (a)(1) are illustrated by the fol- plans and health insurance coverage of- lowing examples: fered by issuers in connection with a group health plan.

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Example 1. (i) Facts. A group health plan fact that the condition was present before provides benefits solely through an insur- the effective date of coverage. The plan pro- ance policy offered by Issuer S. At the expi- vision, therefore, is subject to the limita- ration of the policy, the plan switches cov- tions on preexisting condition exclusions in erage to a policy offered by Issuer T. Issuer this section. T’s policy excludes benefits for any pros- Example 5. (i) Facts. When an individual’s thesis if the body part was lost before the ef- coverage begins under a group health plan, fective date of coverage under the policy. the individual generally becomes eligible for (ii) Conclusion. In this Example 1, the exclu- all benefits. However, benefits for pregnancy sion of benefits for any prosthesis if the body are not available until the individual has part was lost before the effective date of cov- been covered under the plan for 12 months. erage is a preexisting condition exclusion be- (ii) Conclusion. In this Example 5, the re- cause it operates to exclude benefits for a quirement to be covered under the plan for 12 condition based on the fact that the condi- months to be eligible for pregnancy benefits tion was present before the effective date of is a subterfuge for a preexisting condition coverage under the policy. (Therefore, the exclusion because it is designed to exclude exclusion of benefits is required to comply benefits for a condition (pregnancy) that with the limitations on preexisting condition arose before the effective date of coverage. exclusions in this section. For an example il- Because a plan is prohibited under paragraph lustrating the application of these limita- (b)(5) of this section from imposing any pre- tions to a succeeding insurance policy, see existing condition exclusion on pregnancy, Example 3 of paragraph (a)(3)(iv) of this sec- the plan provision is prohibited. However, if tion.) the plan provision included an exception for Example 2. (i) Facts. A group health plan women who were pregnant before the effec- provides coverage for cosmetic surgery in tive date of coverage under the plan (so that cases of accidental injury, but only if the in- the provision applied only to women who be- jury occurred while the individual was cov- came pregnant on or after the effective date ered under the plan. of coverage) the plan provision would not be (ii) Conclusion. In this Example 2, the plan a preexisting condition exclusion (and would provision excluding cosmetic surgery bene- not be prohibited by paragraph (b)(5) of this fits for individuals injured before enrolling section). in the plan is a preexisting condition exclu- Example 6. (i) Facts. A group health plan sion because it operates to exclude benefits provides coverage for medically necessary relating to a condition based on the fact that items and services, generally including the condition was present before the effec- treatment of heart conditions. However, the tive date of coverage. The plan provision, plan does not cover those same items and therefore, is subject to the limitations on services when used for treatment of con- preexisting condition exclusions in this sec- genital heart conditions. tion. (ii) Conclusion. In this Example 6, the exclu- Example 3. (i) Facts. A group health plan sion of coverage for treatment of congenital provides coverage for the treatment of diabe- heart conditions is a preexisting condition tes, generally not subject to any lifetime exclusion because it operates to exclude ben- dollar limit. However, if an individual was efits relating to a condition based on the fact diagnosed with diabetes before the effective that the condition was present before the ef- date of coverage under the plan, diabetes fective date of coverage. The plan provision, coverage is subject to a lifetime limit of therefore, is subject to the limitations on $10,000. preexisting condition exclusions in this sec- (ii) Conclusion. In this Example 3, the $10,000 tion. lifetime limit is a preexisting condition ex- Example 7. (i) Facts. A group health plan clusion because it limits benefits for a condi- generally provides coverage for medically tion based on the fact that the condition was necessary items and services. However, the present before the effective date of coverage. plan excludes coverage for the treatment of The plan provision, therefore, is subject to cleft palate. the limitations on preexisting condition ex- (ii) Conclusion. In this Example 7, the exclu- clusions in this section. sion of coverage for treatment of cleft palate Example 4. (i) Facts. A group health plan is not a preexisting condition exclusion be- provides coverage for the treatment of acne, cause the exclusion applies regardless of subject to a lifetime limit of $2,000. The plan when the condition arose relative to the ef- counts against this $2,000 lifetime limit acne fective date of coverage. The plan provision, treatment benefits provided under prior therefore, is not subject to the limitations health coverage. on preexisting condition exclusions in this (ii) Conclusion. In this Example 4, counting section. benefits for a specific condition provided Example 8. (i) Facts. A group health plan under prior health coverage against a life- provides coverage for treatment of cleft pal- time limit for that condition is a preexisting ate, but only if the individual being treated condition exclusion because it operates to has been continuously covered under the limit benefits for a condition based on the plan from the date of birth.

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(ii) Conclusion. In this Example 8, the exclu- Example 1. (i) Facts. Individual A is diag- sion of coverage for treatment of cleft palate nosed with a medical condition 8 months be- for individuals who have not been covered fore A’s enrollment date in Employer R’s under the plan from the date of birth oper- group health plan. A’s doctor recommends ates to exclude benefits in relation to a con- that A take a prescription drug for 3 months, dition based on the fact that the condition and A follows the recommendation. was present before the effective date of cov- (ii) Conclusion. In this Example 1, Employer erage. The plan provision, therefore, is sub- R’s plan may impose a preexisting condition ject to the limitations on preexisting condi- exclusion with respect to A’s condition be- tion exclusions in this section. cause A received treatment during the 6- month period ending on A’s enrollment date (2) General rules. Subject to para- in Employer R’s plan by taking the prescrip- graph (b) of this section (prohibiting tion medication during that period. However, the imposition of a preexisting condi- if A did not take the prescription drug dur- tion exclusion with respect to certain ing the 6-month period, Employer R’s plan would not be able to impose a preexisting individuals and conditions), a group condition exclusion with respect to that con- health plan, and a health insurance dition. issuer offering group health insurance Example 2. (i) Facts. Individual B is treated coverage, may impose, with respect to for a medical condition 7 months before the a participant or beneficiary, a pre- enrollment date in Employer S’s group existing condition exclusion only if the health plan. As part of such treatment, B’s requirements of this paragraph (a)(2) physician recommends that a follow-up examination be given 2 months later. Despite are satisfied. this recommendation, B does not receive a (i) 6-month look-back rule. A pre- follow-up examination, and no other medical existing condition exclusion must re- advice, diagnosis, care, or treatment for that late to a condition (whether physical condition is recommended to B or received or mental), regardless of the cause of by B during the 6-month period ending on B’s the condition, for which medical ad- enrollment date in Employer S’s plan. (ii) Conclusion. In this Example 2, Employer vice, diagnosis, care, or treatment was S’s plan may not impose a preexisting condi- recommended or received within the 6- tion exclusion with respect to the condition month period (or such shorter period as for which B received treatment 7 months applies under the plan) ending on the prior to the enrollment date. enrollment date. Example 3. (i) Facts. Same facts as Example (A) For purposes of this paragraph 2, except that Employer S’s plan learns of the condition and attaches a rider to B’s cer- (a)(2)(i), medical advice, diagnosis, tificate of coverage excluding coverage for care, or treatment is taken into ac- the condition. Three months after enroll- count only if it is recommended by, or ment, B’s condition recurs, and Employer S’s received from, an individual licensed or plan denies payment under the rider. similarly authorized to provide such (ii) Conclusion. In this Example 3, the rider services under State law and operating is a preexisting condition exclusion and Em- within the scope of practice authorized ployer S’s plan may not impose a preexisting by State law. condition exclusion with respect to the condition for which B received treatment 7 (B) For purposes of this paragraph months prior to the enrollment date. (In ad- (a)(2)(i), the 6-month period ending on dition, such a rider would violate the provi- the enrollment date begins on the 6- sions of § 146.121, even if B had received treat- month anniversary date preceding the ment for the condition within the 6-month enrollment date. For example, for an period ending on the enrollment date.) enrollment date of August 1, 1998, the Example 4. (i) Facts. Individual C has asth- 6-month period preceding the enroll- ma and is treated for that condition several times during the 6-month period before C’s ment date is the period commencing on enrollment date in Employer T’s plan. Three February 1, 1998 and continuing months after the enrollment date, C begins through July 31, 1998. As another exam- coverage under Employer T’s plan. Two ple, for an enrollment date of August months later, C is hospitalized for asthma. 30, 1998, the 6-month period preceding (ii) Conclusion. In this Example 4, Employer the enrollment date is the period com- T’s plan may impose a preexisting condition mencing on February 28, 1998 and con- exclusion with respect to C’s asthma because tinuing through August 29, 1998. care relating to C’s asthma was received during the 6-month period ending on C’s enroll- (C) The rules of this paragraph ment date (which, under the rules of para- (a)(2)(i) are illustrated by the following graph (a)(3)(i) of this section, is the first day examples: of the waiting period).

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Example 5. (i) Facts. Individual D, who is existing condition exclusion (reduced by subject to a preexisting condition exclusion creditable coverage) on all new enrollees. D imposed by Employer U’s plan, has diabetes, enrolls in Y’s plan, but also stays covered as well as retinal degeneration, a foot condi- under X’s plan. D presents Y’s plan with evi- tion, and poor circulation (all of which are dence of creditable coverage under X’s plan. conditions that may be directly attributed (ii) Conclusion. In this Example, Y’s plan to diabetes). D receives treatment for these must reduce the preexisting condition exclu- conditions during the 6-month period ending sion period that applies to D by the number on D’s enrollment date in Employer U’s plan. of days of coverage that D had under X’s plan After enrolling in the plan, D stumbles and as of D’s enrollment date in Y’s plan (even breaks a leg. though D’s coverage under X’s plan was con- (ii) Conclusion. In this Example 5, the leg tinuing as of that date). fracture is not a condition related to D’s diabetes, retinal degeneration, foot condition, (iv) Other standards. See § 146.121 for or poor circulation, even though they may other standards in this Subpart A that have contributed to the accident. Therefore, may apply with respect to certain ben- benefits to treat the leg fracture cannot be efit limitations or restrictions under a subject to a preexisting condition exclusion. group health plan. Other laws may also However, any additional medical services apply, such as the Uniformed Services that may be needed because of D’s preexisting diabetes, poor circulation, or retinal Employment and Reemployment degeneration that would not be needed by Rights Act (USERRA), which can af- another patient with a broken leg who does fect the application of a preexisting not have these conditions may be subject to condition exclusion to certain individ- the preexisting condition exclusion imposed uals who are reinstated in a group under Employer U’s plan. health plan following active military (ii) Maximum length of preexisting con- service. dition exclusion. A preexisting condition (3) Enrollment definitions—(i) Enroll- exclusion is not permitted to extend ment date means the first day of cov- for more than 12 months (18 months in erage (as described in paragraph the case of a late enrollee) after the en- (a)(3)(ii) of this section) or, if there is a rollment date. For example, for an en- waiting period, the first day of the rollment date of August 1, 1998, the 12- waiting period. If an individual receiv- month period after the enrollment date ing benefits under a group health plan is the period commencing on August 1, changes benefit packages, or if the plan 1998 and continuing through July 31, changes group health insurance 1999; the 18-month period after the en- issuers, the individual’s enrollment rollment date is the period com- date does not change. mencing on August 1, 1998 and con- (ii) First day of coverage means, in the tinuing through January 31, 2000. case of an individual covered for bene- (iii) Reducing a preexisting condition fits under a group health plan, the first exclusion period by creditable coverage— day of coverage under the plan and, in (A) The period of any preexisting con- the case of an individual covered by dition exclusion that would otherwise health insurance coverage in the indi- apply to an individual under a group vidual market, the first day of cov- health plan is reduced by the number erage under the policy or contract. of days of creditable coverage the indi- (iii) Waiting period means the period vidual has as of the enrollment date, as that must pass before coverage for an counted under § 146.113. Creditable cov- employee or dependent who is other- erage may be evidenced through a cer- wise eligible to enroll under the terms tificate of creditable coverage (re- of a group health plan can become ef- quired under § 146.115(a)), or through fective. If an employee or dependent other means in accordance with the enrolls as a late enrollee or special en- rules of § 146.115(c). rollee, any period before such late or (B) The rules of this paragraph special enrollment is not a waiting pe- (a)(2)(iii) are illustrated by the fol- riod. If an individual seeks coverage in lowing example: the individual market, a waiting period begins on the date the individual sub- Example. (i) Facts. Individual D works for Employer X and has been covered continu- mits a substantially complete applica- ously under X’s group health plan. D’s spouse tion for coverage and ends on— works for Employer Y. Y maintains a group (A) If the application results in cov- health plan that imposes a 12-month pre- erage, the date coverage begins;

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(B) If the application does not result dent and the leg is amputated. On January 1, in coverage, the date on which the ap- 1999, the plan switches coverage to a policy plication is denied by the issuer or the offered by Issuer T. Issuer T’s policy excludes date on which the offer of coverage benefits for any prosthesis if the body part was lost before the effective date of coverage lapses. under the policy. (iv) The rules of paragraphs (a)(3)(i), (ii) Conclusion. In this Example 3, E’s enroll- (ii), and (iii) of this section are illus- ment date is May 13, 1997, E’s first day of trated by the following examples: coverage. Therefore, the permissible 6-month look-back period for the preexisting condi- Example 1. (i) Facts. Employer V’s group tion exclusion imposed under Issuer T’s pol- health plan provides for coverage to begin on icy begins on November 13, 1996 and ends on the first day of the first payroll period fol- May 12, 1997. In addition, the 12-month max- lowing the date an employee is hired and imum permissible preexisting condition ex- completes the applicable enrollment forms, clusion period begins on May 13, 1997 and or on any subsequent January 1 after com- ends on May 12, 1998. Accordingly, because pletion of the applicable enrollment forms. no medical advice, diagnosis, care, or treat- Employer V’s plan imposes a preexisting con- ment was recommended to or received by E dition exclusion for 12 months (reduced by for the leg during the 6-month look-back pe- the individual’s creditable coverage) fol- riod (even though medical care was provided lowing an individual’s enrollment date. Em- within the 6-month period preceding the ef- ployee E is hired by Employer V on October fective date of E’s coverage under Issuer T’s 13, 1998 and on October 14, 1998 E completes policy), Issuer T may not impose any pre- and files all the forms necessary to enroll in existing condition exclusion with respect to the plan. E’s coverage under the plan be- E. Moreover, even if E had received treat- comes effective on October 25, 1998 (which is ment during the 6-month look-back period, the beginning of the first payroll period after Issuer T still would not be permitted to im- E’s date of hire). pose a preexisting condition exclusion be- (ii) Conclusion. In this Example 1, E’s enroll- cause the 12-month maximum permissible ment date is October 13, 1998 (which is the preexisting condition exclusion period ex- first day of the waiting period for E’s enroll- pired on May 12, 1998 (before the effective ment and is also E’s date of hire). Accord- date of E’s coverage under Issuer T’s policy). ingly, with respect to E, the permissible 6- Example 4. (i) Facts. A group health plan month period in paragraph (a)(2)(i) is the pe- limits eligibility for coverage to full-time riod from April 13, 1998 through October 12, employees of Employer Y. Coverage becomes 1998, the maximum permissible period during effective on the first day of the month fol- which Employer V’s plan can apply a pre- lowing the date the employee becomes eligi- existing condition exclusion under paragraph ble. Employee C begins working full-time for (a)(2)(ii) is the period from October 13, 1998 Employer Y on April 11. Prior to this date, C through October 12, 1999, and this period worked part-time for Y. C enrolls in the plan must be reduced under paragraph (a)(2)(iii) and coverage is effective May 1. by E’s days of creditable coverage as of Octo- (ii) Conclusion. In this Example 4, C’s enroll- ber 13, 1998. ment date is April 11 and the period from Example 2. (i) Facts. A group health plan April 11 through April 30 is a waiting period. has two benefit package options, Option 1 The period while C was working part-time, and Option 2. Under each option a 12-month and therefore not in an eligible class of em- preexisting condition exclusion is imposed. ployees, is not part of the waiting period. Individual B is enrolled in Option 1 on the Example 5. (i) Facts. To be eligible for cov- first day of employment with the employer erage under a multiemployer group health maintaining the plan, remains enrolled in plan in the current calendar quarter, the Option 1 for more than one year, and then plan requires an individual to have worked decides to switch to Option 2 at open season. 250 hours in covered employment during the (ii) Conclusion. In this Example 2, B cannot previous quarter. If the hours requirement is be subject to any preexisting condition ex- satisfied, coverage becomes effective on the clusion under Option 2 because any pre- first day of the current calendar quarter. existing condition exclusion period would Employee D begins work on January 28 and have to begin on B’s enrollment date, which does not work 250 hours in covered employ- is B’s first day of coverage, rather than the ment during the first quarter (ending March date that B enrolled in Option 2. Therefore, 31). D works at least 250 hours in the second the preexisting condition exclusion period quarter (ending June 30) and is enrolled in expired before B switched to Option 2. the plan with coverage effective July 1 (the Example 3. (i) Facts. On May 13, 1997, Indi- first day of the third quarter). vidual E is hired by an employer and enrolls (ii) Conclusion. In this Example 5, D’s en- in the employer’s group health plan. The rollment date is the first day of the quarter plan provides benefits solely through an in- during which D satisfies the hours require- surance policy offered by Issuer S. On De- ment, which is April 1. The period from April cember 27, 1998, E’s leg is injured in an acci- 1 through June 30 is a waiting period.

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(v) Late enrollee means an individual creditable coverage. Accordingly, if a whose enrollment in a plan is a late en- child is enrolled in a group health plan rollment. (or other creditable coverage) within 30 (vi) (A) Late enrollment means enroll- days after birth and subsequently en- ment of an individual under a group rolls in another group health plan health plan other than— without a significant break in coverage (1) On the earliest date on which cov- (as described in § 146.113(b)(2)(iii)), the erage can become effective for the indi- other plan may not impose any pre- vidual under the terms of the plan; or existing condition exclusion on the (2) Through special enrollment. (For child. rules relating to special enrollment, (ii) Examples. The rules of this para- see § 146.117.) graph (b)(1) are illustrated by the fol- (B) If an individual ceases to be eligi- lowing examples: ble for coverage under the plan, and then subsequently becomes eligible for Example 1. (i) Facts. Individual E, who has coverage under the plan, only the indi- no prior creditable coverage, begins working vidual’s most recent period of eligi- for Employer W and has accumulated 210 bility is taken into account in deter- days of creditable coverage under Employer mining whether the individual is a late W’s group health plan on the date E gives birth to a child. Within 30 days after the enrollee under the plan with respect to birth, the child is enrolled in the plan. Nine- the most recent period of coverage. ty days after the birth, both E and the child Similar rules apply if an individual terminate coverage under the plan. Both E again becomes eligible for coverage fol- and the child then experience a break in cov- lowing a suspension of coverage that erage of 45 days before E is hired by Em- applied generally under the plan. ployer X and the two are enrolled in Em- (vii) Examples. The rules of para- ployer X’s group health plan. graphs (a)(3)(v) and (vi) of this section (ii) Conclusion. In this Example 1, because are illustrated by the following exam- E’s child is enrolled in Employer W’s plan ples: within 30 days after birth, no preexisting condition exclusion may be imposed with re- Example 1. (i) Facts. Employee F first be- spect to the child under Employer W’s plan. comes eligible to be covered by Employer Likewise, Employer X’s plan may not impose W’s group health plan on January 1, 1999 but any preexisting condition exclusion on E’s elects not to enroll in the plan until a later child because the child was covered under annual open enrollment period, with cov- creditable coverage within 30 days after erage effective January 1, 2001. F has no spe- birth and had no significant break in cov- cial enrollment right at that time. erage before enrolling in Employer X’s plan. (ii) Conclusion. In this Example 1, F is a late On the other hand, because E had only 300 enrollee with respect to F’s coverage that be- days of creditable coverage prior to E’s en- came effective under the plan on January 1, rollment date in Employer X’s plan, Em- 2001. ployer X’s plan may impose a preexisting Example 2. (i) Facts. Same facts as Example condition exclusion on E for up to 65 days (66 1, except that F terminates employment days if the 12-month period after E’s enroll- with Employer W on July 1, 1999 without ment date in X’s plan includes February 29). having had any health insurance coverage Example 2. (i) Facts. Individual F is enrolled under the plan. F is rehired by Employer W in a group health plan in which coverage is on January 1, 2000 and is eligible for and provided through a health insurance issuer. elects coverage under Employer W’s plan ef- F gives birth. Under State law applicable to fective on January 1, 2000. the health insurance issuer, health care ex- (ii) Conclusion. In this Example 2, F would penses incurred for the child during the 30 not be a late enrollee with respect to F’s cov- days following birth are covered as part of erage that became effective on January 1, F’s coverage. Although F may obtain cov- 2000. erage for the child beyond 30 days by timely (b) Exceptions pertaining to preexisting requesting special enrollment and paying an condition exclusions—(1) Newborns—(i) additional premium, the issuer is prohibited In general. Subject to paragraph (b)(3) under State law from recouping the cost of of this section, a group health plan, any expenses incurred for the child within the 30-day period if the child is not later en- and a health insurance issuer offering rolled. group health insurance coverage, may (ii) Conclusion. In this Example 2, the child not impose any preexisting condition is covered under creditable coverage within exclusion on a child who, within 30 30 days after birth, regardless of whether the days after birth, is covered under any child enrolls as a special enrollee under the

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plan. Therefore, no preexisting condition ex- Example. (i) Facts. Individual A enrolls in a clusion may be imposed on the child unless group health plan that imposes a 12-month the child has a significant break in coverage. maximum preexisting condition exclusion. Three months before A’s enrollment, A’s doc- (2) Adopted children. Subject to para- tor told A that, based on genetic informa- graph (b)(3) of this section, a group tion, A has a predisposition towards breast health plan, and a health insurance cancer. A was not diagnosed with breast can- issuer offering group health insurance cer at any time prior to A’s enrollment date coverage, may not impose any pre- in the plan. Nine months after A’s enrollment date in the plan, A is diagnosed with existing condition exclusion on a child breast cancer. who is adopted or placed for adoption (ii) Conclusion. In this Example, the plan before attaining 18 years of age and may not impose a preexisting condition ex- who, within 30 days after the adoption clusion with respect to A’s breast cancer be- or placement for adoption, is covered cause, prior to A’s enrollment date, A was under any creditable coverage. Accord- not diagnosed with breast cancer. ingly, if a child is enrolled in a group (c) General notice of preexisting condi- health plan (or other creditable cov- tion exclusion. A group health plan im- erage) within 30 days after adoption or posing a preexisting condition exclu- placement for adoption and subse- sion, and a health insurance issuer of- quently enrolls in another group health fering group health insurance coverage plan without a significant break in subject to a preexisting condition ex- coverage (as described in clusion, must provide a written general § 146.113(b)(2)(iii)), the other plan may notice of preexisting condition exclu- not impose any preexisting condition sion to participants under the plan and exclusion on the child. This rule does cannot impose a preexisting condition not apply to coverage before the date exclusion with respect to a participant of such adoption or placement for adop- or a dependent of the participant until tion. such a notice is provided. (3) Significant break in coverage. Para- (1) Manner and timing. A plan or graphs (b)(1) and (2) of this section no issuer must provide the general notice longer apply to a child after a signifi- of preexisting condition exclusion as cant break in coverage. (See part of any written application mate- § 146.113(b)(2)(iii) for rules relating to rials distributed by the plan or issuer the determination of a significant for enrollment. If the plan or issuer break in coverage.) does not distribute such materials, the notice must be provided by the earliest (4) Special enrollment. For special en- date following a request for enrollment rollment rules relating to new depend- that the plan or issuer, acting in a rea- ents, see § 146.117(b). sonable and prompt fashion, can pro- (5) Pregnancy. A group health plan, vide the notice. and a health insurance issuer offering (2) Content. The general notice of pre- group health insurance coverage, may existing condition exclusion must no- not impose a preexisting condition ex- tify participants of the following: clusion relating to pregnancy. (i) The existence and terms of any (6) Genetic information—(i) A group preexisting condition exclusion under health plan, and a health insurance the plan. This description includes the issuer offering group health insurance length of the plan’s look-back period coverage, may not impose a preexisting (which is not to exceed 6 months under condition exclusion relating to a condi- paragraph (a)(2)(i) of this section); the tion based solely on genetic informa- maximum preexisting condition exclu- tion. However, if an individual is diag- sion period under the plan (which can- nosed with a condition, even if the con- not exceed 12 months (or 18-months for dition relates to genetic information, late enrollees) under paragraph the plan may impose a preexisting con- (a)(2)(ii) of this section); and how the dition exclusion with respect to the plan will reduce the maximum pre- condition, subject to the other limita- existing condition exclusion period by tions of this section. creditable coverage (described in para- (ii) The rules of this paragraph (b)(6) graph (a)(2)(iii) of this section). are illustrated by the following exam- (ii) A description of the rights of in- ple: dividuals to demonstrate creditable

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coverage, and any applicable waiting first day of coverage, or, if you were in a periods, through a certificate of cred- waiting period, from the first day of your itable coverage (as required by waiting period. However, you can reduce the § 146.115(a)) or through other means (as length of this exclusion period by the num- described in § 146.115(c)). This must in- ber of days of your prior ‘‘creditable cov- clude a description of the right of the erage.’’ Most prior health coverage is cred- individual to request a certificate from itable coverage and can be used to reduce the preexisting condition exclusion if you have a prior plan or issuer, if necessary, and not experienced a break in coverage of at a statement that the current plan or least 63 days. To reduce the 12-month (or 18- issuer will assist in obtaining a certifi- month) exclusion period by your creditable cate from any prior plan or issuer, if coverage, you should give us a copy of any necessary. certificates of creditable coverage you have. (iii) A person to contact (including If you do not have a certificate, but you do an address or telephone number) for ob- have prior health coverage, we will help you taining additional information or as- obtain one from your prior plan or issuer. sistance regarding the preexisting con- There are also other ways that you can show dition exclusion. you have creditable coverage. Please contact (3) Duplicate notices not required. If a us if you need help demonstrating creditable notice satisfying the requirements of coverage. this paragraph (c) is provided to an in- All questions about the preexisting condi- dividual, the obligation to provide a tion exclusion and creditable coverage general notice of preexisting condition should be directed to Individual B at Address exclusion with respect to that indi- M or Telephone Number N. (ii) Conclusion. In this Example, the plan vidual is satisfied for both the plan and satisfies the general notice requirement of the issuer. this paragraph (c), and thus also satisfies (4) Example with sample language. The this requirement for any issuer providing the rules of this paragraph (c) are illus- coverage. trated by the following example, which includes sample language that plans (d) Determination of creditable cov- and issuers can use as a basis for pre- erage—(1) Determination within reason- paring their own notices to satisfy the able time. If a group health plan or requirements of this paragraph (c): health insurance issuer offering group health insurance coverage receives Example. (i) Facts. A group health plan makes coverage effective on the first day of creditable coverage information under the first calendar month after hire and on § 146.115, the plan or issuer is required, each January 1 following an open season. within a reasonable time following re- The plan imposes a 12-month maximum pre- ceipt of the information, to make a de- existing condition exclusion (18 months for termination regarding the amount of late enrollees) and uses a 6-month look-back period. As part of the enrollment application the individual’s creditable coverage materials, the plan provides the following and the length of any exclusion that statement: remains. Whether this determination is This plan imposes a preexisting condition made within a reasonable time depends exclusion. This means that if you have a on the relevant facts and cir- medical condition before coming to our plan, cumstances. Relevant facts and cir- you might have to wait a certain period of time before the plan will provide coverage cumstances include whether a plan’s for that condition. This exclusion applies application of a preexisting condition only to conditions for which medical advice, exclusion would prevent an individual diagnosis, care, or treatment was rec- from having access to urgent medical ommended or received within a six-month care. period. Generally, this six-month period ends the day before your coverage becomes effec- (2) No time limit on presenting evidence tive. However, if you were in a waiting pe- of creditable coverage. A plan or issuer riod for coverage, the six-month period ends may not impose any limit on the on the day before the waiting period begins. amount of time that an individual has The preexisting condition exclusion does not to present a certificate or other evi- apply to pregnancy nor to a child who is en- dence of creditable coverage. rolled in the plan within 30 days after birth, adoption, or placement for adoption. (3) Example. The rules of this para- This exclusion may last up to 12 months (18 graph (d) are illustrated by the fol- months if you are a late enrollee) from your lowing example:

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Example. (i) Facts. A group health plan im- (iv) A description of any applicable poses a preexisting condition exclusion pe- appeal procedures established by the riod of 12 months. After receiving the gen- plan or issuer. eral notice of preexisting condition exclusion, Individual H develops an urgent health (3) Duplicate notices not required. If a condition before receiving a certificate of notice satisfying the requirements of creditable coverage from H’s prior group this paragraph (e) is provided to an in- health plan. H attests to the period of prior dividual, the obligation to provide this coverage, presents corroborating documenta- individual notice of preexisting condition of the coverage period, and authorizes tion exclusion with respect to that in- the plan to request a certificate on H’s be- dividual is satisfied for both the plan half in accordance with the rules of § 146.115. (ii) Conclusion. In this Example, the plan and the issuer. must review the evidence presented by H and (4) Examples. The rules of this para- make a determination of creditable coverage graph (e) are illustrated by the fol- within a reasonable time that is consistent lowing examples: with the urgency of H’s health condition. (This determination may be modified as per- Example 1. (i) Facts. A group health plan mitted under paragraph (f) of this section.) imposes a preexisting condition exclusion period of 12 months. After receiving the gen- (e) Individual notice of period of pre- eral notice of preexisting condition exclu- existing condition exclusion. After an in- sion, Individual G presents a certificate of dividual has presented evidence of creditable coverage indicating 240 days of creditable coverage and after the plan creditable coverage. Within seven days of re- or issuer has made a determination of ceipt of the certificate, the plan determines creditable coverage under paragraph that G is subject to a preexisting condition exclusion of 125 days, the last day of which is (d) of this section, the plan or issuer March 5. Five days later, the plan notifies G must provide the individual a written that, based on the certificate G submitted, G notice of the length of preexisting con- is subject to a preexisting condition exclu- dition exclusion that remains after off- sion period of 125 days, ending on March 5. setting for prior creditable coverage. The notice also explains the opportunity to This individual notice is not required submit additional evidence of creditable cov- to identify any medical conditions spe- erage and the plan’s appeal procedures. The cific to the individual that could be notice does not identify any of G’s medical conditions that could be subject to the exclu- subject to the exclusion. A plan or sion. issuer is not required to provide this (ii) Conclusion. In this Example 1, the plan notice if the plan or issuer does not im- satisfies the requirements of this paragraph pose any preexisting condition exclu- (e). sion on the individual or if the plan’s Example 2. (i) Facts. Same facts as in Exam- preexisting condition exclusion is comple 1, except that the plan determines that G pletely offset by the individual’s prior has 430 days of creditable coverage based on creditable coverage. G’s certificate indicating 430 days of cred- (1) Manner and timing. The individual itable coverage under G’s prior plan. notice must be provided by the earliest (ii) Conclusion. In this Example 2, the plan is not required to notify G that G will not be date following a determination that subject to a preexisting condition exclusion. the plan or issuer, acting in a reasonable and prompt fashion, can provide (f) Reconsideration. Nothing in this the notice. section prevents a plan or issuer from (2) Content. A plan or issuer must dis- modifying an initial determination of close— creditable coverage if it determines (i) Its determination of any pre- that the individual did not have the existing condition exclusion period claimed creditable coverage, provided that applies to the individual (includ- that — ing the last day on which the pre- (1) A notice of the new determination existing condition exclusion applies); (consistent with the requirements of (ii) The basis for such determination, paragraph (e) of this section) is pro- including the source and substance of vided to the individual; and any information on which the plan or (2) Until the notice of the new deter- issuer relied; mination is provided, the plan or (iii) An explanation of the individ- issuer, for purposes of approving access ual’s right to submit additional evi- to medical services (such as a pre-sur- dence of creditable coverage; and gery authorization), acts in a manner

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consistent with the initial determina- existence or history of a medical condition. tion— [69 FR 78783, Dec. 30, 2004] (1) Are unable to acquire medical care coverage for such condition § 146.113 Rules relating to creditable through insurance or from an HMO, or coverage. (2) Are able to acquire such coverage (a) General rules—(1) Creditable cov- only at a rate which is substantially in erage. For purposes of this section, ex- excess of the rate for such coverage cept as provided in paragraph (a)(2) of through the membership organization. this section, the term creditable cov- (viii) A health plan offered under erage means coverage of an individual Title 5 U.S.C. Chapter 89 (the Federal under any of the following: Employees Health Benefits Program). (i) A group health plan as defined in (ix) A public health plan. For pur- § 146.145(a). poses of this section, a public health (ii) Health insurance coverage as de- plan means any plan established or fined in § 144.103 of this chapter (wheth- maintained by a State, the U.S. gov- er or not the entity offering the cov- ernment, a foreign country, or any po- erage is subject to the requirements of litical subdivision of a State, the U.S. this part and 45 CFR part 148 and without regard to whether the coverage is government, or a foreign country that offered in the group market, the indi- provides health coverage to individuals vidual market, or otherwise). who are enrolled in the plan. (iii) Part A or B of Title XVIII of the (x) A health benefit plan under sec- Social Security Act (Medicare). tion 5(e) of the Peace Corps Act (22 (iv) Title XIX of the Social Security U.S.C. 2504(e)). Act (Medicaid), other than coverage (xi) Title XXI of the Social Security consisting solely of benefits under sec- Act (State Children’s Health Insurance tion 1928 of the Social Security Act Program). (the program for distribution of pedi- (2) Excluded coverage. Creditable cov- atric vaccines). erage does not include coverage of sole- (v) Title 10 U.S.C. Chapter 55 (med- ly excepted benefits (described in ical and dental care for members and § 146.145). certain former members of the uni- (3) Methods of counting creditable cov- formed services, and for their depend- erage. For purposes of reducing any ents; for purposes of Title 10 U.S.C. preexisting condition exclusion period, Chapter 55, uniformed services means as provided under § 146.111(a)(2)(iii), the the armed forces and the Commis- amount of an individual’s creditable sioned Corps of the National Oceanic coverage generally is determined by and Atmospheric Administration and using the standard method described in of the Public Health Service). paragraph (b) of this section. A plan or (vi) A medical care program of the issuer may use the alternative method Indian Health Service or of a tribal or- under paragraph (c) of this section with ganization. respect to any or all of the categories (vii) A State health benefits risk of benefits described under paragraph pool. For purposes of this section, a (c)(3) of this section. State health benefits risk pool means— (A) An organization qualifying under (b) Standard method—(1) Specific bene- section 501(c)(26) of the Internal Rev- fits not considered. Under the standard enue Code; method, the amount of creditable cov- (B) A qualified high risk pool de- erage is determined without regard to scribed in section 2744(c)(2) of the PHS the specific benefits included in the Act; or coverage. (C) Any other arrangement sponsored (2) Counting creditable coverage—(i) by a State, the membership composi- Based on days. For purposes of reducing tion of which is specified by the State the preexisting condition exclusion pe- and which is established and main- riod that applies to an individual, the tained primarily to provide health cov- amount of creditable coverage is deter- erage for individuals who are residents mined by counting all the days on of such State and who, by reason of the which the individual has one or more

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types of creditable coverage. Accord- Q’s plan on the 63rd day after the last date ingly, if on a particular day an indi- of coverage under P’s plan. vidual has creditable coverage from (ii) Conclusion. In this Example 2, A has a break in coverage of 62 days. Because A’s more than one source, all the cred- break in coverage is not a significant break itable coverage on that day is counted in coverage, Q’s plan must count A’s prior as one day. Any days in a waiting pe- creditable coverage for purposes of reducing riod for coverage are not creditable the plan’s preexisting condition exclusion coverage. period that applies to A. (ii) Days not counted before significant Example 3. (i) Facts. Same facts as Example break in coverage. Days of creditable 1, except that Q’s plan provides benefits through an insurance policy that, as re- coverage that occur before a signifi- quired by applicable State insurance laws, cant break in coverage are not required defines a significant break in coverage as 90 to be counted. days. (iii) Significant break in coverage de- (ii) Conclusion. In this Example 3, under fined—A significant break in coverage State law, the issuer that provides group means a period of 63 consecutive days health insurance coverage to Q’s plan must during each of which an individual does count A’s period of creditable coverage prior to the 63-day break. (However, if Q’s plan not have any creditable coverage. (See was a self-insured plan, the coverage would also § 146.143(c)(2)(iii) regarding the ap- not be subject to State law. Therefore, the plicability to issuers of State insurance health coverage would not be governed by laws that require a break of more than the longer break rules and A’s previous 63 days before an individual has a sig- health coverage could be disregarded.) nificant break in coverage for purposes Example 4. [Reserved] of State insurance law.) Example 5. (i) Facts. Individual C has creditable coverage under Employer S’s plan for (iv) Periods that toll a significant 200 days before coverage ceases. C is provided break. Days in a waiting period and a certificate of creditable coverage on C’s days in an affiliation period are not last day of coverage. C then does not have taken into account in determining any creditable coverage for 51 days before whether a significant break in coverage being hired by Employer T. T’s plan has a 3- has occurred. In addition, for an indi- month waiting period. C works for T for 2 months and then terminates employment. vidual who elects COBRA continuation Eleven days after terminating employment coverage during the second election pe- with T, C begins working for Employer U. riod provided under the Trade Act of U’s plan has no waiting period, but has a 6- 2002, the days between the date the in- month preexisting condition exclusion. dividual lost group health plan cov- (ii) Conclusion. In this Example 5, C does erage and the first day of the second not have a significant break in coverage be- COBRA election period are not taken cause, after disregarding the waiting period into account in determining whether a under T’s plan, C had only a 62-day break in coverage (51 days plus 11 days). Accordingly, significant break in coverage has oc- C has 200 days of creditable coverage, and U’s curred. plan may not apply its 6-month preexisting (v) Examples. The rules of this para- condition exclusion with respect to C. graph (b)(2) are illustrated by the fol- Example 6. [Reserved] lowing examples: Example 7. (i) Facts. Individual E has creditable coverage under Employer X’s plan. E Example 1. (i) Facts. Individual A has cred- is provided a certificate of creditable cov- itable coverage under Employer P’s plan for erage on E’s last day of coverage. On the 63rd 18 months before coverage ceases. A is pro- day without coverage, E submits a substan- vided a certificate of creditable coverage on tially complete application for a health in- A’s last day of coverage. Sixty-four days surance policy in the individual market. E’s after the last date of coverage under P’s application is accepted and coverage is made plan, A is hired by Employer Q and enrolls in effective 10 days later. Q’s group health plan. Q’s plan has a 12- (ii) Conclusion. In this Example 7, because E month preexisting condition exclusion. applied for the policy before the end of the (ii) Conclusion. In this Example 1, A has a 63rd day, the period between the date of ap- break in coverage of 63 days. Because A’s plication and the first day of coverage is a break in coverage is a significant break in waiting period and no significant break in coverage, Q’s plan may disregard A’s prior coverage occurred even though the actual pe- coverage and A may be subject to a 12-month riod without coverage was 73 days. preexisting condition exclusion. Example 8. (i) Facts. Same facts as Example Example 2. (i) Facts. Same facts as Example 7, except that E’s application for a policy in 1, except that A is hired by Q and enrolls in the individual market is denied.

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(ii) Conclusion. In this Example 8, even or issuer may use the alternative though E did not obtain coverage following method for any or all of the categories. application, the period between the date of The plan or issuer may apply a dif- application and the date the coverage was denied is a waiting period. However, to avoid ferent preexisting condition exclusion a significant break in coverage, no later than period with respect to each category the day after the application for the policy is (and may apply a different preexisting denied E would need to do one of the fol- condition exclusion period for benefits lowing: submit a substantially complete ap- that are not within any category). The plication for a different individual market creditable coverage determined for a policy; obtain coverage in the group market; or be in a waiting period for coverage in the category of benefits applies only for group market. purposes of reducing the preexisting condition exclusion period with respect (vi) Other permissible counting meth- to that category. An individual’s cred- ods—(A) Rule. Notwithstanding any itable coverage for benefits that are other provisions of this paragraph not within any category for which the (b)(2), for purposes of reducing a pre- alternative method is being used is de- existing condition exclusion period (but not for purposes of issuing a cer- termined under the standard method of tificate under § 146.115), a group health paragraph (b) of this section. plan, and a health insurance issuer of- (2) Uniform application. A plan or fering group health insurance coverage, issuer using the alternative method is may determine the amount of cred- required to apply it uniformly to all itable coverage in any other manner participants and beneficiaries under that is at least as favorable to the indi- the plan or health insurance coverage. vidual as the method set forth in this The use of the alternative method is paragraph (b)(2), subject to the require- required to be set forth in the plan. ments of other applicable law. (3) Categories of benefits. The alter- (B) Example. The rule of this para- native method for counting creditable graph (b)(2)(vi) is illustrated by the fol- coverage may be used for coverage for lowing example: the following categories of benefits— Example. (i) Facts. Individual F has cov- (i) Mental health; erage under Group Health Plan Y from Janu- (ii) Substance abuse treatment; ary 3, 1997 through March 25, 1997. F then be- (iii) Prescription drugs; comes covered by Group Health Plan Z. F’s (iv) Dental care; or enrollment date in Plan Z is May 1, 1997. Plan Z has a 12-month preexisting condition (v) Vision care. exclusion. (4) Plan notice. If the alternative (ii) Conclusion. In this Example, Plan Z may method is used, the plan is required determine, in accordance with the rules pre- to— scribed in paragraphs (b)(2)(i), (ii), and (iii) of this section, that F has 82 days of creditable (i) State prominently that the plan is coverage (29 days in January, 28 days in Feb- using the alternative method of count- ruary, and 25 days in March). Thus, the pre- ing creditable coverage in disclosure existing condition exclusion will no longer statements concerning the plan, and apply to F on February 8, 1998 (82 days before state this to each enrollee at the time the 12-month anniversary of F’s enrollment of enrollment under the plan; and (May 1)). For administrative convenience, however, Plan Z may consider that the pre- (ii) Include in these statements a de- existing condition exclusion will no longer scription of the effect of using the al- apply to F on the first day of the month ternative method, including an identi- (February 1). fication of the categories used. (c) Alternative method—(1) Specific ben- (5) Issuer notice. With respect to efits considered. Under the alternative health insurance coverage offered by method, a group health plan, or a an issuer in the small or large group health insurance issuer offering group market, if the insurance coverage uses health insurance coverage, determines the alternative method, the issuer the amount of creditable coverage states prominently in any disclosure based on coverage within any category statement concerning the coverage, of benefits described in paragraph (c)(3) that the issuer is using the alternative of this section and not based on cov- method, and includes in such state- erage for any other benefits. The plan ments a description of the effect of

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using the alternative method. This ap- 1, 2002 (D’s enrollment date). Employer Y’s plies separately to each type of cov- plan uses the alternative method of counting erage offered by the health insurance creditable coverage and imposes a 12-month issuer. preexisting condition exclusion on prescription drug benefits. (6) Disclosure of information on pre- (ii) Conclusion. In this Example, Employer vious benefits. See § 146.115(b) for special Y’s plan may impose a 275-day preexisting rules concerning disclosure of coverage condition exclusion with respect to D for to a plan, or issuer, using the alter- prescription drug benefits because D had 90 native method of counting creditable days of creditable coverage relating to pre- coverage under this paragraph (c). scription drug benefits within D’s determina- (7) Counting creditable coverage—(i) In tion period. general. Under the alternative method, [69 FR 78788, Dec. 30, 2004] the group health plan or issuer counts creditable coverage within a category § 146.115 Certification and disclosure if any level of benefits is provided of previous coverage. within the category. Coverage under a (a) Certificate of creditable coverage— reimbursement account or arrange- (1) Entities required to provide certifi- ment, such as a flexible spending ar- cate—(i) In General. A group health rangement (as defined in section plan, and each health insurance issuer 106(c)(2) of the Internal Revenue Code), offering group health insurance cov- does not constitute coverage within erage under a group health plan, is re- any category. quired to furnish certificates of cred- (ii) Special rules. In counting an indi- itable coverage in accordance with this vidual’s creditable coverage under the paragraph (a). alternative method, the group health (ii) Duplicate certificates not required. plan, or issuer, first determines the An entity required to provide a certifi- amount of the individual’s creditable cate under this paragraph (a) with re- coverage that may be counted under spect to an individual satisfies that re- paragraph (b) of this section, up to a quirement if another party provides total of 365 days of the most recent the certificate, but only to the extent creditable coverage (546 days for a late that the certificate contains the infor- enrollee). The period over which this mation required in paragraph (a)(3) of creditable coverage is determined is re- this section. For example, in the case ferred to as the determination period. of a group health plan funded through Then, for the category specified under an insurance policy, the issuer satisfies the alternative method, the plan or the certification requirement with re- issuer counts within the category all spect to an individual if the plan actu- days of coverage that occurred during ally provides a certificate that includes the determination period (whether or all the information required under not a significant break in coverage for paragraph (a)(3) of this section with re- that category occurs), and reduces the spect to the individual. individual’s preexisting condition ex- (iii) Special rule for group health plans. clusion period for that category by To the extent coverage under a plan that number of days. The plan or issuer consists of group health insurance cov- may determine the amount of cred- erage, the plan satisfies the certifi- itable coverage in any other reasonable cation requirements under this para- manner, uniformly applied, that is at graph (a) if any issuer offering the cov- least as favorable to the individual. erage is required to provide the certifi- (iii) Example. The rules of this para- cates pursuant to an agreement be- graph (c)(7) are illustrated by the fol- tween the plan and the issuer. For ex- lowing example: ample, if there is an agreement be- Example. (i) Facts. Individual D enrolls in tween an issuer and a plan sponsor Employer V’s plan on January 1, 2001. Cov- under which the issuer agrees to pro- erage under the plan includes prescription vide certificates for individuals covered drug benefits. On April 1, 2001, the plan under the plan, and the issuer fails to ceases providing prescription drug benefits. D’s employment with Employer V ends on provide a certificate to an individual January 1, 2002, after D was covered under when the plan would have been re- Employer V’s group health plan for 365 days. quired to provide one under this para- D enrolls in Employer Y’s plan on February graph (a), then the issuer, but not the

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plan, violates the certification require- tive date for changing enrollment opments of this paragraph (a). tions under the plan, the issuer may (iv) Special rules for issuers—(A)(1) Re- presume (absent information to the sponsibility of issuer for coverage period. contrary) that the individual’s cov- An issuer is not required to provide in- erage under the plan continues. There- formation regarding coverage provided fore, the issuer is required to provide to an individual by another party. information to the plan in accordance (2) Example. The rule of this para- with this paragraph (a)(1)(iv)(B)(1) (and graph (a)(1)(iv)(A) is illustrated by the is not required to provide an automatic following example: certificate under paragraph (a)(2)(ii) of this section). Example. (i) Facts. A plan offers coverage with an HMO option from one issuer and an (2) Example. The rule of this para- indemnity option from a different issuer. graph (a)(1)(iv)(B) is illustrated by the The HMO has not entered into an agreement following example: with the plan to provide certificates as per- Example. (i) Facts. A group health plan pro- mitted under paragraph (a)(1)(iii) of this sec- vides coverage under an HMO option and an tion. indemnity option through different issuers, (ii) Conclusion. In this Example, if an em- and only allows employees to switch on each ployee switches from the indemnity option January 1. Neither the HMO nor the indem- to the HMO option and later ceases to be nity issuer has entered into an agreement covered under the plan, any certificate pro- with the plan to provide certificates as per- vided by the HMO is not required to provide mitted under paragraph (a)(1)(iii) of this sec- information regarding the employee’s cov- tion. erage under the indemnity option. (ii) Conclusion. In this Example, if an em- (B)(1) Cessation of issuer coverage prior ployee switches from the indemnity option to cessation of coverage under a plan. If to the HMO option on January 1, the indem- an individual’s coverage under an nity issuer must provide the plan (or a per- issuer’s policy or contract ceases be- son designated by the plan) with appropriate information with respect to the individual’s fore the individual’s coverage under coverage with the indemnity issuer. How- the plan ceases, the issuer is required ever, if the individual’s coverage with the in- to provide sufficient information to the demnity issuer ceases at a date other than plan (or to another party designated by January 1, the issuer is instead required to the plan) to enable the plan (or other provide the individual with an automatic party), after cessation of the individ- certificate. ual’s coverage under the plan, to pro- (2) Individuals for whom certificate vide a certificate that reflects the pe- must be provided; timing of issuance—(i) riod of coverage under the policy or Individuals. A certificate must be pro- contract. By providing that informa- vided, without charge, for participants tion to the plan, the issuer satisfies its or dependents who are or were covered obligation to provide an automatic cer- under a group health plan upon the oc- tificate for that period of creditable currence of any of the events described coverage with respect to the individual in paragraph (a)(2)(ii) or (iii) of this under paragraph (a)(2)(ii) of this sec- section. tion. The issuer, however, must still (ii) Issuance of automatic certificates. provide a certificate upon request as The certificates described in this para- required under paragraph (a)(2)(iii) of graph (a)(2)(ii) are referred to as auto- this section. In addition, the issuer is matic certificates. required to cooperate with the plan in (A) Qualified beneficiaries upon a responding to any request made under qualifying event. In the case of an indi- paragraph (b)(2) of this section (relat- vidual who is a qualified beneficiary ing to the alternative method of count- (as defined in section 607(3) of ERISA, ing creditable coverage). Moreover, if section 4980(B)(g)(1) of the Internal the individual’s coverage under the Revenue Code, or section 2208 of the plan ceases at the time the individual’s PHS Act) entitled to elect COBRA con- coverage under the issuer’s policy or tinuation coverage, an automatic cer- contract ceases, the issuer must still tificate is required to be provided at provide an automatic certificate under the time the individual would lose cov- paragraph (a)(2)(ii) of this section. If an erage under the plan in the absence of individual’s coverage under an issuer’s COBRA continuation coverage or alter- policy or contract ceases on the effec- native coverage elected instead of

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COBRA continuation coverage. A plan requirement if it provides the auto- or issuer satisfies this requirement if it matic certificate within a reasonable provides the automatic certificate no time after coverage ceases (or after the later than the time a notice is required expiration of any grace period for non- to be furnished for a qualifying event payment of premiums). An automatic under section 606 of ERISA, section certificate is required to be provided to 4980(B)(f)(6) of the Internal Revenue such an individual regardless of wheth- Code, and section 2206 of the PHS Act er the individual has previously re- (relating to notices required under ceived an automatic certificate under COBRA). paragraph (a)(2)(ii)(A) of this section. (B) Other individuals when coverage (iii) Any individual upon request. A ceases. In the case of an individual who certificate must be provided in re- is not a qualified beneficiary entitled sponse to a request made by, or on be- to elect COBRA continuation coverage, half of, an individual at any time while an automatic certificate must be pro- the individual is covered under a plan vided at the time the individual ceases and up to 24 months after coverage to be covered under the plan. A plan or ceases. Thus, for example, a plan in issuer satisfies the requirement to pro- which an individual enrolls may, if au- vide an automatic certificate at the thorized by the individual, request a time the individual ceases to be cov- certificate of the individual’s cred- ered if it provides the automatic cer- itable coverage on behalf of the indi- tificate within a reasonable time after vidual from a plan in which the indi- coverage ceases (or after the expiration vidual was formerly enrolled. After the of any grace period for nonpayment of request is received, a plan or issuer is premiums). required to provide the certificate by (1) The cessation of temporary con- the earliest date that the plan or tinuation coverage (TCC) under Title 5 issuer, acting in a reasonable and U.S.C. Chapter 89 (the Federal Employ- prompt fashion, can provide the certifi- ees Health Benefit Program) is a ces- cate. A certificate is required to be pro- sation of coverage upon which an auto- vided under this paragraph (a)(2)(iii) matic certificate must be provided. even if the individual has previously (2) In the case of an individual who is received a certificate under this para- entitled to elect to continue coverage graph (a)(2)(iii) or an automatic certifi- under a State program similar to cate under paragraph (a)(2)(ii) of this COBRA and who receives the auto- section. matic certificate not later than the (iv) Examples. The rules of this para- time a notice is required to be fur- graph (a)(2) are illustrated by the fol- nished under the State program, the lowing examples: certificate is deemed to be provided within a reasonable time after cov- Example 1. (i) Facts. Individual A termi- erage ceases under the plan. nates employment with Employer Q. A is a (3) If an individual’s coverage ceases qualified beneficiary entitled to elect due to the operation of a lifetime limit COBRA continuation coverage under Em- on all benefits, coverage is considered ployer Q’s group health plan. A notice of the rights provided under COBRA is typically to cease for purposes of this paragraph furnished to qualified beneficiaries under the (a)(2)(ii)(B) on the earliest date that a plan within 10 days after a covered employee claim is denied due to the operation of terminates employment. the lifetime limit. (ii) Conclusion. In this Example 1, the auto- (C) Qualified beneficiaries when matic certificate may be provided at the COBRA ceases. In the case of an indi- same time that A is provided the COBRA no- vidual who is a qualified beneficiary tice. and has elected COBRA continuation Example 2. (i) Facts. Same facts as Example coverage (or whose coverage has con- 1, except that the automatic certificate for A tinued after the individual became en- is not completed by the time the COBRA notice is furnished to A. titled to elect COBRA continuation (ii) Conclusion. In this Example 2, the auto- coverage), an automatic certificate is matic certificate may be provided after the to be provided at the time the indi- COBRA notice but must be provided within vidual’ s coverage under the plan the period permitted by law for the delivery ceases. A plan, or issuer, satisfies this of notices under COBRA.

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Example 3. (i) Facts. Employer R maintains a written certificate (such as by tele- an insured group health plan. R has never phone); and had 20 employees and thus R’s plan is not (3) The receiving plan or issuer re- subject to the COBRA continuation provi- ceives the information from the send- sions. However, R is in a State that has a State program similar to COBRA. B termi- ing plan or issuer through such means nates employment with R and loses coverage within the time required under para- under R’s plan. graph (a)(2) of this section. (ii) Conclusion. In this Example 3, the auto- (ii) Required information. The certifi- matic certificate must be provided not later cate must include the following— than the time a notice is required to be fur- (A) The date the certificate is issued; nished under the State program. (B) The name of the group health Example 4. (i) Facts. Individual C termi- plan that provided the coverage de- nates employment with Employer S and re- scribed in the certificate; ceives both a notice of C’s rights under (C) The name of the participant or COBRA and an automatic certificate. C dependent with respect to whom the elects COBRA continuation coverage under Employer S’s group health plan. After four certificate applies, and any other infor- months of COBRA continuation coverage and mation necessary for the plan pro- the expiration of a 30-day grace period, S’s viding the coverage specified in the group health plan determines that C’s certificate to identify the individual, COBRA continuation coverage has ceased such as the individual’s identification due to a failure to make a timely payment number under the plan and the name of for continuation coverage. the participant if the certificate is for (ii) Conclusion. In this Example 4, the plan (or includes) a dependent; must provide an updated automatic certifi- (D) The name, address, and telephone cate to C within a reasonable time after the number of the plan administrator or end of the grace period. Example 5. (i) Facts. Individual D is cur- issuer required to provide the certifi- rently covered under the group health plan cate; of Employer T. D requests a certificate, as (E) The telephone number to call for permitted under paragraph (a)(2)(iii) of this further information regarding the cer- section. Under the procedure for T’s plan, tificate (if different from paragraph certificates are mailed (by first class mail) 7 (a)(3)(ii)(D) of this section); business days following receipt of the re- (F) Either— quest. This date reflects the earliest date (1) A statement that an individual that the plan, acting in a reasonable and has at least 18 months (for this pur- prompt fashion, can provide certificates. pose, 546 days is deemed to be 18 (ii) Conclusion. In this Example 5, the plan’s procedure satisfies paragraph (a)(2)(iii) of months) of creditable coverage, dis- this section. regarding days of creditable coverage before a significant break in coverage, (3) Form and content of certificate—(i) or Written certificate—(A) In General. Ex- (2) The date any waiting period (and cept as provided in paragraph affiliation period, if applicable) began (a)(3)(i)(B) of this section, the certifi- and the date creditable coverage began; cate must be provided in writing (or (G) The date creditable coverage any other medium approved by the ended, unless the certificate indicates Secretary). that creditable coverage is continuing (B) Other permissible forms. No written as of the date of the certificate; and certificate is required to be provided (H) An educational statement regard- under this paragraph (a) with respect ing HIPAA, which explains: to a particular event described in para- (1) The restrictions on the ability of graph (a)(2)(ii) or (iii) of this section, a plan or issuer to impose a preexisting if— condition exclusion (including an indi- (1) An individual who is entitled to vidual’s ability to reduce a preexisting receive the certificate requests that condition exclusion by creditable cov- the certificate be sent to another plan erage); or issuer instead of to the individual; (2) Special enrollment rights; (2) The plan or issuer that would oth- (3) The prohibitions against discrimi- erwise receive the certificate agrees to nation based on any health factor; accept the information in this para- (4) The right to individual health graph (a)(3) through means other than coverage;

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(5) The fact that State law may re- paragraph (a)(2) of this section or an quire issuers to provide additional pro- entity requesting the certificate on be- tections to individuals in that State; half of the individual. The certificate and may be provided by first-class mail. If (6) Where to get more information. the certificate or certificates are pro- (iii) Periods of coverage under the cer- vided to the participant and the par- tificate. If an automatic certificate is ticipant’s spouse at the participant’s provided pursuant to paragraph last known address, then the require- (a)(2)(ii) of this section, the period that ments of this paragraph (a)(4) are satis- must be included on the certificate is fied with respect to all individuals re- the last period of continuous coverage siding at that address. If a dependent’s ending on the date coverage ceased. If last known address is different than an individual requests a certificate the participant’s last known address, a pursuant to paragraph (a)(2)(iii) of this separate certificate is required to be section, the certificate provided must provided to the dependent at the de- include each period of continuous cov- pendent’s last known address. If sepa- erage ending within the 24-month pe- rate certificates are being provided by riod ending on the date of the request mail to individuals who reside at the (or continuing on the date of the re- same address, separate mailings of quest). A separate certificate may be each certificate are not required. provided for each such period of contin- (ii) Procedure for requesting certifi- uous coverage. cates. A plan or issuer must establish a (iv) Combining information for families. written procedure for individuals to re- A certificate may provide information quest and receive certificates pursuant with respect to both a participant and to paragraph (a)(2)(iii) of this section. the participant’s dependents if the in- The written procedure must include all formation is identical for each indi- contact information necessary to re- vidual. If the information is not iden- quest a certificate (such as name and tical, certificates may be provided on phone number or address). one form if the form provides all the (iii) Designated recipients. If an auto- required information for each indi- matic certificate is required to be pro- vidual and separately states the infor- vided under paragraph (a)(2)(ii) of this mation that is not identical. section, and the individual entitled to (v) Model certificate. The require- receive the certificate designates an- ments of paragraph (a)(3)(ii) of this sec- other individual or entity to receive tion are satisfied if the plan or issuer the certificate, the plan or issuer re- provides a certificate in accordance sponsible for providing the certificate with a model certificate authorized by is permitted to provide the certificate the Secretary. to the designated individual or entity. (vi) Excepted benefits; categories of ben- If a certificate is required to be pro- efits. No certificate is required to be vided upon request under paragraph furnished with respect to excepted ben- (a)(2)(iii) of this section and the indi- efits described in § 146.145(c). In addi- vidual entitled to receive the certifi- tion, the information in the certificate cate designates another individual or regarding coverage is not required to entity to receive the certificate, the specify categories of benefits described plan or issuer responsible for providing in § 146.113(c) (relating to the alter- the certificate is required to provide native method of counting creditable the certificate to the designated indi- coverage). However, if excepted bene- vidual or entity. fits are provided concurrently with (5) Special rules concerning dependent other creditable coverage (so that the coverage—(i)(A) Reasonable efforts. A coverage does not consist solely of ex- plan or issuer is required to use reason- cepted benefits), information con- able efforts to determine any informa- cerning the benefits may be required to tion needed for a certificate relating to be disclosed under paragraph (b) of this dependent coverage. In any case in section. which an automatic certificate is re- (4) Procedures—(i) Method of delivery. quired to be furnished with respect to a The certificate is required to be pro- dependent under paragraph (a)(2)(ii) of vided to each individual described in this section, no individual certificate is

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required to be furnished until the plan (B) Coverage subject to section or issuer knows (or making reasonable 2721(b)(1)(B) of the PHS Act (requiring efforts should know) of the dependent’s certificates by issuers offering health cessation of coverage under the plan. insurance coverage in connection with (B) Example. The rules of this para- any group health plan, including a graph (a)(5)(i) are illustrated by the church plan or a governmental plan following example: (including the Federal Employees Health Benefits Program). Example. (i) Facts. A group health plan cov- (C) Coverage subject to section 2743 ers employees and their dependents. The of the PHS Act applicable to health in- plan annually requests all employees to provide updated information regarding depend- surance issuers in the individual mar- ents, including the specific date on which an ket. (However, this section does not re- employee has a new dependent or on which a quire a certificate to be provided with person ceases to be a dependent of the em- respect to short-term limited duration ployee. insurance, which is excluded from the (ii) Conclusion. In this Example, the plan definition of ‘‘individual health insur- has satisfied the standard in this paragraph ance coverage’’ in 45 CFR 144.103 that is (a)(5)(i) of this section that it make reason- not provided in connection with a able efforts to determine the cessation of dependents’ coverage and the related depend- group health plan, as described in para- ent coverage information. graph (a)(6)(i)(B) of this section.) (ii) Other entities. For special rules re- (ii) Special rules for demonstrating cov- quiring that certain other entities, not erage. If a certificate furnished by a subject to this part, provide certifi- plan or issuer does not provide the cates consistent with the rules of this name of any dependent covered by the section, see section 2791(a)(3) of the certificate, the procedures described in PHS Act applicable to entities de- paragraph (c)(5) of this section may be scribed in sections 2701(c)(1)(C), (D), used to demonstrate dependent status. (E), and (F) of the PHS Act (relating to In addition, these procedures may be Medicare, Medicaid, TRICARE, and In- used to demonstrate that a child was dian Health Service), section covered under any creditable coverage 2721(b)(1)(A) of the PHS Act applicable within 30 days after birth, adoption, or to non-Federal governmental plans placement for adoption. See also generally, section 2721(b)(2)(C)(ii) of the § 146.111(b), under which such a child PHS Act applicable to non-Federal cannot be subject to a preexisting con- governmental plans that elect to be ex- dition exclusion. cluded from the requirements of sub- (6) Special certification rules—(i) parts 1 through 3 of part A of title Issuers. Issuers of group and individual XXVII of the PHS Act, and section health insurance are required to pro- 9805(a) of the Internal Revenue Code vide certificates of any creditable cov- applicable to group health plans, which erage they provide in the group or indi- includes church plans (as defined in vidual health insurance market, even if section 414(e) of the Internal Revenue the coverage is provided in connection Code). with an entity or program that is not (b) Disclosure of coverage to a plan or itself required to provide a certificate issuer using the alternative method of because it is not subject to the group counting creditable coverage—(1) In gen- market provisions of this part, part 7 eral. After an individual provides a cer- of subtitle B of title I of ERISA, or tificate of creditable coverage to a plan chapter 100 of subtitle K of the Internal or issuer using the alternative method Revenue Code. This would include cov- under § 146.113(c), that plan or issuer erage provided in connection with any (requesting entity) must request that of the following: the entity that issued the certificate (A) Creditable coverage described in (prior entity) disclose the information sections 2701(c)(1)(G), (I) and (J) of the set forth in paragraph (b)(2) of this sec- PHS Act (coverage under a State tion. The prior entity is required to health benefits risk pool, a public disclose this information promptly. health plan, and a health benefit plan (2) Information to be disclosed. The under section 5(e) of the Peace Corps prior entity is required to identify to Act). the requesting entity the categories of

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benefits with respect to which the re- to make a determination, based on the questing entity is using the alternative relevant facts and circumstances, method of counting creditable cov- whether an individual has creditable erage, and the requesting entity may coverage. A plan or issuer shall treat identify specific information that the the individual as having furnished a requesting entity reasonably needs in certificate under paragraph (a) of this order to determine the individual’s section if— creditable coverage with respect to any (1) The individual attests to the pe- such category. riod of creditable coverage; (3) Charge for providing information. (2) The individual also presents rel- The prior entity may charge the re- evant corroborating evidence of some questing entity for the reasonable cost creditable coverage during the period; of disclosing such information. and (c) Ability of an individual to dem- (3) The individual cooperates with onstrate creditable coverage and waiting the plan’s or issuer’s efforts to verify period information—(1) Purpose. The the individual’s coverage. rules in this paragraph (c) implement (B) For purposes of this paragraph section 2701(c)(4) of the PHS Act, which (c)(3)(i), cooperation includes providing permits individuals to demonstrate the (upon the plan’s or issuer’s request) a duration of creditable coverage written authorization for the plan or through means other than certificates, issuer to request a certificate on behalf and section 2701(e)(3) of the PHS Act, of the individual, and cooperating in which requires the Secretary to estab- efforts to determine the validity of the lish rules designed to prevent an indi- corroborating evidence and the dates of vidual’s subsequent coverage under a creditable coverage. While a plan or group health plan or health insurance issuer may refuse to credit coverage coverage from being adversely affected where the individual fails to cooperate by an entity’s failure to provide a cer- with the plan’s or issuer’s efforts to tificate with respect to that individual. verify coverage, the plan or issuer may (2) In general. If the accuracy of a cer- not consider an individual’s inability tificate is contested or a certificate is to obtain a certificate to be evidence of unavailable when needed by an indi- the absence of creditable coverage. vidual, the individual has the right to (ii) Documents. Documents that cor- demonstrate creditable coverage (and roborate creditable coverage (and wait- waiting or affiliation periods) through ing or affiliation periods) include ex- the presentation of documents or other planations of benefits (EOBs) or other means. For example, the individual correspondence from a plan or issuer may make such a demonstration indicating coverage, pay stubs showing when— a payroll deduction for health cov- (i) An entity has failed to provide a erage, a health insurance identification certificate within the required time; card, a certificate of coverage under a (ii) The individual has creditable cov- group health policy, records from med- erage provided by an entity that is not ical care providers indicating health required to provide a certificate of the coverage, third party statements coverage pursuant to paragraph (a) of verifying periods of coverage, and any this section; other relevant documents that evi- (iii) The individual has an urgent dence periods of health coverage. medical condition that necessitates a (iii) Other evidence. Creditable cov- determination before the individual erage (and waiting or affiliation peri- can deliver a certificate to the plan; or ods) may also be corroborated through (iv) The individual lost a certificate means other than documentation, such that the individual had previously re- as by a telephone call from the plan or ceived and is unable to obtain another provider to a third party verifying certificate. creditable coverage. (3) Evidence of creditable coverage—(i) (iv) Example. The rules of this para- Consideration of evidence—(A) A plan or graph (c)(3) are illustrated by the fol- issuer is required to take into account lowing example: all information that it obtains or that Example. (i) Facts. Individual F terminates is presented on behalf of an individual employment with Employer W and, a month

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later, is hired by Employer X. X’s group ditions in paragraph (a)(3) of this sec- health plan imposes a preexisting condition tion are satisfied. The special enroll- exclusion of 12 months on new enrollees ment rights under this paragraph (a) under the plan and uses the standard method of determining creditable coverage. F fails to apply without regard to the dates on receive a certificate of prior coverage from which an individual would otherwise be the self-insured group health plan main- able to enroll under the plan. tained by F’s prior employer, W, and re- (2) Individuals eligible for special en- quests a certificate. However, F (and X’s rollment—(i) When employee loses cov- plan, on F’s behalf and with F’s cooperation) erage. A current employee and any de- is unable to obtain a certificate from W’s pendents (including the employee’s plan. F attests that, to the best of F’s knowledge, F had at least 12 months of continuous spouse) each are eligible for special en- coverage under W’s plan, and that the cov- rollment in any benefit package under erage ended no earlier than F’s termination the plan (subject to plan eligibility of employment from W. In addition, F pre- rules conditioning dependent enroll- sents evidence of coverage, such as an expla- ment on enrollment of the employee) nation of benefits for a claim that was made if— during the relevant period. (A) The employee and the dependents (ii) Conclusion. In this Example, based sole- are otherwise eligible to enroll in the ly on these facts, F has demonstrated creditable coverage for the 12 months of coverage benefit package; under W’s plan in the same manner as if F (B) When coverage under the plan had presented a written certificate of cred- was previously offered, the employee itable coverage. had coverage under any group health (4) Demonstrating categories of cred- plan or health insurance coverage; and itable coverage. Procedures similar to (C) The employee satisfies the condi- those described in this paragraph (c) tions of paragraph (a)(3)(i), (ii), or (iii) apply in order to determine the dura- of this section and, if applicable, para- tion of an individual’s creditable cov- graph (a)(3)(iv) of this section. erage with respect to any category (ii) When dependent loses coverage—(A) under paragraph (b) of this section (re- A dependent of a current employee (in- lating to determining creditable cov- cluding the employee’s spouse) and the erage under the alternative method). employee each are eligible for special (5) Demonstrating dependent status. If, enrollment in any benefit package in the course of providing evidence (in- under the plan (subject to plan eligi- cluding a certificate) of creditable cov- bility rules conditioning dependent en- erage, an individual is required to dem- rollment on enrollment of the em- onstrate dependent status, the group ployee) if— health plan or issuer is required to (1) The dependent and the employee treat the individual as having fur- are otherwise eligible to enroll in the nished a certificate showing the de- benefit package; pendent status if the individual attests (2) When coverage under the plan was to such dependency and the period of previously offered, the dependent had such status and the individual cooper- coverage under any group health plan ates with the plan’s or issuer’s efforts or health insurance coverage; and to verify the dependent status. (3) The dependent satisfies the conditions of paragraph (a)(3)(i), (ii), or (iii) [69 FR 78790, Dec. 30, 2004] of this section and, if applicable, para- § 146.117 Special enrollment periods. graph (a)(3)(iv) of this section. (B) However, the plan or issuer is not (a) Special enrollment for certain indi- required to enroll any other dependent viduals who lose coverage—(1) In General. A group health plan, and a health in- unless that dependent satisfies the cri- surance issuer offering health insur- teria of this paragraph (a)(2)(ii), or the ance coverage in connection with a employee satisfies the criteria of para- group health plan, is required to per- graph (a)(2)(i) of this section. mit current employees and dependents (iii) Examples. The rules of this para- (as defined in § 144.103 of this chapter) graph (a)(2) are illustrated by the fol- who are described in paragraph (a)(2) of lowing examples: this section to enroll for coverage Example 1. (i) Facts. Individual A works for under the terms of the plan if the con- Employer X. A, A’s spouse, and A’s dependent

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children are eligible but not enrolled for cov- plan must allow A and A’s spouse to enroll in erage under X’s group health plan. A’s spouse the indemnity option. works for Employer Y and at the time coverage was offered under X’s plan, A was en- (3) Conditions for special enrollment— rolled in coverage under Y’s plan. Then, A (i) Loss of eligibility for coverage. In the loses eligibility for coverage under Y’s plan. case of an employee or dependent who (ii) Conclusion. In this Example 1, because A has coverage that is not COBRA con- satisfies the conditions for special enroll- tinuation coverage, the conditions of ment under paragraph (a)(2)(i) of this section, A, A’s spouse, and A’s dependent chil- this paragraph (a)(3)(i) are satisfied at dren are eligible for special enrollment under the time the coverage is terminated as X’s plan. a result of loss of eligibility (regardless Example 2. (i) Facts. Individual A and A’s of whether the individual is eligible for spouse are eligible but not enrolled for cov- or elects COBRA continuation coverage under Group Health Plan P maintained erage). Loss of eligibility under this by A’s employer. When A was first presented paragraph (a)(3)(i) does not include a with an opportunity to enroll A and A’s spouse, they did not have other coverage. loss due to the failure of the employee Later, A and A’s spouse enroll in Group or dependent to pay premiums on a Health Plan Q maintained by the employer timely basis or termination of cov- of A’s spouse. During a subsequent open en- erage for cause (such as making a rollment period in P, A and A’s spouse did fraudulent claim or an intentional mis- not enroll because of their coverage under Q. representation of a material fact in They then lose eligibility for coverage under connection with the plan). Loss of eli- Q. (ii) Conclusion. In this Example 2, because A gibility for coverage under this para- and A’s spouse were covered under Q when graph (a)(3)(i) includes (but is not lim- they did not enroll in P during open enroll- ited to)— ment, they satisfy the conditions for special (A) Loss of eligibility for coverage as enrollment under paragraphs (a)(2)(i) and (ii) a result of legal separation, divorce, of this section. Consequently, A and A’s spouse are eligible for special enrollment cessation of dependent status (such as under P. attaining the maximum age to be eligi- Example 3. (i) Facts. Individual B works for ble as a dependent child under the Employer X. B and B’s spouse are eligible plan), death of an employee, termi- but not enrolled for coverage under X’s nation of employment, reduction in the group health plan. B’s spouse works for Em- number of hours of employment, and ployer Y and at the time coverage was of- any loss of eligibility for coverage fered under X’s plan, B’s spouse was enrolled in self-only coverage under Y’s group health after a period that is measured by ref- plan. Then, B’s spouse loses eligibility for erence to any of the foregoing; coverage under Y’s plan. (B) In the case of coverage offered (ii) Conclusion. In this Example 3, because through an HMO, or other arrange- B’s spouse satisfies the conditions for special ment, in the individual market that enrollment under paragraph (a)(2)(ii) of this does not provide benefits to individuals section, both B and B’s spouse are eligible who no longer reside, live, or work in a for special enrollment under X’s plan. Example 4. (i) Facts. Individual A works for service area, loss of coverage because Employer X. X maintains a group health an individual no longer resides, lives, plan with two benefit packages—an HMO op- or works in the service area (whether tion and an indemnity option. Self-only and or not within the choice of the indi- family coverage are available under both op- vidual); tions. A enrolls for self-only coverage in the (C) In the case of coverage offered HMO option. A’s spouse works for Employer through an HMO, or other arrange- Y and was enrolled for self-only coverage under Y’s plan at the time coverage was of- ment, in the group market that does fered under X’s plan. Then, A’s spouse loses not provide benefits to individuals who coverage under Y’s plan. A requests special no longer reside, live, or work in a enrollment for A and A’s spouse under the service area, loss of coverage because plan’s indemnity option. an individual no longer resides, lives, (ii) Conclusion. In this Example 4, because or works in the service area (whether A’s spouse satisfies the conditions for special or not within the choice of the indi- enrollment under paragraph (a)(2)(ii) of this vidual), and no other benefit package is section, both A and A’s spouse can enroll in either benefit package under X’s plan. There- available to the individual; fore, if A requests enrollment in accordance (D) A situation in which an indi- with the requirements of this section, the vidual incurs a claim that would meet

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or exceed a lifetime limit on all bene- dependent had other coverage; a plan fits; and cannot require anything more for the (E) A situation in which a plan no employee to satisfy the plan’s require- longer offers any benefits to the class ment to provide a written statement. of similarly situated individuals (as de- (For example, the plan cannot require scribed in § 146.121(d)) that includes the that the statement be notarized.) individual. (v) The rules of this paragraph (a)(3) (ii) Termination of employer contribu- are illustrated by the following exam- tions. In the case of an employee or de- ples: pendent who has coverage that is not Example 1. (i) Facts. Individual D enrolls in COBRA continuation coverage, the a group health plan maintained by Employer conditions of this paragraph (a)(3)(ii) Y. At the time D enrolls, Y pays 70 percent are satisfied at the time employer con- of the cost of employee coverage and D pays tributions towards the employee’s or the rest. Y announces that beginning Janu- dependent’s coverage terminate. Em- ary 1, Y will no longer make employer con- ployer contributions include contribu- tributions towards the coverage. Employees may maintain coverage, however, if they pay tions by any current or former em- the total cost of the coverage. ployer that was contributing to cov- (ii) Conclusion. In this Example 1, employer erage for the employee or dependent. contributions towards D’s coverage ceased (iii) Exhaustion of COBRA continu- on January 1 and the conditions of paragraph ation coverage. In the case of an em- (a)(3)(ii) of this section are satisfied on this ployee or dependent who has coverage date (regardless of whether D elects to pay that is COBRA continuation coverage, the total cost and continue coverage under Y’s plan). the conditions of this paragraph Example 2. (i) Facts. A group health plan (a)(3)(iii) are satisfied at the time the provides coverage through two options—Op- COBRA continuation coverage is ex- tion 1 and Option 2. Employees can enroll in hausted. For purposes of this para- either option only within 30 days of hire or graph (a)(3)(iii), an individual who sat- on January 1 of each year. Employee A is eli- isfies the conditions for special enroll- gible for both options and enrolls in Option ment of paragraph (a)(3)(i) of this sec- 1. Effective July 1 the plan terminates cov- tion, does not enroll, and instead elects erage under Option 1 and the plan does not create an immediate open enrollment oppor- and exhausts COBRA continuation cov- tunity into Option 2. erage satisfies the conditions of this (ii) Conclusion. In this Example 2, A has ex- paragraph (a)(3)(iii). (Exhaustion of perienced a loss of eligibility for coverage COBRA continuation coverage is defined that satisfies paragraph (a)(3)(i) of this sec- in § 144.103 of this chapter.) tion, and has satisfied the other conditions (iv) Written statement. A plan may re- for special enrollment under paragraph quire an employee declining coverage (a)(2)(i) of this section. Therefore, if A satis- (for the employee or any dependent of fies the other conditions of this paragraph (a), the plan must permit A to enroll in Op- the employee) to state in writing tion 2 as a special enrollee. (A may also be whether the coverage is being declined eligible to enroll in another group health due to other health coverage only if, at plan, such as a plan maintained by the em- or before the time the employee de- ployer of A’s spouse, as a special enrollee.) clines coverage, the employee is pro- The outcome would be the same if Option 1 vided with notice of the requirement to was terminated by an issuer and the plan provide the statement (and the con- made no other coverage available to A. sequences of the employee’s failure to Example 3. (i) Facts. Individual C is covered under a group health plan maintained by provide the statement). If a plan re- Employer X. While covered under X’s plan, C quires such a statement, and an em- was eligible for but did not enroll in a plan ployee does not provide it, the plan is maintained by Employer Z, the employer of not required to provide special enroll- C’s spouse. C terminates employment with X ment to the employee or any dependent and loses eligibility for coverage under X’s of the employee under this paragraph plan. C has a special enrollment right to en- (a)(3). A plan must treat an employee roll in Z’s plan, but C instead elects COBRA as having satisfied the plan require- continuation coverage under X’s plan. C exhausts COBRA continuation coverage under ment permitted under this paragraph X’s plan and requests special enrollment in (a)(3)(iv) if the employee provides a Z’s plan. written statement that coverage was (ii) Conclusion. In this Example 3, C has sat- being declined because the employee or isfied the conditions for special enrollment

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under paragraph (a)(3)(iii) of this section, (i) Current employee only. A current and has satisfied the other conditions for employee is described in this paragraph special enrollment under paragraph (a)(2)(i) (b)(2)(i) if a person becomes a depend- of this section. The special enrollment right ent of the individual through marriage, that C had into Z’s plan immediately after the loss of eligibility for coverage under X’s birth, adoption, or placement for adop- plan was an offer of coverage under Z’s plan. tion. When C later exhausts COBRA coverage (ii) Spouse of a participant only. An in- under X’s plan, C has a second special enroll- dividual is described in this paragraph ment right in Z’s plan. (b)(2)(ii) if either— (A) The individual becomes the (4) Applying for special enrollment and spouse of a participant; or effective date of coverage—(i) A plan or (B) The individual is a spouse of a issuer must allow an employee a period participant and a child becomes a de- of at least 30 days after an event dependent of the participant through scribed in paragraph (a)(3) of this sec- birth, adoption, or placement for adoption (other than an event described in tion. paragraph (a)(3)(i)(D)) to request en- (iii) Current employee and spouse. A rollment (for the employee or the em- current employee and an individual ployee’s dependent). In the case of an who is or becomes a spouse of such an event described in paragraph employee, are described in this para- (a)(3)(i)(D) of this section (relating to graph (b)(2)(iii) if either— loss of eligibility for coverage due to (A) The employee and the spouse be- the operation of a lifetime limit on all come married; or benefits), a plan or issuer must allow (B) The employee and spouse are an employee a period of at least 30 days married and a child becomes a depend- after a claim is denied due to the oper- ent of the employee through birth, ation of a lifetime limit on all benefits. adoption, or placement for adoption. (ii) Coverage must begin no later (iv) Dependent of a participant only. than the first day of the first calendar An individual is described in this para- month beginning after the date the graph (b)(2)(iv) if the individual is a de- plan or issuer receives the request for pendent (as defined in § 144.103 of this special enrollment. chapter) of a participant and the indi- (b) Special enrollment with respect to vidual has become a dependent of the certain dependent beneficiaries—(1) Gen- participant through marriage, birth, eral. A group health plan, and a health adoption, or placement for adoption. insurance issuer offering health insur- (v) Current employee and a new de- ance coverage in connection with a pendent. A current employee and an in- group health plan, that makes cov- dividual who is a dependent of the em- erage available with respect to depend- ployee, are described in this paragraph ents is required to permit individuals (b)(2)(v) if the individual becomes a de- described in paragraph (b)(2) of this pendent of the employee through mar- section to be enrolled for coverage in a riage, birth, adoption, or placement for benefit package under the terms of the adoption. plan. Paragraph (b)(3) of this section (vi) Current employee, spouse, and a describes the required special enroll- new dependent. A current employee, the ment period and the date by which cov- employee’s spouse, and the employee’s erage must begin. The special enroll- dependent are described in this para- ment rights under this paragraph (b) graph (b)(2)(vi) if the dependent be- apply without regard to the dates on comes a dependent of the employee which an individual would otherwise be through marriage, birth, adoption, or able to enroll under the plan. placement for adoption. (2) Individuals eligible for special en- (3) Applying for special enrollment and rollment. An individual is described in effective date of coverage—(i) Request. A this paragraph (b)(2) if the individual is plan or issuer must allow an individual otherwise eligible for coverage in a a period of at least 30 days after the benefit package under the plan and if date of the marriage, birth, adoption, the individual is described in paragraph or placement for adoption (or, if de- (b)(2)(i), (ii), (iii), (iv), (v), or (vi) of this pendent coverage is not generally made section. available at the time of the marriage,

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birth, adoption, or placement for adop- family coverage are available under both option, a period of at least 30 days after tions. D enrolls for self-only coverage in the the date the plan makes dependent cov- HMO option. Then, a child, E, is placed for erage generally available) to request adoption with D. Within 30 days of the placement of E for adoption, D requests enroll- enrollment (for the individual or the ment for D and E under the plan’s indemnity individual’s dependent). option. (ii) Reasonable procedures for special (ii) Conclusion. In this Example 2, D and E enrollment. [Reserved] satisfy the conditions for special enrollment (iii) Date coverage must begin—(A) under paragraphs (b)(2)(v) and (b)(3) of this Marriage. In the case of marriage, cov- section. Therefore, the plan must allow D erage must begin no later than the and E to enroll in the indemnity coverage, first day of the first calendar month effective as of the date of the placement for adoption. beginning after the date the plan or issuer receives the request for special (c) Notice of special enrollment. At or enrollment. before the time an employee is ini- (B) Birth, adoption, or placement for tially offered the opportunity to enroll adoption. Coverage must begin in the in a group health plan, the plan must case of a dependent’s birth on the date furnish the employee with a notice of of birth and in the case of a depend- special enrollment that complies with ent’s adoption or placement for adop- the requirements of this paragraph (c). tion no later than the date of such (1) Description of special enrollment adoption or placement for adoption (or, rights. The notice of special enrollment if dependent coverage is not made gen- must include a description of special erally available at the time of the enrollment rights. The following model birth, adoption, or placement for adop- language may be used to satisfy this tion, the date the plan makes depend- requirement: ent coverage available). If you are declining enrollment for your- (4) Examples. The rules of this para- self or your dependents (including your graph (b) are illustrated by the fol- spouse) because of other health insurance or lowing examples: group health plan coverage, you may be able to enroll yourself and your dependents in Example 1. (i) Facts. An employer maintains this plan if you or your dependents lose eligi- a group health plan that offers all employees bility for that other coverage (or if the em- employee-only coverage, employee-plus- ployer stops contributing towards your or spouse coverage, or family coverage. Under your dependents’ other coverage). However, the terms of the plan, any employee may you must request enrollment within [insert elect to enroll when first hired (with cov- ‘‘30 days’’ or any longer period that applies erage beginning on the date of hire) or dur- under the plan] after your or your depending an annual open enrollment period held ents’ other coverage ends (or after the em- each December (with coverage beginning the ployer stops contributing toward the other following January 1). Employee A is hired on coverage). September 3. A is married to B, and they have no children. On March 15 in the fol- In addition, if you have a new dependent as a result of marriage, birth, adoption, or lowing year a child C is born to A and B. Be- placement for adoption, you may be able to fore that date, A and B have not been enrolled in the plan. enroll yourself and your dependents. How- ever, you must request enrollment within (ii) Conclusion. In this Example 1, the conditions for special enrollment of an employee [insert ‘‘30 days’’ or any longer period that with a spouse and new dependent under para- applies under the plan] after the marriage, graph (b)(2)(vi) of this section are satisfied. birth, adoption, or placement for adoption. If A satisfies the conditions of paragraph To request special enrollment or obtain (b)(3) of this section for requesting enroll- more information, contact [insert the name, ment timely, the plan will satisfy this para- title, telephone number, and any additional graph (b) if it allows A to enroll either with contact information of the appropriate plan employee-only coverage, with employee- representative]. plus-spouse coverage (for A and B), or with (2) Additional information that may be family coverage (for A, B, and C). The plan required. The notice of special enroll- must allow whatever coverage is chosen to ment must also include, if applicable, begin on March 15, the date of C’s birth. Example 2. (i) Facts. Individual D works for the notice described in paragraph Employer X. X maintains a group health (a)(3)(iv) of this section (the notice re- plan with two benefit packages—an HMO op- quired to be furnished to an individual tion and an indemnity option. Self-only and declining coverage if the plan requires

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the reason for declining coverage to be § 146.119 HMO affiliation period as an in writing). alternative to a preexisting condi- (d) Treatment of special enrollees—(1) If tion exclusion. an individual requests enrollment (a) In general. A group health plan of- while the individual is entitled to spe- fering health insurance coverage cial enrollment under either paragraph through an HMO, or an HMO that of- (a) or (b) of this section, the individual fers health insurance coverage in con- is a special enrollee, even if the request nection with a group health plan, may for enrollment coincides with a late en- impose an affiliation period only if rollment opportunity under the plan. each of the following requirements is Therefore, the individual cannot be satisfied— treated as a late enrollee. (1) No preexisting condition exclusion (2) Special enrollees must be offered is imposed with respect to any cov- all the benefit packages available to erage offered by the HMO in connection similarly situated individuals who en- with the particular group health plan. roll when first eligible. For this pur- (2) No premium is charged to a par- pose, any difference in benefits or cost- ticipant or beneficiary for the affili- sharing requirements for different indi- ation period. viduals constitutes a different benefit (3) The affiliation period for the HMO package. In addition, a special enrollee coverage is imposed consistent with cannot be required to pay more for cov- the requirements of § 146.121 (prohib- erage than a similarly situated indi- iting discrimination based on a health vidual who enrolls in the same cov- factor). erage when first eligible. The length of (4) The affiliation period does not ex- any preexisting condition exclusion ceed 2 months (or 3 months in the case that may be applied to a special en- of a late enrollee). rollee cannot exceed the length of any (5) The affiliation period begins on preexisting condition exclusion that is the enrollment date, or in the case of a applied to similarly situated individ- late enrollee, the affiliation period be- uals who enroll when first eligible. For gins on the day that would be the first rules prohibiting the application of a day of coverage but for the affiliation preexisting condition exclusion to cer- period. tain newborns, adopted children, and (6) The affiliation period for enroll- children placed for adoption, see ment in the HMO under a plan runs § 146.111(b). concurrently with any waiting period. (3) The rules of this section are illus- (b) Examples. The rules of paragraph trated by the following example: (a) of this section are illustrated by the Example. (i) Facts. Employer Y maintains a following examples: group health plan that has an enrollment period for late enrollees every November 1 Example 1. (i) Facts. An employer sponsors through November 30 with coverage effective a group health plan. Benefits under the plan the following January 1. On October 18, Indi- are provided through an HMO, which imposes vidual B loses coverage under another group a two-month affiliation period. In order to be health plan and satisfies the requirements of eligible under the plan, employees must have paragraphs (a)(2), (3), and (4) of this section. worked for the employer for six months. In- B submits a completed application for cov- dividual A begins working for the employer erage on November 2. on February 1. (ii) Conclusion. In this Example, B is a spe- (ii) Conclusion. In this Example 1, Individual cial enrollee. Therefore, even though B’s re- A’s enrollment date is February 1 (see quest for enrollment coincides with an open § 146.111(a)(2)), and both the waiting period enrollment period, B’s coverage is required and the affiliation period begin on this date to be made effective no later than December and run concurrently. Therefore, the affili- 1 (rather than the plan’s January 1 effective ation period ends on March 31, the waiting date for late enrollees). period ends on July 31, and A is eligible to have coverage begin on August 1. [69 FR 78794, Dec. 30, 2004] Example 2. (i) Facts. A group health plan has two benefit package options, a fee-for- service option and an HMO option. The HMO

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imposes a 1-month affiliation period. Indi- (vii) Evidence of insurability; or vidual B is enrolled in the fee-for-service op- (viii) Disability. tion for more than one month and then decides to switch to the HMO option at open (2) Evidence of insurability in- season. cludes— (ii) Conclusion. In this Example 2, the HMO (i) Conditions arising out of acts of may not impose the affiliation period with domestic violence; and respect to B because any affiliation period (ii) Participation in activities such would have to begin on B’s enrollment date as motorcycling, snowmobiling, all-ter- in the plan rather than the date that B enrolled in the HMO option. Therefore, the af- rain vehicle riding, horseback riding, filiation period would have expired before B skiing, and other similar activities. switched to the HMO option. (3) The decision whether health cov- Example 3. (i) Facts. An employer sponsors erage is elected for an individual (in- a group health plan that provides benefits cluding the time chosen to enroll, such through an HMO. The plan imposes a two- as under special enrollment or late en- month affiliation period with respect to sala- rollment) is not, itself, within the ried employees, but it does not impose an affiliation period with respect to hourly em- scope of any health factor. (However, ployees. under § 146.117, a plan or issuer must (ii) Conclusion. In this Example 3, the plan treat special enrollees the same as may impose the affiliation period with re- similarly situated individuals who are spect to salaried employees without impos- enrolled when first eligible.) ing any affiliation period with respect to (b) Prohibited discrimination in rules hourly employees (unless, under the cir- for eligibility—(1) In general—(i) A group cumstances, treating salaried and hourly employees differently does not comply with health plan, and a health insurance the requirements of § 146.121). issuer offering health insurance coverage in connection with a group (c) Alternatives to affiliation period. An health plan, may not establish any rule HMO may use alternative methods in for eligibility (including continued eli- lieu of an affiliation period to address gibility) of any individual to enroll for adverse selection, as approved by the benefits under the terms of the plan or State insurance commissioner or other group health insurance coverage that official designated to regulate HMOs. discriminates based on any health fac- However, an arrangement that is in the tor that relates to that individual or a nature of a preexisting condition exclu- dependent of that individual. This rule sion cannot be an alternative to an af- is subject to the provisions of para- filiation period. Nothing in this part graph (b)(2) of this section (explaining requires a State to receive proposals how this rule applies to benefits), para- for or approve alternatives to affili- graph (b)(3) of this section (allowing ation periods. plans to impose certain preexisting [69 FR 78797, Dec. 30, 2004] condition exclusions), paragraph (d) of this section (containing rules for estab- § 146.120 Interaction with the Family lishing groups of similarly situated in- and Medical Leave Act. [Reserved] dividuals), paragraph (e) of this section (relating to nonconfinement, actively- § 146.121 Prohibiting discrimination at-work, and other service require- against participants and beneficiaries based on a health factor. ments), paragraph (f) of this section (relating to wellness programs), and (a) Health factors. (1) The term health paragraph (g) of this section (permit- factor means, in relation to an indi- ting favorable treatment of individuals vidual, any of the following health sta- with adverse health factors). tus-related factors: (ii) For purposes of this section, rules (i) Health status; for eligibility include, but are not lim- (ii) Medical condition (including both ited to, rules relating to— physical and mental illnesses), as defined in § 144.103 of this chapter; (A) Enrollment; (iii) Claims experience; (B) The effective date of coverage; (iv) Receipt of health care; (C) Waiting (or affiliation) periods; (v) Medical history; (D) Late and special enrollment; (vi) Genetic information, as defined (E) Eligibility for benefit packages in § 144.103 of this chapter; (including rules for individuals to

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change their selection among benefit (ii) Conclusion. In this Example 3, excluding packages); from the plan individuals who participate in (F) Benefits (including rules relating recreational activities, such as to covered benefits, benefit restric- motorcycling, is a rule for eligibility that discriminates based on one or more health tions, and cost-sharing mechanisms factors and thus violates this paragraph such as coinsurance, copayments, and (b)(1). deductibles), as described in para- Example 4. (i) Facts. A group health plan graphs (b)(2) and (b)(3) of this section; applies for a group health policy offered by (G) Continued eligibility; and an issuer. As part of the application, the (H) Terminating coverage (including issuer receives health information about in- disenrollment) of any individual under dividuals to be covered under the plan. Indi- the plan. vidual A is an employee of the employer maintaining the plan. A and A’s dependents (iii) The rules of this paragraph (b)(1) have a history of high health claims. Based are illustrated by the following exam- on the information about A and A’s depend- ples: ents, the issuer excludes A and A’s dependents from the group policy it offers to the Example 1. (i) Facts. An employer sponsors employer. a group health plan that is available to all (ii) Conclusion. In this Example 4, the employees who enroll within the first 30 days issuer’s exclusion of A and A’s dependents of their employment. However, employees from coverage is a rule for eligibility that who do not enroll within the first 30 days discriminates based on one or more health cannot enroll later unless they pass a phys- factors, and thus violates this paragraph ical examination. (b)(1). (If the employer is a small employer (ii) Conclusion. In this Example 1, the re- under 45 CFR 144.103 (generally, an employer quirement to pass a physical examination in with 50 or fewer employees), the issuer also order to enroll in the plan is a rule for eligi- may violate 45 CFR 146.150, which requires bility that discriminates based on one or issuers to offer all the policies they sell in more health factors and thus violates this the small group market on a guaranteed paragraph (b)(1). available basis to all small employers and to Example 2. (i) Facts. Under an employer’s accept every eligible individual in every group health plan, employees who enroll dur- small employer group.) If the plan provides ing the first 30 days of employment (and dur- coverage through this policy and does not ing special enrollment periods) may choose provide equivalent coverage for A and A’s de- between two benefit packages: an indemnity pendents through other means, the plan will option and an HMO option. However, em- also violate this paragraph (b)(1). ployees who enroll during late enrollment are permitted to enroll only in the HMO op- (2) Application to benefits—(i) General tion and only if they provide evidence of rule—(A) Under this section, a group good health. health plan or group health insurance (ii) Conclusion. In this Example 2, the issuer is not required to provide cov- requirement to provide evidence of erage for any particular benefit to any good health in order to be eligible for group of similarly situated individuals. late enrollment in the HMO option is a (B) However, benefits provided under rule for eligibility that discriminates a plan or through group health insur- based on one or more health factors ance coverage must be uniformly avail- and thus violates this paragraph (b)(1). able to all similarly situated individ- However, if the plan did not require uals (as described in paragraph (d) of evidence of good health but limited this section). Likewise, any restriction late enrollees to the HMO option, the on a benefit or benefits must apply uni- plan’s rules for eligibility would not formly to all similarly situated indi- discriminate based on any health fac- viduals and must not be directed at in- tor, and thus would not violate this dividual participants or beneficiaries paragraph (b)(1), because the time an based on any health factor of the par- individual chooses to enroll is not, ticipants or beneficiaries (determined itself, within the scope of any health based on all the relevant facts and cir- factor. cumstances). Thus, for example, a plan Example 3. (i) Facts. Under an employer’s or issuer may limit or exclude benefits group health plan, all employees generally in relation to a specific disease or con- may enroll within the first 30 days of employment. However, individuals who partici- dition, limit or exclude benefits for pate in certain recreational activities, in- certain types of treatments or drugs, cluding motorcycling, are excluded from cov- or limit or exclude benefits based on a erage. determination of whether the benefits

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are experimental or not medically nec- (and no other lifetime limits) for partici- essary, but only if the benefit limita- pants covered under the plan. Participant B tion or exclusion applies uniformly to files a claim for the treatment of AIDS. At the next corporate board meeting of the plan all similarly situated individuals and is sponsor, the claim is discussed. Shortly not directed at individual participants thereafter, the plan is modified to impose a or beneficiaries based on any health $10,000 lifetime limit on benefits for the factor of the participants or bene- treatment of AIDS, effective before the be- ficiaries. In addition, a plan or issuer ginning of the next plan year. may impose annual, lifetime, or other (ii) Conclusion. The facts of this Example 2 limits on benefits and may require the strongly suggest that the plan modification satisfaction of a deductible, copay- is directed at B based on B’s claim. Absent outweighing evidence to the contrary, the ment, coinsurance, or other cost-shar- plan violates this paragraph (b)(2)(i). ing requirement in order to obtain a Example 3. (i) A group health plan applies benefit if the limit or cost-sharing re- for a group health policy offered by an quirement applies uniformly to all issuer. Individual C is covered under the plan similarly situated individuals and is and has an adverse health condition. As part not directed at individual participants of the application, the issuer receives health or beneficiaries based on any health information about the individuals to be covered, including information about C’s ad- factor of the participants or bene- verse health condition. The policy form of- ficiaries. In the case of a cost-sharing fered by the issuer generally provides bene- requirement, see also paragraph fits for the adverse health condition that C (b)(2)(ii) of this section, which permits has, but in this case the issuer offers the variances in the application of a cost- plan a policy modified by a rider that ex- sharing mechanism made available cludes benefits for C for that condition. The under a wellness program. (Whether exclusionary rider is made effective the first day of the next plan year. any plan provision or practice with re- (ii) Conclusion. In this Example 3, the issuer spect to benefits complies with this violates this paragraph (b)(2)(i) because ben- paragraph (b)(2)(i) does not affect efits for C’s condition are available to other whether the provision or practice is individuals in the group of similarly situated permitted under any other provision of individuals that includes C but are not avail- ERISA, the Americans with Disabil- able to C. Thus, the benefits are not uni- ities Act, or any other law, whether formly available to all similarly situated individuals. Even though the exclusionary State or Federal.) rider is made effective the first day of the (C) For purposes of this paragraph next plan year, because the rider does not (b)(2)(i), a plan amendment applicable apply to all similarly situated individuals, to all individuals in one or more groups the issuer violates this paragraph (b)(2)(i). of similarly situated individuals under Example 4. (i) Facts. A group health plan the plan and made effective no earlier has a $2,000 lifetime limit for the treatment than the first day of the first plan year of temporomandibular joint syndrome (TMJ). The limit is applied uniformly to all after the amendment is adopted is not similarly situated individuals and is not di- considered to be directed at any indi- rected at individual participants or bene- vidual participants or beneficiaries. ficiaries. (D) The rules of this paragraph (ii) Conclusion. In this Example 4, the limit (b)(2)(i) are illustrated by the following does not violate this paragraph (b)(2)(i) be- examples: cause $2,000 of benefits for the treatment of TMJ are available uniformly to all similarly Example 1. (i) Facts. A group health plan situated individuals and a plan may limit applies a $500,000 lifetime limit on all bene- benefits covered in relation to a specific dis- fits to each participant or beneficiary cov- ease or condition if the limit applies uni- ered under the plan. The limit is not directed formly to all similarly situated individuals at individual participants or beneficiaries. and is not directed at individual participants (ii) Conclusion. In this Example 1, the limit or beneficiaries. (This example does not ad- does not violate this paragraph (b)(2)(i) be- dress whether the plan provision is permis- cause $500,000 of benefits are available uni- sible under the Americans with Disabilities formly to each participant and beneficiary Act or any other applicable law.) under the plan and because the limit is ap- Example 5. (i) Facts. A group health plan plied uniformly to all participants and bene- applies a $2 million lifetime limit on all ben- ficiaries and is not directed at individual efits. However, the $2 million lifetime limit participants or beneficiaries. is reduced to $10,000 for any participant or Example 2. (i) Facts. A group health plan beneficiary covered under the plan who has a has a $2 million lifetime limit on all benefits congenital heart defect.

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(ii) Conclusion. In this Example 5, the lower on the maximum reimbursement amount is lifetime limit for participants and bene- not directed at any individual participants ficiaries with a congenital heart defect vio- or beneficiaries based on any health factor). lates this paragraph (b)(2)(i) because benefits under the plan are not uniformly available (ii) Exception for wellness programs. A to all similarly situated individuals and the group health plan or group health in- plan’s lifetime limit on benefits does not surance issuer may vary benefits, in- apply uniformly to all similarly situated including cost-sharing mechanisms (such dividuals. as a deductible, copayment, or coinsur- Example 6. (i) Facts. A group health plan ance), based on whether an individual limits benefits for prescription drugs to has met the standards of a wellness those listed on a drug formulary. The limit is applied uniformly to all similarly situated program that satisfies the require- individuals and is not directed at individual ments of paragraph (f) of this section. participants or beneficiaries. (iii) Specific rule relating to source-of- (ii) Conclusion. In this Example 6, the exclu- injury exclusions—(A) If a group health sion from coverage of drugs not listed on the plan or group health insurance cov- drug formulary does not violate this para- erage generally provides benefits for a graph (b)(2)(i) because benefits for prescrip- type of injury, the plan or issuer may tion drugs listed on the formulary are uniformly available to all similarly situated in- not deny benefits otherwise provided dividuals and because the exclusion of drugs for treatment of the injury if the in- not listed on the formulary applies uni- jury results from an act of domestic vi- formly to all similarly situated individuals olence or a medical condition (includ- and is not directed at individual participants ing both physical and mental health or beneficiaries. conditions). This rule applies in the Example 7. (i) Facts. Under a group health case of an injury resulting from a med- plan, doctor visits are generally subject to a $250 annual deductible and 20 percent coin- ical condition even if the condition is surance requirement. However, prenatal doc- not diagnosed before the injury. tor visits are not subject to any deductible (B) The rules of this paragraph or coinsurance requirement. These rules are (b)(2)(iii) are illustrated by the fol- applied uniformly to all similarly situated lowing examples: individuals and are not directed at individual participants or beneficiaries. Example 1. (i) Facts. A group health plan (ii) Conclusion. In this Example 7, imposing generally provides medical/surgical benefits, different deductible and coinsurance require- including benefits for hospital stays, that ments for prenatal doctor visits and other are medically necessary. However, the plan visits does not violate this paragraph (b)(2)(i) excludes benefits for self-inflicted injuries or because a plan may establish different injuries sustained in connection with at- deductibles or coinsurance requirements for tempted suicide. Because of depression, Indi- different services if the deductible or coin- vidual D attempts suicide. As a result, D sus- surance requirement is applied uniformly to tains injuries and is hospitalized for treat- all similarly situated individuals and is not ment of the injuries. Under the exclusion, directed at individual participants or bene- the plan denies D benefits for treatment of ficiaries. the injuries. Example 8. (i) Facts. An employer sponsors (ii) Conclusion. In this Example 1, the sui- a group health plan that is available to all cide attempt is the result of a medical condi- current employees. Under the plan, the med- tion (depression). Accordingly, the denial of ical care expenses of each employee (and the benefits for the treatments of D’s injuries employee’s dependents) are reimbursed up to violates the requirements of this paragraph an annual maximum amount. The maximum (b)(2)(iii) because the plan provision excludes reimbursement amount with respect to an benefits for treatment of an injury resulting employee for a year is $1500 multiplied by from a medical condition. the number of years the employee has par- Example 2. (i) Facts. A group health plan ticipated in the plan, reduced by the total re- provides benefits for head injuries generally. imbursements for prior years. The plan also has a general exclusion for any (ii) Conclusion. In this Example 8, the vari- injury sustained while participating in any able annual limit does not violate this para- of a number of recreational activities, in- graph (b)(2)(i). Although the maximum reim- cluding bungee jumping. However, this ex- bursement amount for a year varies among clusion does not apply to any injury that re- employees within the same group of simi- sults from a medical condition (nor from do- larly situated individuals based on prior mestic violence). Participant E sustains a claims experience, employees who have par- head injury while bungee jumping. The in- ticipated in the plan for the same length of jury did not result from a medical condition time are eligible for the same total benefit (nor from domestic violence). Accordingly, over that length of time (and the restriction the plan denies benefits for E’s head injury.

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(ii) Conclusion. In this Example 2, the plan maximum exclusion period, and the cred- provision that denies benefits based on the itable coverage offset). source of an injury does not restrict benefits Example 2. (i) Facts. A group health plan ex- based on an act of domestic violence or any cludes coverage for conditions with respect medical condition. Therefore, the provision to which medical advice, diagnosis, care, or is permissible under this paragraph (b)(2)(iii) treatment was recommended or received and does not violate this section. (However, within the six-month period ending on an in- if the plan did not allow E to enroll in the dividual’s enrollment date. Under the plan, plan (or applied different rules for eligibility the preexisting condition exclusion generally to E) because E frequently participates in extends for 12 months, offset by creditable bungee jumping, the plan would violate para- coverage. However, if an individual has no graph (b)(1) of this section.) claims in the first six months following enrollment, the remainder of the exclusion pe- (3) Relationship to § 146.111. (i) A pre- riod is waived. existing condition exclusion is per- (ii) Conclusion. In this Example 2, the plan’s mitted under this section if it — preexisting condition exclusions violate this (A) Complies with § 146.111; section because they do not meet the re- (B) Applies uniformly to all similarly quirements of this paragraph (b)(3); specifi- situated individuals (as described in cally, they do not apply uniformly to all paragraph (d) of this section); and similarly situated individuals. The plan provisions do not apply uniformly to all simi- (C) Is not directed at individual par- larly situated individuals because individ- ticipants or beneficiaries based on any uals who have medical claims during the health factor of the participants or first six months following enrollment are not beneficiaries. For purposes of this para- treated the same as similarly situated indi- graph (b)(3)(i)(C), a plan amendment re- viduals with no claims during that period. lating to a preexisting condition exclu- (Under paragraph (d) of this section, the sion applicable to all individuals in one groups cannot be treated as two separate or more groups of similarly situated in- groups of similarly situated individuals because the distinction is based on a health dividuals under the plan and made ef- factor.) fective no earlier than the first day of the first plan year after the amend- (c) Prohibited discrimination in pre- ment is adopted is not considered to be miums or contributions—(1) In general— directed at any individual participants (i) A group health plan, and a health or beneficiaries. insurance issuer offering health insur- (ii) The rules of this paragraph (b)(3) ance coverage in connection with a are illustrated by the following exam- group health plan, may not require an ples: individual, as a condition of enrollment or continued enrollment under Example 1. (i) Facts. A group health plan the plan or group health insurance cov- imposes a preexisting condition exclusion on erage, to pay a premium or contribu- all individuals enrolled in the plan. The ex- tion that is greater than the premium clusion applies to conditions for which medical advice, diagnosis, care, or treatment was or contribution for a similarly situated recommended or received within the six- individual (described in paragraph (d) month period ending on an individual’s en- of this section) enrolled in the plan or rollment date. In addition, the exclusion group health insurance coverage based generally extends for 12 months after an in- on any health factor that relates to the dividual’s enrollment date, but this 12-month individual or a dependent of the indi- period is offset by the number of days of an vidual. individual’s creditable coverage in accord- (ii) Discounts, rebates, payments in ance with § 146.111. There is nothing to indicate that the exclusion is directed at indi- kind, and any other premium differen- vidual participants or beneficiaries. tial mechanisms are taken into ac- (ii) Conclusion. In this Example 1, even count in determining an individual’s though the plan’s preexisting condition ex- premium or contribution rate. (For clusion discriminates against individuals rules relating to cost-sharing mecha- based on one or more health factors, the pre- nisms, see paragraph (b)(2) of this sec- existing condition exclusion does not violate tion (addressing benefits).) this section because it applies uniformly to (2) Rules relating to premium rates—(i) all similarly situated individuals, is not directed at individual participants or bene- Group rating based on health factors not ficiaries, and complies with § 146.111 (that is, restricted under this section. Nothing in the requirements relating to the six-month this section restricts the aggregate look-back period, the 12-month (or 18-month) amount that an employer may be

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charged for coverage under a group treated as similarly situated individ- health plan. uals. A plan or issuer may treat par- (ii) List billing based on a health factor ticipants as a group of similarly situ- prohibited. However, a group health in- ated individuals separate from bene- surance issuer, or a group health plan, ficiaries. In addition, participants may may not quote or charge an employer be treated as two or more distinct (or an individual) a different premium groups of similarly situated individuals for an individual in a group of simi- and beneficiaries may be treated as two larly situated individuals based on a or more distinct groups of similarly health factor. (But see paragraph (g) of situated individuals in accordance with this section permitting favorable treat- the rules of this paragraph (d). More- ment of individuals with adverse over, if individuals have a choice of two health factors.) (iii) Examples. The rules of this para- or more benefit packages, individuals graph (c)(2) are illustrated by the fol- choosing one benefit package may be lowing examples: treated as one or more groups of similarly situated individuals distinct from Example 1. (i) Facts. An employer sponsors individuals choosing another benefit a group health plan and purchases coverage package. from a health insurance issuer. In order to determine the premium rate for the upcom- (1) Participants. Subject to paragraph ing plan year, the issuer reviews the claims (d)(3) of this section, a plan or issuer experience of individuals covered under the may treat participants as two or more plan. The issuer finds that Individual F had distinct groups of similarly situated in- significantly higher claims experience than dividuals if the distinction between or similarly situated individuals in the plan. The issuer quotes the plan a higher per-par- among the groups of participants is ticipant rate because of F’s claims experi- based on a bona fide employment-based ence. classification consistent with the em- (ii) Conclusion. In this Example 1, the issuer ployer’s usual business practice. does not violate the provisions of this para- Whether an employment-based classi- graph (c)(2) because the issuer blends the fication is bona fide is determined on rate so that the employer is not quoted a higher rate for F than for a similarly situ- the basis of all the relevant facts and ated individual based on F’s claims experi- circumstances. Relevant facts and cir- ence. cumstances include whether the em- Example 2. (i) Facts. Same facts as Example ployer uses the classification for pur- 1, except that the issuer quotes the employer poses independent of qualification for a higher premium rate for F, because of F’s health coverage (for example, deter- claims experience, than for a similarly situated individual. mining eligibility for other employee (ii) Conclusion. In this Example 2, the issuer benefits or determining other terms of violates this paragraph (c)(2). Moreover, even employment). Subject to paragraph if the plan purchased the policy based on the (d)(3) of this section, examples of clas- quote but did not require a higher partici- sifications that, based on all the rel- pant contribution for F than for a similarly evant facts and circumstances, may be situated individual, the issuer would still violate this paragraph (c)(2) (but in such a bona fide include full-time versus part- case the plan would not violate this para- time status, different geographic loca- graph (c)(2)). tion, membership in a collective bargaining unit, date of hire, length of (3) Exception for wellness programs. Notwithstanding paragraphs (c)(1) and service, current employee versus (c)(2) of this section, a plan or issuer former employee status, and different may vary the amount of premium or occupations. However, a classification contribution it requires similarly situ- based on any health factor is not a ated individuals to pay based on wheth- bona fide employment-based classifica- er an individual has met the standards tion, unless the requirements of para- of a wellness program that satisfies the graph (g) of this section are satisfied requirements of paragraph (f) of this (permitting favorable treatment of in- section. dividuals with adverse health factors). (d) Similarly situated individuals. The (2) Beneficiaries—(i) Subject to para- requirements of this section apply only graph (d)(3) of this section, a plan or within a group of individuals who are issuer may treat beneficiaries as two or

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more distinct groups of similarly situ- not directed at individual participants or ated individuals if the distinction be- beneficiaries. tween or among the groups of bene- Example 2. (i) Facts. Under a group health ficiaries is based on any of the fol- plan, coverage is made available to employees, their spouses, and their dependent chil- lowing factors: dren. However, coverage is made available to (A) A bona fide employment-based a dependent child only if the dependent child classification of the participant is under age 19 (or under age 25 if the child through whom the beneficiary is re- is continuously enrolled full-time in an in- ceiving coverage; stitution of higher learning (full-time stu- (B) Relationship to the participant dents)). There is no evidence to suggest that (for example, as a spouse or as a de- these classifications are directed at indi- pendent child); vidual participants or beneficiaries. (C) Marital status; (ii) Conclusion. In this Example 2, treating spouses and dependent children differently (D) With respect to children of a par- by imposing an age limitation on dependent ticipant, age or student status; or children, but not on spouses, is permitted (E) Any other factor if the factor is under this paragraph (d). Specifically, the not a health factor. distinction between spouses and dependent (ii) Paragraph (d)(2)(i) of this section children is permitted under paragraph (d)(2) does not prevent more favorable treat- of this section and is not prohibited under ment of individuals with adverse paragraph (d)(3) of this section because it is not directed at individual participants or health factors in accordance with para- beneficiaries. It is also permissible to treat graph (g) of this section. dependent children who are under age 19 (or (3) Discrimination directed at individ- full-time students under age 25) as a group of uals. Notwithstanding paragraphs (d)(1) similarly situated individuals separate from and (d)(2) of this section, if the cre- those who are age 25 or older (or age 19 or ation or modification of an employ- older if they are not full-time students) be- ment or coverage classification is di- cause the classification is permitted under rected at individual participants or paragraph (d)(2) of this section and is not directed at individual participants or bene- beneficiaries based on any health fac- ficiaries. tor of the participants or beneficiaries, Example 3. (i) Facts. A university sponsors the classification is not permitted a group health plan that provides one health under this paragraph (d), unless it is benefit package to faculty and another permitted under paragraph (g) of this health benefit package to other staff. Fac- section (permitting favorable treat- ulty and staff are treated differently with re- ment of individuals with adverse spect to other employee benefits such as re- health factors). Thus, if an employer tirement benefits and leaves of absence. modified an employment-based classi- There is no evidence to suggest that the distinction is directed at individual partici- fication to single out, based on a pants or beneficiaries. health factor, individual participants (ii) Conclusion. In this Example 3, the classi- and beneficiaries and deny them health fication is permitted under this paragraph coverage, the new classification would (d) because there is a distinction based on a not be permitted under this section. bona fide employment-based classification (4) Examples. The rules of this para- consistent with the employer’s usual busi- graph (d) are illustrated by the fol- ness practice and the distinction is not di- lowing examples: rected at individual participants and beneficiaries. Example 1. (i) Facts. An employer sponsors Example 4. (i) Facts. An employer sponsors a group health plan for full-time employees a group health plan that is available to all only. Under the plan (consistent with the current employees. Former employees may employer’s usual business practice), employ- also be eligible, but only if they complete a ees who normally work at least 30 hours per specified number of years of service, are en- week are considered to be working full-time. rolled under the plan at the time of termi- Other employees are considered to be work- nation of employment, and are continuously ing part-time. There is no evidence to sug- enrolled from that date. There is no evidence gest that the classification is directed at in- to suggest that these distinctions are di- dividual participants or beneficiaries. rected at individual participants or bene- (ii) Conclusion. In this Example 1, treating ficiaries. the full-time and part-time employees as two (ii) Conclusion. In this Example 4, imposing separate groups of similarly situated individ- additional eligibility requirements on former uals is permitted under this paragraph (d) employees is permitted because a classifica- because the classification is bona fide and is tion that distinguishes between current and

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former employees is a bona fide employ- Example 1. (i) Facts. Under a group health ment-based classification that is permitted plan, coverage for employees and their de- under this paragraph (d), provided that it is pendents generally becomes effective on the not directed at individual participants or first day of employment. However, coverage beneficiaries. In addition, it is permissible to for a dependent who is confined to a hospital distinguish between former employees who or other health care institution does not be- satisfy the service requirement and those come effective until the confinement ends. who do not, provided that the distinction is (ii) Conclusion. In this Example 1, the plan not directed at individual participants or violates this paragraph (e)(1) because the beneficiaries. (However, former employees plan delays the effective date of coverage for who do not satisfy the eligibility criteria dependents based on confinement to a hos- may, nonetheless, be eligible for continued pital or other health care institution. coverage pursuant to a COBRA continuation Example 2. (i) Facts. In previous years, a provision or similar State law.) group health plan has provided coverage Example 5. (i) Facts. An employer sponsors through a group health insurance policy of- a group health plan that provides the same fered by Issuer M. However, for the current benefit package to all seven employees of the year, the plan provides coverage through a employer. Six of the seven employees have group health insurance policy offered by the same job title and responsibilities, but Issuer N. Under Issuer N’s policy, items and Employee G has a different job title and dif- services provided in connection with the con- ferent responsibilities. After G files an ex- finement of a dependent to a hospital or pensive claim for benefits under the plan, other health care institution are not covered coverage under the plan is modified so that if the confinement is covered under an exten- employees with G’s job title receive a dif- sion of benefits clause from a previous health ferent benefit package that includes a lower insurance issuer. lifetime dollar limit than in the benefit (ii) Conclusion. In this Example 2, Issuer N package made available to the other six em- violates this paragraph (e)(1) because the ployees. group health insurance coverage restricts benefits (a rule for eligibility under para- (ii) Conclusion. Under the facts of this Ex- graph (b)(1)) based on whether a dependent is ample 5, changing the coverage classification confined to a hospital or other health care for G based on the existing employment clas- institution that is covered under an exten- sification for G is not permitted under this sion of benefits clause from a previous paragraph (d) because the creation of the issuer. State law cannot change the obliga- new coverage classification for G is directed tion of Issuer N under this section. However, at G based on one or more health factors. under State law Issuer M may also be re- (e) Nonconfinement and actively-at- sponsible for providing benefits to such a de- work provisions—(1) Nonconfinement pro- pendent. In a case in which Issuer N has an obligation under this section to provide ben- visions—(i) General rule. Under the rules efits and Issuer M has an obligation under of paragraphs (b) and (c) of this sec- State law to provide benefits, any State laws tion, a plan or issuer may not establish designed to prevent more than 100% reim- a rule for eligibility (as described in bursement, such as State coordination-of- paragraph (b)(1)(ii) of this section) or benefits laws, continue to apply. set any individual’s premium or con- (2) Actively-at-work and continuous tribution rate based on whether an inservice provisions—(i) General rule—(A) dividual is confined to a hospital or Under the rules of paragraphs (b) and other health care institution. In addi- (c) of this section and subject to the ex- tion, under the rules of paragraphs (b) ception for the first day of work de- and (c) of this section, a plan or issuer scribed in paragraph (e)(2)(ii) of this may not establish a rule for eligibility section, a plan or issuer may not estab- or set any individual’s premium or con- lish a rule for eligibility (as described tribution rate based on an individual’s in paragraph (b)(1)(ii) of this section) ability to engage in normal life activi- or set any individual’s premium or con- ties, except to the extent permitted tribution rate based on whether an in- under paragraphs (e)(2)(ii) and (e)(3) of dividual is actively at work (including this section (permitting plans and whether an individual is continuously issuers, under certain circumstances, employed), unless absence from work to distinguish among employees based due to any health factor (such as being on the performance of services). absent from work on sick leave) is (ii) Examples. The rules of this para- treated, for purposes of the plan or graph (e)(1) are illustrated by the fol- health insurance coverage, as being ac- lowing examples: tively at work.

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(B) The rules of this paragraph (ii) Conclusion. In this Example 1, the plan (e)(2)(i) are illustrated by the following provision does not violate this section. How- examples: ever, if coverage for individuals who do not report to work on the first day they were Example 1. (i) Facts. Under a group health scheduled to work for a reason unrelated to plan, an employee generally becomes eligible a health factor (such as vacation or bereave- to enroll 30 days after the first day of em- ment) becomes effective on the first day ployment. However, if the employee is not they were scheduled to work, then the plan actively at work on the first day after the would violate this section. end of the 30-day period, then eligibility for Example 2. (i) Facts. Under a group health enrollment is delayed until the first day the plan, coverage for new employees becomes employee is actively at work. effective on the first day of the month fol- (ii) Conclusion. In this Example 1, the plan lowing the employee’s first day of work, re- violates this paragraph (e)(2) (and thus also gardless of whether the employee is actively violates paragraph (b) of this section). How- at work on the first day of the month. Indi- ever, the plan would not violate paragraph vidual J is scheduled to begin work on March (e)(2) or (b) of this section if, under the plan, 24. However, J is unable to begin work on an absence due to any health factor is con- March 24 because of illness. J begins working sidered being actively at work. on April 7 and J’s coverage is effective May Example 2. (i) Facts. Under a group health 1. plan, coverage for an employee becomes ef- (ii) Conclusion. In this Example 2, the plan fective after 90 days of continuous service; provision does not violate this section. How- that is, if an employee is absent from work ever, as in Example 1, if coverage for individ- (for any reason) before completing 90 days of uals absent from work for reasons unrelated service, the beginning of the 90-day period is to a health factor became effective despite measured from the day the employee returns their absence, then the plan would violate to work (without any credit for service be- this section. fore the absence). (ii) Conclusion. In this Example 2, the plan (3) Relationship to plan provisions de- violates this paragraph (e)(2) (and thus also fining similarly situated individuals—(i) paragraph (b) of this section) because the 90- Notwithstanding the rules of para- day continuous service requirement is a rule graphs (e)(1) and (e)(2) of this section, a for eligibility based on whether an individual plan or issuer may establish rules for is actively at work. However, the plan would eligibility or set any individual’s pre- not violate this paragraph (e)(2) or paragraph mium or contribution rate in accord- (b) of this section if, under the plan, an ab- ance with the rules relating to simi- sence due to any health factor is not considered an absence for purposes of measuring 90 larly situated individuals in paragraph days of continuous service. (d) of this section. Accordingly, a plan or issuer may distinguish in rules for (ii) Exception for the first day of eligibility under the plan between full- work—(A) Notwithstanding the general time and part-time employees, between rule in paragraph (e)(2)(i) of this sec- permanent and temporary or seasonal tion, a plan or issuer may establish a employees, between current and former rule for eligibility that requires an in- employees, and between employees cur- dividual to begin work for the em- rently performing services and employ- ployer sponsoring the plan (or, in the ees no longer performing services for case of a multiemployer plan, to begin the employer, subject to paragraph (d) a job in covered employment) before of this section. However, other Federal coverage becomes effective, provided or State laws (including the COBRA that such a rule for eligibility applies continuation provisions and the Fam- regardless of the reason for the ab- ily and Medical Leave Act of 1993) may sence. require an employee or the employee’s (B) The rules of this paragraph dependents to be offered coverage and (e)(2)(ii) are illustrated by the fol- set limits on the premium or contribu- lowing examples: tion rate even though the employee is Example 1. (i) Facts. Under the eligibility not performing services. provision of a group health plan, coverage (ii) The rules of this paragraph (e)(3) for new employees becomes effective on the are illustrated by the following exam- first day that the employee reports to work. ples: Individual H is scheduled to begin work on August 3. However, H is unable to begin work Example 1. (i) Facts. Under a group health on that day because of illness. H begins plan, employees are eligible for coverage if working on August 4, and H’s coverage is ef- they perform services for the employer for 30 fective on August 4. or more hours per week or if they are on paid

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leave (such as vacation, sick, or bereavement Example 4. (i) Facts. Under a group health leave). Employees on unpaid leave are treat- plan, coverage of an employee is terminated ed as a separate group of similarly situated when the employee ceases to perform serv- individuals in accordance with the rules of ices for the employer sponsoring the plan, in paragraph (d) of this section. accordance with the rules of paragraph (d) of (ii) Conclusion. In this Example 1, the plan this section. Employee C is laid off for three provisions do not violate this section. How- months. When the layoff begins, C’s coverage ever, if the plan treated individuals per- under the plan is terminated. (This termi- forming services for the employer for 30 or nation of coverage is without regard to more hours per week, individuals on vaca- whatever rights the employee (or members of tion leave, and individuals on bereavement the employee’s family) may have for COBRA leave as a group of similarly situated indi- continuation coverage.) viduals separate from individuals on sick (ii) Conclusion. In this Example 4, the plan leave, the plan would violate this paragraph provision terminating C’s coverage upon the (e) (and thus also would violate paragraph (b) cessation of C’s performance of services does of this section) because groups of similarly not violate this section. situated individuals cannot be established based on a health factor (including the tak- (f) Wellness programs. A wellness pro- ing of sick leave) under paragraph (d) of this gram is any program designed to pro- section. mote health or prevent disease. Para- Example 2. (i) Facts. To be eligible for cov- graphs (b)(2)(ii) and (c)(3) of this sec- erage under a bona fide collectively bar- tion provide exceptions to the general gained group health plan in the current cal- prohibitions against discrimination endar quarter, the plan requires an indi- based on a health factor for plan provi- vidual to have worked 250 hours in covered employment during the three-month period sions that vary benefits (including that ends one month before the beginning of cost-sharing mechanisms) or the pre- the current calendar quarter. The distinction mium or contribution for similarly sit- between employees working at least 250 uated individuals in connection with a hours and those working less than 250 hours wellness program that satisfies the re- in the earlier three-month period is not di- quirements of this paragraph (f). If rected at individual participants or bene- none of the conditions for obtaining a ficiaries based on any health factor of the reward under a wellness program is participants or beneficiaries. (ii) Conclusion. In this Example 2, the plan based on an individual satisfying a provision does not violate this section be- standard that is related to a health fac- cause, under the rules for similarly situated tor, paragraph (f)(1) of this section individuals allowing full-time employees to clarifies that the wellness program be treated differently than part-time em- does not violate this section if partici- ployees, employees who work at least 250 pation in the program is made avail- hours in a three-month period can be treated able to all similarly situated individ- differently than employees who fail to work uals. If any of the conditions for ob- 250 hours in that period. The result would be the same if the plan permitted individuals to taining a reward under a wellness pro- apply excess hours from previous periods to gram is based on an individual satis- satisfy the requirement for the current quar- fying a standard that is related to a ter. health factor, the wellness program Example 3. (i) Facts. Under a group health does not violate this section if the re- plan, coverage of an employee is terminated quirements of paragraph (f)(2) of this when the individual’s employment is termi- section are met. nated, in accordance with the rules of para- (1) Wellness programs not subject to re- graph (d) of this section. Employee B has been covered under the plan. B experiences a quirements. If none of the conditions for disabling illness that prevents B from work- obtaining a reward under a wellness ing. B takes a leave of absence under the program are based on an individual sat- Family and Medical Leave Act of 1993. At the isfying a standard that is related to a end of such leave, B terminates employment health factor (or if a wellness program and consequently loses coverage under the does not provide a reward), the plan. (This termination of coverage is with- wellness program does not violate this out regard to whatever rights the employee section, if participation in the program (or members of the employee’s family) may have for COBRA continuation coverage.) is made available to all similarly situ- (ii) Conclusion. In this Example 3, the plan ated individuals. Thus, for example, provision terminating B’s coverage upon B’s the following programs need not sat- termination of employment does not violate isfy the requirements of paragraph this section. (f)(2) of this section, if participation in

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the program is made available to all would otherwise not be provided under similarly situated individuals: the plan. (i) A program that reimburses all or (ii) The program must be reasonably part of the cost for memberships in a designed to promote health or prevent fitness center. disease. A program satisfies this stand- (ii) A diagnostic testing program ard if it has a reasonable chance of im- that provides a reward for participa- proving the health of or preventing dis- tion and does not base any part of the ease in participating individuals and it reward on outcomes. is not overly burdensome, is not a sub- (iii) A program that encourages pre- terfuge for discriminating based on a ventive care through the waiver of the health factor, and is not highly suspect copayment or deductible requirement in the method chosen to promote under a group health plan for the costs health or prevent disease. of, for example, prenatal care or well- (iii) The program must give individ- baby visits. uals eligible for the program the oppor- (iv) A program that reimburses em- tunity to qualify for the reward under ployees for the costs of smoking ces- the program at least once per year. sation programs without regard to (iv) The reward under the program whether the employee quits smoking. must be available to all similarly situ- (v) A program that provides a reward ated individuals. (A) A reward is not to employees for attending a monthly available to all similarly situated indi- health education seminar. viduals for a period unless the program (2) Wellness programs subject to require- allows — ments. If any of the conditions for obtaining a reward under a wellness pro- (1) A reasonable alternative standard gram is based on an individual satis- (or waiver of the otherwise applicable fying a standard that is related to a standard) for obtaining the reward for health factor, the wellness program any individual for whom, for that pe- does not violate this section if the re- riod, it is unreasonably difficult due to quirements of this paragraph (f)(2) are a medical condition to satisfy the oth- met. erwise applicable standard; and (i) The reward for the wellness pro- (2) A reasonable alternative standard gram, coupled with the reward for (or waiver of the otherwise applicable other wellness programs with respect standard) for obtaining the reward for to the plan that require satisfaction of any individual for whom, for that pe- a standard related to a health factor, riod, it is medically inadvisable to at- must not exceed 20 percent of the cost tempt to satisfy the otherwise applica- of employee-only coverage under the ble standard. plan. However, if, in addition to em- (B) A plan or issuer may seek ployees, any class of dependents (such verification, such as a statement from as spouses or spouses and dependent an individual’s physician, that a health children) may participate in the factor makes it unreasonably difficult wellness program, the reward must not or medically inadvisable for the indi- exceed 20 percent of the cost of the cov- vidual to satisfy or attempt to satisfy erage in which an employee and any the otherwise applicable standard. dependents are enrolled. For purposes (v)(A) The plan or issuer must dis- of this paragraph (f)(2), the cost of cov- close in all plan materials describing erage is determined based on the total the terms of the program the avail- amount of employer and employee con- ability of a reasonable alternative tributions for the benefit package standard (or the possibility of waiver of under which the employee is (or the the otherwise applicable standard) re- employee and any dependents are) required under paragraph (f)(2)(iv) of this ceiving coverage. A reward can be in section. However, if plan materials the form of a discount or rebate of a merely mention that a program is premium or contribution, a waiver of available, without describing its terms, all or part of a cost-sharing mechanism this disclosure is not required. (such as deductibles, copayments, or (B) The following language, or sub- coinsurance), the absence of a sur- stantially similar language, can be charge, or the value of a benefit that used to satisfy the requirement of this

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paragraph (f)(2)(v): ‘‘If it is unreason- require an individual to pay a higher pre- ably difficult due to a medical condi- mium based on a health factor of the indi- tion for you to achieve the standards vidual than is required of a similarly situ- for the reward under this program, or if ated individual under the plan. Example 3. (i) Facts. Same facts as Example it is medically inadvisable for you to 2, except that the plan provides that if it is attempt to achieve the standards for unreasonably difficult due to a medical con- the reward under this program, call us dition for a participant to achieve the tar- at [insert telephone number] and we geted cholesterol count (or if it is medically will work with you to develop another inadvisable for a participant to attempt to way to qualify for the reward.’’ In addi- achieve the targeted cholesterol count) with- tion, other examples of language that in a 60-day period, the plan will make avail- would satisfy this requirement are set able a reasonable alternative standard that takes the relevant medical condition into ac- forth in Examples 3, 4, and 5 of para- count. In addition, all plan materials de- graph (f)(3) of this section. scribing the terms of the program include (3) Examples. The rules of paragraph the following statement: ‘‘If it is unreason- (f)(2) of this section are illustrated by ably difficult due to a medical condition for the following examples: you to achieve a cholesterol count under 200, or if it is medically inadvisable for you to at- Example 1. (i) Facts. An employer sponsors tempt to achieve a count under 200, call us at a group health plan. The annual premium for the number below and we will work with you employee-only coverage is $3,600 (of which to develop another way to get the discount.’’ the employer pays $2,700 per year and the Individual D begins a diet and exercise pro- employee pays $900 per year). The annual gram but is unable to achieve a cholesterol premium for family coverage is $9,000 (of count under 200 within the prescribed period. which the employer pays $4,500 per year and D’s doctor determines D requires prescrip- the employee pays $4,500 per year). The plan tion medication to achieve a medically ad- offers a wellness program with an annual visable cholesterol count. In addition, the premium rebate of $360. The program is doctor determines that D must be monitored available only to employees. through periodic blood tests to continually (ii) Conclusion. In this Example 1, the pro- reevaluate D’s health status. The plan ac- gram satisfies the requirements of paragraph commodates D by making the discount (f)(2)(i) of this section because the reward for available to D, but only if D follows the ad- the wellness program, $360, does not exceed vice of D’s doctor regarding medication and 20 percent of the total annual cost of em- blood tests. ployee-only coverage, $720. ($3,600 × 20% = (ii) Conclusion. In this Example 3, the pro- $720.) If any class of dependents is allowed to gram is a wellness program because it satis- participate in the program and the employee fies the five requirements of paragraph (f)(2) is enrolled in family coverage, the plan could of this section. First, the program complies offer the employee a reward of up to 20 per- with the limits on rewards under a program. cent of the cost of family coverage, $1,800. Second, it is reasonably designed to promote ($9,000 × 20% = $1,800.) health or prevent disease. Third, individuals Example 2. (i) Facts. A group health plan eligible for the program are given the oppor- gives an annual premium discount of 20 per- tunity to qualify for the reward at least once cent of the cost of employee-only coverage per year. Fourth, the reward under the pro- to participants who adhere to a wellness program is available to all similarly situated in- gram. The wellness program consists solely dividuals because it accommodates individ- of giving an annual cholesterol test to par- uals for whom it is unreasonably difficult ticipants. Those participants who achieve a due to a medical condition to achieve the count under 200 receive the premium dis- targeted count (or for whom it is medically count for the year. inadvisable to attempt to achieve the tar- (ii) Conclusion. In this Example 2,the pro- geted count) in the prescribed period by program fails to satisfy the requirement of viding a reasonable alternative standard. being available to all similarly situated indi- Fifth, the plan discloses in all materials de- viduals because some participants may be scribing the terms of the program the avail- unable to achieve a cholesterol count of ability of a reasonable alternative standard. under 200 and the plan does not make avail- Thus, the premium discount does not violate able a reasonable alternative standard or this section. waive the cholesterol standard. (In addition, Example 4. (i) Facts. A group health plan plan materials describing the program are will waive the $250 annual deductible (which required to disclose the availability of a rea- is less than 20 percent of the annual cost of sonable alternative standard (or the possi- employee-only coverage under the plan) for bility of waiver of the otherwise applicable the following year for participants who have standard) for obtaining the premium dis- a body mass index between 19 and 26, deter- count. Thus, the premium discount violates mined shortly before the beginning of the paragraph (c) of this section because it may year. However, any participant for whom it

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is unreasonably difficult due to a medical to certify that they have not used tobacco condition to attain this standard (and any products in the preceding twelve months. participant for whom it is medically inadvis- Participants who do not provide the certifi- able to attempt to achieve this standard) cation are assessed a surcharge that is 20 during the plan year is given the same dis- percent of the cost of employee-only cov- count if the participant walks for 20 minutes erage. However, all plan materials describing three days a week. Any participant for whom the terms of the wellness program include it is unreasonably difficult due to a medical the following statement: ‘‘If it is unreason- condition to attain either standard (and any ably difficult due to a health factor for you participant for whom it is medically inadvis- to meet the requirements under this pro- able to attempt to achieve either standard) gram (or if it is medically inadvisable for during the year is given the same discount if the individual satisfies an alternative stand- you to attempt to meet the requirements of ard that is reasonable in the burden it im- this program), we will make available a rea- poses and is reasonable taking into consider- sonable alternative standard for you to avoid ation the individual’s medical situation. All this surcharge.’’ It is unreasonably difficult plan materials describing the terms of the for Individual F to stop smoking cigarettes wellness program include the following due to an addiction to nicotine (a medical statement: ‘‘If it is unreasonably difficult condition). The plan accommodates F by re- due to a medical condition for you to achieve quiring F to participate in a smoking ces- a body mass index between 19 and 26 (or if it sation program to avoid the surcharge. F can is medically inadvisable for you to attempt avoid the surcharge for as long as F partici- to achieve this body mass index) this year, pates in the program, regardless of whether your deductible will be waived if you walk F stops smoking (as long as F continues to for 20 minutes three days a week. If you can- be addicted to nicotine). not follow the walking program, call us at (ii) Conclusion. In this Example 5, the pre- the number above and we will work with you mium surcharge is permissible as a wellness to develop another way to have your deduct- program because it satisfies the five require- ible waived.’’ Due to a medical condition, In- ments of paragraph (f)(2) of this section. dividual E is unable to achieve a BMI of be- First, the program complies with the limits tween 19 and 26 and is also unable to follow on rewards under a program. Second, it is the walking program. E proposes a program reasonably designed to promote health or based on the recommendations of E’s physi- prevent disease. Third, individuals eligible cian. The plan agrees to make the discount available to E if E follows the physician’s for the program are given the opportunity to recommendations. qualify for the reward at least once per year. (ii) Conclusion. In this Example 4, the pro- Fourth, the reward under the program is gram satisfies the five requirements of para- available to all similarly situated individ- graph (f)(2) of this section. First, the pro- uals because it accommodates individuals for gram complies with the limits on rewards whom it is unreasonably difficult due to a under a program. Second, it is reasonably de- medical condition (or for whom it is medi- signed to promote health or prevent disease. cally inadvisable to attempt) to quit using Third, individuals eligible for the program tobacco products by providing a reasonable are given the opportunity to qualify for the alternative standard. Fifth, the plan dis- reward at least once per year. Fourth, the re- closes in all materials describing the terms ward under the program is available to all of the program the availability of a reason- similarly situated individuals because it gen- able alternative standard. Thus, the pre- erally accommodates individuals for whom it mium surcharge does not violate this sec- is unreasonably difficult due to a medical tion. condition to achieve (or for whom it is medi- Example 6. (i) Facts. Same facts as Example cally inadvisable to attempt to achieve) the 5, except the plan accommodates F by requir- targeted body mass index by providing a rea- ing F to view, over a period of 12 months, a sonable alternative standard (walking) and it 12-hour video series on health problems asso- accommodates individuals for whom it is un- ciated with tobacco use. F can avoid the sur- reasonably difficult due to a medical condi- charge by complying with this requirement. tion (or for whom it is medically inadvisable (ii) Conclusion. In this Example 6, the re- to attempt) to walk by providing an alter- quirement to watch the series of video tapes native standard that is reasonable for the in- is a reasonable alternative method for avoid- dividual. Fifth, the plan discloses in all ma- ing the surcharge. terials describing the terms of the program the availability of a reasonable alternative (g) More favorable treatment of individ- standard for every individual. Thus, the uals with adverse health factors per- waiver of the deductible does not violate this mitted—(1) In rules for eligibility—(i) section. Example 5. (i) Facts. In conjunction with an Nothing in this section prevents a annual open enrollment period, a group group health plan or group health in- health plan provides a form for participants surance issuer from establishing more

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favorable rules for eligibility (de- sion, a group health plan generally makes scribed in paragraph (b)(1) of this sec- COBRA continuation coverage available for tion) for individuals with an adverse a maximum period of 18 months in connec- health factor, such as disability, than tion with a termination of employment but makes the coverage available for a max- for individuals without the adverse imum period of 29 months to certain disabled health factor. Moreover, nothing in individuals and certain members of the dis- this section prevents a plan or issuer abled individual’s family. Although the plan from charging a higher premium or generally requires payment of 102 percent of contribution with respect to individ- the applicable premium for the first 18 uals with an adverse health factor if months of COBRA continuation coverage, they would not be eligible for the cov- the plan requires payment of 150 percent of erage were it not for the adverse health the applicable premium for the disabled individual’s COBRA continuation coverage dur- factor. (However, other laws, including ing the disability extension if the disabled State insurance laws, may set or limit individual would not be entitled to COBRA premium rates; these laws are not af- continuation coverage but for the disability. fected by this section.) (ii) Conclusion. In this Example 3, the plan (ii) The rules of this paragraph (g)(1) provision allowing extended COBRA continu- are illustrated by the following exam- ation coverage for disabled individuals satis- ples: fies this paragraph (g)(1) (and thus does not violate this section). In addition, the plan is Example 1. (i) Facts. An employer sponsors permitted, under this paragraph (g)(1), to a group health plan that generally is avail- charge the disabled individuals a higher pre- able to employees, spouses of employees, and mium for the extended coverage if the indi- dependent children until age 23. However, de- viduals would not be eligible for COBRA con- pendent children who are disabled are eligi- tinuation coverage were it not for the dis- ble for coverage beyond age 23. ability. (Similarly, if the plan provided an (ii) Conclusion. In this Example 1, the plan extended period of coverage for disabled indi- provision allowing coverage for disabled de- viduals pursuant to State law or plan provi- pendent children beyond age 23 satisfies this sion rather than pursuant to a COBRA con- paragraph (g)(1) (and thus does not violate tinuation coverage provision, the plan could this section). likewise charge the disabled individuals a Example 2. (i) Facts. An employer sponsors higher premium for the extended coverage.) a group health plan, which is generally available to employees (and members of the em- (2) In premiums or contributions—(i) ployee’s family) until the last day of the Nothing in this section prevents a month in which the employee ceases to per- group health plan or group health inform services for the employer. The plan surance issuer from charging individ- generally charges employees $50 per month uals a premium or contribution that is for employee-only coverage and $125 per month for family coverage. However, an em- less than the premium (or contribu- ployee who ceases to perform services for the tion) for similarly situated individuals employer by reason of disability may remain if the lower charge is based on an ad- covered under the plan until the last day of verse health factor, such as disability. the month that is 12 months after the month (ii) The rules of this paragraph (g)(2) in which the employee ceased to perform are illustrated by the following exam- services for the employer. During this ex- ple: tended period of coverage, the plan charges the employee $100 per month for employee- Example. (i) Facts. Under a group health only coverage and $250 per month for family plan, employees are generally required to coverage. (This extended period of coverage pay $50 per month for employee-only cov- is without regard to whatever rights the em- erage and $125 per month for family coverage ployee (or members of the employee’s fam- under the plan. However, employees who are ily) may have for COBRA continuation cov- disabled receive coverage (whether em- erage.) ployee-only or family coverage) under the (ii) Conclusion. In this Example 2, the plan plan free of charge. provision allowing extended coverage for dis- (ii) Conclusion. In this Example, the plan abled employees and their families satisfies provision waiving premium payment for dis- this paragraph (g)(1) (and thus does not vio- abled employees is permitted under this late this section). In addition, the plan is paragraph (g)(2) (and thus does not violate permitted, under this paragraph (g)(1), to this section). charge the disabled employees a higher premium during the extended period of cov- (h) No effect on other laws. Compliance erage. with this section is not determinative Example 3. (i) Facts. To comply with the re- of compliance with any other provision quirements of a COBRA continuation provi- of the PHS Act (including the COBRA

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continuation provisions) or any other (D) May not treat the individual as a State or Federal law, such as the late enrollee or a special enrollee. Americans with Disabilities Act. (ii) For purposes of this paragraph Therefore, although the rules of this (i)(2), an individual is considered to section would not prohibit a plan or have been denied coverage if the indi- issuer from treating one group of simi- vidual failed to apply for coverage be- larly situated individuals differently cause, given an exemption election from another (such as providing dif- under § 146.180 of this part, it was rea- ferent benefit packages to current and sonable to believe that an application former employees), other Federal or for coverage would have been denied State laws may require that two sepa- based on a health factor. rate groups of similarly situated indi- (iii) The rules of this paragraph (i)(2) viduals be treated the same for certain are illustrated by the following exam- purposes (such as making the same ples: benefit package available to COBRA Example 1. (i) Facts. Individual D was hired qualified beneficiaries as is made avail- by a nonfederal governmental employer in able to active employees). In addition, June 1999. The employer maintains a self- although this section generally does funded group health plan with a plan year not impose new disclosure obligations beginning on October 1. The plan sponsor on plans and issuers, this section does elected under § 146.180 of this part to exempt not affect any other laws, including the plan from the requirements of this section for the plan year beginning October 1, those that require accurate disclosures 2005, and renewed the exemption election for and prohibit intentional misrepresen- the plan year beginning October 1, 2006. tation. Under the terms of the plan while the exemp- (i) Applicability dates. (1) Generally. tion was in effect, employees and their de- This section applies for plan years be- pendents were allowed to enroll when the ginning on or after July 1, 2007. employee was first hired without regard to any health factor. If an individual declines (2) Special rule for self-funded non- to enroll when first eligible, the individual federal governmental plans exempted could enroll effective October 1 of any plan under 45 CFR 146.180—(i) If coverage has year if the individual could pass a physical been denied to any individual because examination. The evidence-of-good-health the sponsor of a self-funded nonfederal requirement for late enrollees, absent an ex- governmental plan has elected under emption election under § 146.180 of this part, § 146.180 to exempt the plan from the re- would have been in violation of this section. D chose not to enroll for coverage when first quirements of this section, and the hired. In February of 2006, D was treated for plan sponsor subsequently chooses to skin cancer but did not apply for coverage bring the plan into compliance with under the plan for the plan year beginning the requirements of this section, the October 1, 2006, because D assumed D could plan— not meet the evidence-of-good-health re- (A) Must notify the individual that quirement. With the plan year beginning Oc- the plan will be coming into compli- tober 1, 2007 the plan sponsor chose not to renew its exemption election and brought ance with the requirements of this sec- the plan into compliance with this section. tion, specify the effective date of com- The plan notifies individual D (and all other pliance, and inform the individual re- employees) that it will be coming into com- garding any enrollment restrictions pliance with the requirements of this sec- that may apply under the terms of the tion. The notice specifies that the effective plan once the plan is in compliance date of compliance will be October 1, 2007, ex- with this section (as a matter of ad- plains the applicable enrollment restrictions that will apply under the plan, states that ministrative convenience, the notice individuals will have at least 30 days to en- may be disseminated to all employees); roll, and explains that coverage for those (B) Must give the individual an op- who choose to enroll will be effective as of portunity to enroll that continues for October 1, 2007. Individual D timely requests at least 30 days; enrollment in the plan, and coverage com- (C) Must permit coverage to be effec- mences under the plan on October 1, 2007. (ii) Conclusion. In this Example 1, the plan tive as of the first day of plan coverage complies with this paragraph (i)(2). for which an exemption election under Example 2. (i) Facts. Individual E was hired § 146.180 of this part (with regard to this by a nonfederal governmental employer in section) is no longer in effect; and February 1999. The employer maintains a

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self-funded group health plan with a plan Subpart C—Requirements Related year beginning on September 1. The plan sponsor elected under § 146.180 of this part to to Benefits exempt the plan from the requirements of this section and ‘‘§ 146.111 (limitations on § 146.130 Standards relating to bene- preexisting condition exclusion periods) for fits for mothers and newborns. the plan year beginning September 1, 2002, (a) Hospital length of stay—(1) General and renews the exemption election for the rule. Except as provided in paragraph plan years beginning September 1, 2003, Sep- (a)(5) of this section, a group health tember 1, 2004, September 1, 2005, and Sep- tember 1, 2006. Under the terms of the plan plan, or a health insurance issuer offer- while the exemption was in effect, employees ing group health insurance coverage, and their dependents were allowed to enroll that provides benefits for a hospital when the employee was first hired without length of stay in connection with child- regard to any health factor. If an individual birth for a mother or her newborn may declined to enroll when first eligible, the in- not restrict benefits for the stay to less dividual could enroll effective September 1 of than— any plan year if the individual could pass a (i) 48 hours following a vaginal deliv- physical examination. Also under the terms of the plan, all enrollees were subject to a 12- ery; or month preexisting condition exclusion pe- (ii) 96 hours following a delivery by riod, regardless of whether they had cred- cesarean section. itable coverage. E chose not to enroll for (2) When stay begins—(i) Delivery in a coverage when first hired. In June of 2006, E hospital. If delivery occurs in a hos- is diagnosed as having multiple sclerosis pital, the hospital length of stay for (MS). With the plan year beginning Sep- the mother or newborn child begins at tember 1, 2007, the plan sponsor chooses to bring the plan into compliance with this sec- the time of delivery (or in the case of tion, but renews its exemption election with multiple births, at the time of the last regard to limitations on preexisting condi- delivery). tion exclusion periods. The plan notifies E of (ii) Delivery outside a hospital. If deliv- her opportunity to enroll, without a physical ery occurs outside a hospital, the hos- examination, effective September 1, 2007. pital length of stay begins at the time The plan gives E 30 days to enroll. E is sub- the mother or newborn is admitted as a ject to a 12-month preexisting condition exclusion period with respect to any treatment hospital inpatient in connection with E receives that is related to E’s MS, without childbirth. The determination of regard to any prior creditable coverage E whether an admission is in connection may have. Beginning September 1, 2008, the with childbirth is a medical decision to plan will cover treatment of E’s MS. be made by the attending provider. (ii) Conclusion. In this Example 2, the plan (3) Examples. The rules of paragraphs complies with the requirements of this sec- (a)(1) and (a)(2) of this section are illus- tion. (The plan is not required to comply trated by the following examples. In with the requirements of § 146.111 because the plan continues to be exempted from those re- each example, the group health plan quirements in accordance with the plan provides benefits for hospital lengths of sponsor’s election under § 146.180.) stay in connection with childbirth and is subject to the requirements of this [71 FR 75046, Dec. 13, 2006] section, as follows: § 146.125 Applicability dates. Example 1. (i) A pregnant woman covered Section 144.103, §§ 146.111 through under a group health plan goes into labor 146.119, § 146.143, and § 146.145 are appli- and is admitted to the hospital at 10 p.m. on June 11. She gives birth by vaginal delivery cable for plan years beginning on or at 6 a.m. on June 12. after July 1, 2005. Until the applica- (ii) In this Example 1, the 48-hour period de- bility date for this regulation, plans scribed in paragraph (a)(1)(i) of this section and issuers are required to continue to ends at 6 a.m. on June 14. comply with the corresponding sec- Example 2. (i) A woman covered under a tions of 45 CFR parts 144 and 146, con- group health plan gives birth at home by tained in the 45 CFR, parts 1 to 199, edi- vaginal delivery. After the delivery, the tion revised as of October 1, 2004. woman begins bleeding excessively in connection with the childbirth and is admitted [69 FR 78797, Dec. 30, 2004; 70 FR 21147, Apr. to the hospital for treatment of the excessive 25, 2005] bleeding at 7 p.m. on October 1.

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(ii) In this Example 2, the 48-hour period de- ized representative), the requirements scribed in paragraph (a)(1)(i) of this section of paragraph (a)(1) of this section do ends at 7 p.m. on October 3. not apply for any period after the dis- Example 3. (i) A woman covered under a charge. group health plan gives birth by vaginal de- (iii) Attending provider defined. For livery at home. The child later develops pneumonia and is admitted to the hospital. purposes of this section, attending pro- The attending provider determines that the vider means an individual who is li- admission is not in connection with child- censed under applicable State law to birth. provide maternity or pediatric care and (ii) In this Example 3, the hospital length- who is directly responsible for proof-stay requirements of this section do not viding maternity or pediatric care to a apply to the child’s admission to the hospital mother or newborn child. because the admission is not in connection (iv) Example. The rules of this para- with childbirth. graph (a)(5) are illustrated by the fol- (4) Authorization not required—(i) In lowing example: general. A plan or issuer may not re- Example. (i) A pregnant woman covered quire that a physician or other health under a group health plan subject to the re- care provider obtain authorization quirements of this section goes into labor from the plan or issuer for prescribing and is admitted to a hospital. She gives birth the hospital length of stay required by cesarean section. On the third day after under paragraph (a)(1) of this section. the delivery, the attending provider for the (See also paragraphs (b)(2) and (c)(3) of mother consults with the mother, and the at- this section for rules and examples re- tending provider for the newborn consults with the mother regarding the newborn. The garding other authorization and cer- attending providers authorize the early dis- tain notice requirements.) charge of both the mother and the newborn. (ii) Example. The rule of this para- Both are discharged approximately 72 hours graph (a)(4) is illustrated by the fol- after the delivery. The plan pays for the 72- lowing example: hour hospital stays. (ii) In this Example, the requirements of Example. (i) In the case of a delivery by ce- this paragraph (a) have been satisfied with sarean section, a group health plan subject respect to the mother and the newborn. If ei- to the requirements of this section auto- ther is readmitted, the hospital stay for the matically provides benefits for any hospital readmission is not subject to this section. length of stay of up to 72 hours. For any longer stay, the plan requires an attending (b) Prohibitions—(1) With respect to provider to complete a certificate of medical mothers—(i) In general. A group health necessity. The plan then makes a determina- plan, and a health insurance issuer of- tion, based on the certificate of medical ne- fering group health insurance coverage, cessity, whether a longer stay is medically may not— necessary. (A) Deny a mother or her newborn (ii) In this Example, the requirement that child eligibility or continued eligibility an attending provider complete a certificate to enroll or renew coverage under the of medical necessity to obtain authorization for the period between 72 hours and 96 hours terms of the plan solely to avoid the following a delivery by cesarean section is requirements of this section; or prohibited by this paragraph (a)(4). (B) Provide payments (including payments-in-kind) or rebates to a mother (5) Exceptions—(i) Discharge of mother. to encourage her to accept less than If a decision to discharge a mother ear- the minimum protections available lier than the period specified in para- under this section. graph (a)(1) of this section is made by (ii) Examples. The rules of this para- an attending provider, in consultation graph (b)(1) are illustrated by the fol- with the mother, the requirements of lowing examples. In each example, the paragraph (a)(1) of this section do not group health plan is subject to the re- apply for any period after the dis- quirements of this section, as follows: charge. (ii) Discharge of newborn. If a decision Example 1. (i) A group health plan provides to discharge a newborn child earlier benefits for at least a 48-hour hospital length of stay following a vaginal delivery. If a than the period specified in paragraph mother and newborn covered under the plan (a)(1) of this section is made by an at- are discharged within 24 hours after the de- tending provider, in consultation with livery, the plan will waive the copayment the mother (or the newborn’s author- and deductible.

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(ii) In this Example 1, because waiver of the able than benefits for a preceding portion of copayment and deductible is in the nature of the stay. (However, this section does not pro- a rebate that the mother would not receive if hibit a plan from requiring precertification she and her newborn remained in the hos- for any period after the first 96 hours.) In ad- pital, it is prohibited by this paragraph dition, if the plan’s utilization reviewer de- (b)(1). (In addition, the plan violates para- nied any mother or her newborn benefits graph (b)(2) of this section because, in effect, within the 96-hour stay, the plan would also no copayment or deductible is required for violate paragraph (a) of this section. the first portion of the stay and a double copayment and a deductible are required for (3) With respect to attending providers. the second portion of the stay.) A group health plan, and a health in- Example 2. (i) A group health plan provides surance issuer offering group health in- benefits for at least a 48-hour hospital length surance coverage, may not directly or of stay following a vaginal delivery. In the indirectly— event that a mother and her newborn are discharged earlier than 48 hours and the dis- (i) Penalize (for example, take discharges occur after consultation with the ciplinary action against or retaliate mother in accordance with the requirements against), or otherwise reduce or limit of paragraph (a)(5) of this section, the plan the compensation of, an attending pro- provides for a follow-up visit by a nurse vider because the provider furnished within 48 hours after the discharges to pro- care to a participant or beneficiary in vide certain services that the mother and her accordance with this section; or newborn would otherwise receive in the hospital. (ii) Provide monetary or other incen- (ii) In this Example 2, because the follow-up tives to an attending provider to in- visit does not provide any services beyond duce the provider to furnish care to a what the mother and her newborn would re- participant or beneficiary in a manner ceive in the hospital, coverage for the follow- inconsistent with this section, includ- up visit is not prohibited by this paragraph ing providing any incentive that could (b)(1). induce an attending provider to dis- (2) With respect to benefit restrictions— charge a mother or newborn earlier (i) In general. Subject to paragraph than 48 hours (or 96 hours) after deliv- (c)(3) of this section, a group health ery. plan, and a health insurance issuer of- (c) Construction. With respect to this fering group health insurance coverage, section, the following rules of con- may not restrict the benefits for any struction apply: portion of a hospital length of stay re- (1) Hospital stays not mandatory. This quired under paragraph (a) of this sec- section does not require a mother to— tion in a manner that is less favorable (i) Give birth in a hospital; or than the benefits provided for any pre- (ii) Stay in the hospital for a fixed ceding portion of the stay. period of time following the birth of (ii) Example. The rules of this para- her child. graph (b)(2) are illustrated by the fol- (2) Hospital stay benefits not mandated. lowing example: This section does not apply to any Example. (i) A group health plan subject to group health plan, or any group health the requirements of this section provides insurance coverage, that does not pro- benefits for hospital lengths of stay in con- vide benefits for hospital lengths of nection with childbirth. In the case of a de- stay in connection with childbirth for a livery by cesarean section, the plan auto- mother or her newborn child. matically pays for the first 48 hours. With (3) Cost-sharing rules—(i) In general. respect to each succeeding 24-hour period, the participant or beneficiary must call the This section does not prevent a group plan to obtain precertification from a utili- health plan or a health insurance zation reviewer, who determines if an addi- issuer offering group health insurance tional 24-hour period is medically necessary. coverage from imposing deductibles, If this approval is not obtained, the plan will coinsurance, or other cost-sharing in not provide benefits for any succeeding 24- relation to benefits for hospital lengths hour period. of stay in connection with childbirth (ii) In this Example, the requirement to ob- for a mother or a newborn under the tain precertification for the two 24-hour periods immediately following the initial 48-hour plan or coverage, except that the coin- stay is prohibited by this paragraph (b)(2) be- surance or other cost-sharing for any cause benefits for the latter part of the stay portion of the hospital length of stay are restricted in a manner that is less favor- required under paragraph (a) of this

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section may not be greater than that (2) Disclosure notice. To meet the dis- for any preceding portion of the stay. closure requirement set forth in para- (ii) Examples. The rules of this paragraph (d)(1) of this section, the fol- graph (c)(3) are illustrated by the following disclosure notice must be used: lowing examples. In each example, the group health plan is subject to the re- STATEMENT OF RIGHTS UNDER THE NEWBORNS’ quirements of this section, as follows: AND MOTHERS’ HEALTH PROTECTION ACT Under federal law, group health plans and Example 1. (i) A group health plan provides health insurance issuers offering group benefits for at least a 48-hour hospital length health insurance coverage generally may not of stay in connection with vaginal deliveries. restrict benefits for any hospital length of The plan covers 80 percent of the cost of the stay in connection with childbirth for the stay for the first 24-hour period and 50 per- mother or newborn child to less than 48 cent of the cost of the stay for the second 24- hours following a vaginal delivery, or less hour period. Thus, the coinsurance paid by than 96 hours following a delivery by cesar- the patient increases from 20 percent to 50 ean section. However, the plan or issuer may percent after 24 hours. pay for a shorter stay if the attending pro- (ii) In this Example 1, the plan violates the vider (e.g., your physician, nurse midwife, or rules of this paragraph (c)(3) because coin- physician assistant), after consultation with surance for the second 24-hour period of the the mother, discharges the mother or new- 48-hour stay is greater than that for the pre- born earlier. ceding portion of the stay. (In addition, the Also, under federal law, plans and issuers plan also violates the similar rule in para- may not set the level of benefits or out-of- graph (b)(2) of this section.) pocket costs so that any later portion of the Example 2. (i) A group health plan gen- 48-hour (or 96-hour) stay is treated in a man- erally covers 70 percent of the cost of a hos- ner less favorable to the mother or newborn pital length of stay in connection with child- than any earlier portion of the stay. birth. However, the plan will cover 80 per- In addition, a plan or issuer may not, cent of the cost of the stay if the participant under federal law, require that a physician or beneficiary notifies the plan of the preg- or other health care provider obtain author- nancy in advance of admission and uses ization for prescribing a length of stay of up whatever hospital the plan may designate. to 48 hours (or 96 hours). However, to use cer- (ii) In this Example 2, the plan does not vio- tain providers or facilities, or to reduce your late the rules of this paragraph (c)(3) because out-of-pocket costs, you may be required to the level of benefits provided (70 percent or obtain precertification. For information on 80 percent) is consistent throughout the 48- precertification, contact your plan adminis- hour (or 96-hour) hospital length of stay re- trator. quired under paragraph (a) of this section. (In addition, the plan does not violate the (3) Timing of disclosure. The disclosure rules in paragraph (a)(4) or paragraph (b)(2) notice in paragraph (d)(2) of this sec- of this section.) tion shall be furnished to each partici- (4) Compensation of attending provider. pant covered under a group health This section does not prevent a group plan, and each beneficiary receiving health plan or a health insurance benefits under a group health plan, not issuer offering group health insurance later than 60 days after the first day of coverage from negotiating with an at- the first plan year beginning on or tending provider the level and type of after January 1, 1999. compensation for care furnished in ac- (4) Exceptions. The requirements of cordance with this section (including this paragraph (d) do not apply in the paragraph (b) of this section). following situations: (d) Notice requirement. Except as pro- (i) Self-insured plans. The benefits for vided in paragraph (d)(4)of this section, hospital lengths of stay in connection a group health plan that provides bene- with childbirth are not provided fits for hospital lengths of stay in con- through health insurance coverage, and nection with childbirth must meet the the group health plan has made the following requirements: election described in § 146.180 to be ex- (1) Required statement. The plan docu- empted from the requirements of this ment that provides a description of section. plan benefits to participants and bene- (ii) Insured plans. The benefits for ficiaries must disclose information hospital lengths of stay in connection that notifies participants and bene- with childbirth are provided through ficiaries of their rights under this sec- health insurance coverage, and the cov- tion. erage is regulated under a State law

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described in paragraph (e) of this section 2704 of the PHS Act and this section. tion apply only to the extent the plan (e) Applicability in certain States—(1) provides benefits for hospital lengths of Health insurance coverage. The require- stay in connection with childbirth ments of section 2704 of the PHS Act other than through health insurance and this section do not apply with re- coverage. spect to health insurance coverage of- (3) Relation to section 2723(a) of the fered in connection with a group health PHS Act. The preemption provisions plan if there is a State law regulating contained in section 2723(a)(1) of the the coverage that meets any of the fol- PHS Act and § 146.143(a) do not super- lowing criteria: sede a State law described in paragraph (i) The State law requires the cov- (e)(1) of this section. erage to provide for at least a 48-hour (4) Examples. The rules of this para- hospital length of stay following a vag- graph (e) are illustrated by the fol- inal delivery and at least a 96-hour hos- lowing examples: pital length of stay following a deliv- Example 1. (i) A group health plan buys ery by cesarean section. group health insurance coverage in a State (ii) The State law requires the cov- that requires that the coverage provide for erage to provide for maternity and pe- at least a 48-hour hospital length of stay fol- diatric care in accordance with guide- lowing a vaginal delivery and at least a 96- lines established by the American Col- hour hospital length of stay following a de- lege of Obstetricians and Gyne- livery by cesarean section. cologists, the American Academy of (ii) In this Example 1, the coverage is subject to State law, and the requirements of Pediatrics, or any other established section 2704 of the PHS Act and this section professional medical association. do not apply. (iii) The State law requires, in con- Example 2. (i) A self-insured group health nection with the coverage for mater- plan covers hospital lengths of stay in con- nity care, that the hospital length of nection with childbirth in a State that re- stay for such care is left to the decision quires health insurance coverage to provide of (or is required to be made by) the at- for maternity care in accordance with guide- tending provider in consultation with lines established by the American College of Obstetricians and Gynecologists and to pro- the mother. State laws that require the vide for pediatric care in accordance with decision to be made by the attending guidelines established by the American provider with the consent of the moth- Academy of Pediatrics. er satisfy the criterion of this para- (ii) In this Example 2, even though the graph (e)(1)(iii). State law satisfies the criterion of paragraph (2) Group health plans—(i) Fully-in- (e)(1)(ii) of this section, because the plan pro- sured plans. For a group health plan vides benefits for hospital lengths of stay in that provides benefits solely through connection with childbirth other than through health insurance coverage, the plan health insurance coverage, if the State is subject to the requirements of section 2704 law regulating the health insurance of the PHS Act and this section. coverage meets any of the criteria in paragraph (e)(1) of this section, then (f) Effective date. Section 2704 of the the requirements of section 2704 of the PHS Act applies to group health plans, PHS Act and this section do not apply. and health insurance issuers offering (ii) Self-insured plans. For a group group health insurance coverage, for health plan that provides all benefits plan years beginning on or after Janu- for hospital lengths of stay in connec- ary 1, 1998. This section applies to tion with childbirth other than group health plans, and health insur- through health insurance coverage, the ance issuers offering group health in- requirements of section 2704 of the PHS surance coverage, for plan years begin- Act and this section apply. ning on or after January 1, 1999. (iii) Partially-insured plans. For a [63 FR 57559, Oct. 27, 1998] group health plan that provides some benefits through health insurance cov- § 146.136 Parity in the application of erage, if the State law regulating the certain limits to mental health ben- health insurance coverage meets any of efits. the criteria in paragraph (e)(1) of this (a) Definitions. For purposes of this section, then the requirements of sec- section, except where the context

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clearly indicates otherwise, the fol- impose an aggregate lifetime or annual lowing definitions apply: limit, respectively, on mental health Aggregate lifetime limit means a dollar benefits. limitation on the total amount of spec- (3) Plan with a limit on at least two- ified benefits that may be paid under a thirds of all medical/surgical benefits. If a group health plan (or group health in- plan (or group health insurance cov- surance coverage offered in connection erage) includes an aggregate lifetime with such plan) for an individual (or for or annual limit on at least two-thirds a group of individuals considered a sin- of all medical/surgical benefits, it must gle unit in applying this dollar limita- either— tion, such as a family or an employee (i) Apply the aggregate lifetime or plus spouse). annual limit both to the medical/sur- Annual limit means a dollar limita- gical benefits to which the limit would tion on the total amount of specified otherwise apply and to mental health benefits that may be paid in a 12- benefits in a manner that does not dis- month period under a plan (or group tinguish between the medical/surgical health insurance coverage offered in and mental health benefits; or connection with such plan) for an indi- (ii) Not include an aggregate lifetime vidual (or for a group of individuals or annual limit on mental health bene- considered a single unit in applying fits that is less than the aggregate life- this dollar limitation, such as a family time or annual limit, respectively, on or an employee plus spouse). the medical/surgical benefits. Medical/surgical benefits means bene- (4) Examples. The rules of paragraphs fits for medical or surgical services, as (b) (2) and (3) of this section are illus- defined under the terms of the plan or trated by the following examples: group health insurance coverage, but Example 1. (i) Prior to the effective date of does not include mental health bene- the mental health parity provisions, a group fits. health plan had no annual limit on medical/ Mental health benefits means benefits surgical benefits and had a $10,000 annual for mental health services, as defined limit on mental health benefits. To comply under the terms of the plan or group with the parity requirements of this para- health insurance coverage, but does graph (b), the plan sponsor is considering each of the following options: not include benefits for treatment of (A) Eliminating the plan’s annual limit on substance abuse or chemical depend- mental health benefits; ency. (B) Replacing the plan’s previous annual (b) Requirements regarding limits on limit on mental health benefits with a benefits—(1) In general—(i) General par- $500,000 annual limit on all benefits (includ- ity requirement. A group health plan (or ing medical/surgical and mental health bene- health insurance coverage offered by fits); and (C) Replacing the plan’s previous annual an issuer in connection with a group limit on mental health benefits with a health plan) that provides both med- $250,000 annual limit on medical/surgical ical/surgical benefits and mental benefits and a $250,000 annual limit on men- health benefits must comply with para- tal health benefits. graph (b)(2), paragraph (b)(3), or para- (ii) In this Example 1, each of the three op- graph (b)(6) of this section. tions being considered by the plan sponsor (ii) Exception. The rule in paragraph would comply with the requirements of this (b)(1)(i) of this section does not apply if section because they offer parity in the dollar limits placed on medical/surgical and a plan, or coverage, satisfies the re- mental health benefits. quirements of paragraph (e) or para- Example 2. (i) Prior to the effective date of graph (f) of this section. the mental health parity provisions, a group (2) Plan with no limit or limits on less health plan had a $100,000 annual limit on than one-third of all medical/surgical ben- medical/surgical inpatient benefits, a $50,000 efits. If a plan (or group health insur- annual limit on medical/surgical outpatient ance coverage) does not include an ag- benefits, and a $100,000 annual limit on all gregate lifetime or annual limit on any mental health benefits. To comply with the parity requirements of this paragraph (b), medical/surgical benefits or includes the plan sponsor is considering each of the aggregate lifetime or annual limits following options: that apply to less than one-third of all (A) Replacing the plan’s previous annual medical/surgical benefits, it may not limit on mental health benefits with a

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$150,000 annual limit on mental health bene- are counted with medical/surgical benefits fits; and and mental health benefits in applying the (B) Replacing the plan’s previous annual overall limit. limit on mental health benefits with a (ii) In this Example 4, the group health plan $100,000 annual limit on mental health inpa- is described in paragraph (b)(3) of this sec- tient benefits and a $50,000 annual limit on tion. Because mental health benefits are de- mental health outpatient benefits. fined in paragraph (a) of this section as ex- (ii) In this Example 2, each option under cluding benefits for treatment of substance consideration by the plan sponsor would abuse and chemical dependency, the inclu- comply with the requirements of this section sion of benefits for treatment of substance because they offer parity in the dollar limits abuse and chemical dependency in applying placed on medical/surgical and mental an aggregate lifetime limit or annual limit health benefits. on mental health benefits under option (A) of Example 3. (i) A group health plan that is this Example 4 would not comply with the re- subject to the requirements of this section quirements of paragraph (b)(3) of this sec- has no aggregate lifetime or annual limit for tion. However, options (B), (C), and (D) of either medical/surgical benefits or mental this Example 4 would comply with the re- health benefits. While the plan provides med- quirements of paragraph (b)(3) of this section ical/surgical benefits with respect to both because they offer parity in the dollar limits network and out-of-network providers, it placed on medical/surgical and mental does not provide mental health benefits with health benefits. respect to out-of-network providers. (ii) In this Example 3, the plan complies (5) Determining one-third and two- with the requirements of this section be- thirds of all medical/surgical benefits. For cause they offer parity in the dollar limits purposes of this paragraph (b), the de- placed on medical/surgical and mental termination of whether the portion of health benefits. medical/surgical benefits subject to a Example 4. (i) Prior to the effective date of the mental health parity provisions, a group limit represents one-third or two- health plan had an annual limit on medical/ thirds of all medical/surgical benefits surgical benefits and a separate but identical is based on the dollar amount of all annual limit on mental health benefits. The plan payments for medical/surgical plan included benefits for treatment of sub- benefits expected to be paid under the stance abuse and chemical dependency in its plan for the plan year (or for the por- definition of mental health benefits. Accord- tion of the plan year after a change in ingly, claims paid for treatment of substance abuse and chemical dependency were count- plan benefits that affects the applica- ed in applying the annual limit on mental bility of the aggregate lifetime or an- health benefits. To comply with the parity nual limits). Any reasonable method requirements of this paragraph (b), the plan may be used to determine whether the sponsor is considering each of the following dollar amounts expected to be paid options: under the plan will constitute one- (A) Making no change in the plan so that third or two-thirds of the dollar claims paid for treatment of substance abuse amount of all plan payments for med- and chemical dependency continue to count in applying the annual limit on mental ical/surgical benefits. health benefits; (6) Plan not described in paragraph (B) Amending the plan to count claims (b)(2) or paragraph (b)(3) of this section— paid for treatment of substance abuse and (i) In general. A group health plan (or chemical dependency in applying the annual group health insurance coverage) that limit on medical/surgical benefits (rather is not described in paragraph (b)(2) or than counting those claims in applying the paragraph (b)(3) of this section, must annual limit on mental health benefits); either impose— (C) Amending the plan to provide a new category of benefits for treatment of chem- (A) No aggregate lifetime or annual ical dependency and substance abuse that is limit, as appropriate, on mental health subject to a separate, lower limit and under benefits; or which claims paid for treatment of substance (B) An aggregate lifetime or annual abuse and chemical dependency are counted limit on mental health benefits that is only in applying the annual limit on this no less than an average limit for med- separate category; and ical/surgical benefits calculated in the (D) Amending the plan to eliminate dis- following manner. The average limit is tinctions between medical/surgical benefits and mental health benefits and establishing calculated by taking into account the an overall limit on benefits offered under the weighted average of the aggregate life- plan under which claims paid for treatment time or annual limits, as appropriate, of substance abuse and chemical dependency that are applicable to the categories of

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medical/surgical benefits. Limits based is $640,000 (40% ‘‘ $100,000 + 60% ‘‘ $1,000,000 = on delivery systems, such as inpatient/ $640,000). outpatient treatment, or normal treat- (c) Rule in the case of separate benefit ment of common, low-cost conditions packages. If a group health plan offers (such as treatment of normal births), two or more benefit packages, the re- do not constitute categories for pur- quirements of this section, including poses of this paragraph (b)(6)(i)(B). In the exemption provisions in paragraph addition, for purposes of determining (f) of this section, apply separately to weighted averages, any benefits that each benefit package. Examples of a are not within a category that is sub- group health plan that offers two or ject to a separately-designated limit more benefit packages include a group under the plan are taken into account health plan that offers employees a as a single separate category by using choice between indemnity coverage or an estimate of the upper limit on the HMO coverage, and a group health plan dollar amount that a plan may reason- that provides one benefit package for ably be expected to incur with respect retirees and a different benefit package to such benefits, taking into account for current employees. any other applicable restrictions under (d) Applicability—(1) Group health the plan. plans. The requirements of this section (ii) Weighting. For purposes of this apply to a group health plan offering paragraph (b)(6), the weighting applica- both medical/surgical benefits and ble to any category of medical/surgical mental health benefits regardless of benefits is determined in the manner whether the mental health benefits are set forth in paragraph (b)(5) of this sec- administered separately under the tion for determining one-third or two- plan. thirds of all medical/surgical benefits. (2) Health insurance issuers. The re- (iii) Examples. The rules of this para- quirements of this section apply to a graph (b)(6) are illustrated by the fol- health insurance issuer offering health lowing example: insurance coverage for both medical/ surgical benefits and mental health Example. (i) A group health plan that is benefits in connection with a group subject to the requirements of this section health plan. includes a $100,000 annual limit on medical/ (3) Scope. This section does not— surgical benefits related to cardio-pul- (i) Require a group health plan (or monary diseases. The plan does not include health insurance issuer offering cov- an annual limit on any other category of medical/surgical benefits. The plan deter- erage in connection with a group mines that 40% of the dollar amount of plan health plan) to provide any mental payments for medical/surgical benefits are health benefits; or related to cardio-pulmonary diseases. The (ii) Affect the terms and conditions plan determines that $1,000,000 is a reason- (including cost sharing, limits on the able estimate of the upper limit on the dollar number of visits or days of coverage, amount that the plan may incur with respect requirements relating to medical ne- to the other 60% of payments for medical/ cessity, requiring prior authorization surgical benefits. for treatment, or requiring primary (ii) In this Example, the plan is not de- care physicians’ referrals for treat- scribed in paragraph (b)(3) of this section because there is not one annual limit that ap- ment) relating to the amount, dura- plies to at least two-thirds of all medical/sur- tion, or scope of the mental health ben- gical benefits. Further, the plan is not de- efits under the plan (or coverage) ex- scribed in paragraph (b)(2) of this section be- cept as specifically provided in para- cause more than one-third of all medical/sur- graph (b) of this section. gical benefits are subject to an annual limit. (e) Small employer exemption—(1) In Under this paragraph (b)(6), the plan sponsor general. The requirements of this sec- can choose either to include no annual limit tion do not apply to a group health on mental health benefits, or to include an plan (or health insurance issuer offer- annual limit on mental health benefits that is not less than the weighted average of the ing coverage in connection with a annual limits applicable to each category of group health plan) for a plan year of a medical/surgical benefits. In this example, small employer. For purposes of this the minimum weighted average annual limit paragraph (e), the term small employer that can be applied to mental health benefits means, in connection with a group

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health plan with respect to a calendar first plan year beginning on or after year and a plan year, an employer who January 1, 1998, and must continue to employed an average of at least two comply with the requirements of para- but not more than 50 employees on graph (b)(1)(i) of this section until the business days during the preceding cal- plan satisfies the requirements in this endar year and who employs at least paragraph (f). In no event is the exemp- two employees on the first day of the tion of this paragraph (f) effective until plan year. See regulations at 30 days after the notice requirements § 146.145(a), which provide that this sec- in paragraph (f)(3) of this section are tion (and certain other sections) does satisfied. If the requirements of this not apply to any group health plan paragraph (f) are satisfied with respect (and health insurance issuer offering to a plan, the exemption continues in coverage in connection with a group effect (at the plan’s discretion) until health plan) for any plan year if, on the December 31, 2007, even if the plan sub- first day of the plan year, the plan has sequently purchases a different policy fewer than two participants who are from the same or a different issuer and current employees. regardless of any other changes to the (2) Rules in determining employer size. plan’s benefit structure. For purposes of paragraph (e)(1) of this (2) Calculation of the one-percent in- section— crease—(i) Ratio. A group health plan (i) All persons treated as a single em- (or group health insurance coverage) ployer under subsections (b), (c), (m), satisfies the requirements of this para- and (o) of section 414 of the Internal graph (f)(2) if the application of para- Revenue Code of 1986 (26 U.S.C. 414) are graph (b)(1)(i) of this section to the treated as one employer; plan (or to such coverage) results in an (ii) If an employer was not in exist- increase in the cost under the plan (or ence throughout the preceding cal- for such coverage) of at least one per- endar year, whether it is a small em- cent. The application of paragraph ployer is determined based on the aver- (b)(1)(i) of this section results in an in- age number of employees the employer creased cost of at least one percent reasonably expects to employ on busi- under a group health plan (or for such ness days during the current calendar coverage) only if the ratio below equals year; and or exceeds 1.01000. The ratio is deter- (iii) Any reference to an employer for mined as follows: purposes of the small employer exemption includes a reference to a prede- (A) The incurred expenditures during cessor of the employer. the base period, divided by, (f) Increased cost exemption—(1) In gen- (B) The incurred expenditures during eral. A group health plan (or health in- the base period, reduced by— surance coverage offered in connection (1) The claims incurred during the with a group health plan) is not subject base period that would have been de- to the requirements of this section if nied under the terms of the plan absent the requirements of this paragraph (f) plan amendments required to comply are satisfied. If a plan offers more than with this section, and one benefit package, this paragraph (f) (2) Administrative expenses attrib- applies separately to each benefit utable to complying with the require- package. Except as provided in para- ments of this section. graph (h) of this section, a plan must (ii) Formula. The ratio of paragraph comply with the requirements of para- (f)(2)(i) is expressed mathematically as graph (b)(1)(i) of this section for the follows:

IE ≥ 1. 01000 IE−+() CE AE

(A) IE means the incurred expendi- (B) CE means the claims incurred tures during the base period. during the base period that would have

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been denied under the terms of the plan that $1,000,000 in claims have been incurred absent plan amendments required to during the period between January 1, 1998 comply with this section. and June 30, 1998 and reported by August 30, 1998. The plan also determines that $100,000 (C) AE means administrative costs in administrative costs have been incurred related to claims in CE and other ad- for all benefits under the group health plan, ministrative costs attributable to com- including mental health benefits. Thus, the plying with the requirements of this plan determines that its incurred expendi- section. tures for the base period are $1,100,000. The (iii) Incurred expenditures. Incurred ex- plan also determines that the claims in- penditures means actual claims incurred during the base period that would curred during the base period and re- have been denied under the terms of the plan absent plan amendments required to comply ported within two months following with this section are $40,000 and that admin- the base period, and administrative istrative expenses attributable to complying costs for all benefits under the group with the requirements of this section are health plan, including mental health $10,000. Thus, the total amount of expendi- benefits and medical/surgical benefits, tures for the base period had the plan not during the base period. Incurred ex- been amended to comply with the require- penditures do not include premiums. ments of paragraph (b)(1)(i) of this section are $1,050,000 ($1,100,000—($40,000 + $10,000) = (iv) Base period. Base period means $1,050,000). the period used to calculate whether (ii) In this Example 1, the plan satisfies the the plan may claim the one-percent in- requirements of this paragraph (f)(2) because creased cost exemption in this para- the application of this section results in an graph (f). The base period must begin increased cost of at least one percent under on the first day in any plan year that the terms of the plan ($1,100,000/$1,050,000 = the plan complies with the require- 1.04762). Example 2. (i) A health insurance issuer ments of paragraph (b)(1)(i) of this sec- sells a group health insurance policy that is tion and must extend for a period of at rated on a pooled-basis and is sold to 30 least six consecutive calendar months. group health plans. One of the group health However, in no event may the base pe- plans inquires whether it qualifies for the riod begin prior to September 26, 1996 one percent increased cost exemption. The (the date of enactment of the Mental issuer performs the calculation for the pool Health Parity Act (Pub. L. 104–204, 110 as a whole and determines that the application of this section results in an increased Stat. 2944)). cost of 0.500 percent (for a ratio under this (v) Rating pools. For plans that are paragraph (f)(2) of 1.00500) for the pool. The combined in a pool for rating purposes, issuer informs the requesting plan and the the calculation under this paragraph other plans in the pool of the calculation. (f)(2) for each plan in the pool for the (ii) In this Example 2, none of the plans sat- base period is based on the incurred ex- isfy the requirements of this paragraph (f)(2) penditures of the pool, whether or not and a plan that purchases a policy not complying with the requirements of paragraph all the plans in the pool have partici- (b)(1)(i) of this section violates the require- pated in the pool for the entire base pe- ments of this section. In addition, an issuer riod. (However, only the plans that that issues to any of the plans in the pool a have complied with paragraph (b)(1)(i) policy not complying with the requirements of this section for at least six months of paragraph (b)(1)(i) of this section violates as a member of the pool satisfy the re- the requirements of this section. quirements of this paragraph (f)(2).) Example 3. (i) A partially-insured plan is Otherwise, the calculation under this collecting the information to determine whether it qualifies for the exemption. The paragraph (f)(2) for each plan is cal- plan administrator determines the incurred culated by the plan administrator (or expenses for the base period for the self-fund- issuer) based on the incurred expendi- ed portion of the plan to be $2,000,000 and the tures of the plan. administrative expenses for the base period (vi) Examples. The rules of this para- for the self-funded portion to be $200,000. For graph (f)(2) are illustrated by the fol- the insured portion of the plan, the plan ad- lowing examples: ministrator requests data from the insurer. For the insured portion of the plan, the Example 1. (i) A group health plan has a plan’s own incurred expenses for the base pe- plan year that is the calendar year. The plan riod are $1,000,000 and the administrative ex- satisfies the requirements of paragraph penses for the base period are $100,000. The (b)(1)(i) of this section as of January 1, 1998. plan administrator determines that under On September 15, 1998, the plan determines the self-funded portion of the plan, the

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claims incurred for the base period that (8) The availability, upon request and would have been denied under the terms of free of charge, of a summary of the in- the plan absent the amendment are $0 be- formation required under paragraph cause the self-funded portion does not cover (f)(4) of this section. mental health benefits and the plan’s administrative costs attributable to complying (B) Use of summary of material reduc- with the requirements of this section are tions in covered services or benefits. A $1,000. The issuer determines that under the plan may satisfy the requirements of insured portion of the plan, the claims in- paragraph (f)(3)(i)(A) by providing par- curred for the base period that would have ticipants and beneficiaries (in accord- been denied under the terms of the plan ab- ance with paragraph (f)(3)(i)(C)) with a sent the amendment are $25,000 and the ad- summary of material reductions in ministrative costs attributable to complying covered services or benefits consistent with the requirements of this section are with Department of Labor regulations $1,000. Thus, the total incurred expenditures for the plan for the base period are $3,300,000 at 29 CFR 2520.104b–3(d) that also in- ($2,000,000 + $200,000 + $1,000,000 + $100,000 = cludes the information of this para- $3,300,000) and the total amount of expendi- graph (f)(3)(i). However, in all cases, tures for the base period had the plan not the exemption is not effective until 30 been amended to comply with the require- days after notice has been sent. ments of paragraph (b)(1)(i) of this section (C) Delivery. The notice described in are $3,273,000 ($3,300,000 ¥ ($0 + $1,000 + $25,000 this paragraph (f)(3)(i) is required to be + $1,000) = $3,273,000). provided to all participants and bene- (ii) In this Example 3, the plan does not sat- ficiaries. The notice may be furnished isfy the requirements of this paragraph (f)(2) by any method of delivery that satis- because the application of this section does not result in an increased cost of at least one fies the requirements of section percent under the terms of the plan 104(b)(1) of ERISA (29 U.S.C. 1024(b)(1)) ($3,300,000/$3,273,000 = 1.00825). (e.g., first-class mail). If the notice is provided to the participant at the par- (3) Notice of exemption—(i) Participants ticipant’s last known address, then the and beneficiaries—(A) In general. A requirements of this paragraph (f)(3)(i) group health plan must notify partici- are satisfied with respect to the partic- pants and beneficiaries of the plan’s de- ipant and all beneficiaries residing at cision to claim the one percent in- that address. If a beneficiary’s last creased cost exemption. The notice known address is different from the must include the following informa- participant’s last known address, a sep- tion: arate notice is required to be provided (1) A statement that the plan is ex- to the beneficiary at the beneficiary’s empt from the requirements of this last known address. section and a description of the basis (D) Example. The rules of this para- for the exemption. graph (f)(3)(i) are illustrated by the fol- (2) The name and telephone number lowing example: of the individual to contact for further Example. (i) A group health plan has a plan information. year that is the calendar year and has an (3) The plan name and plan number open enrollment period every November 1 (PN). through November 30. The plan determines (4) The plan administrator’s name, on September 15 that it satisfies the require- address, and telephone number. ments of paragraph (f)(2) of this section. As part of its open enrollment materials, the (5) For single-employer plans, the plan mails, on October 15, to all participants plan sponsor’s name, address, and tele- and beneficiaries a notice satisfying the re- phone number (if different from para- quirements of this paragraph (f)(3)(i). graph (f)(3)(i)(A)(3) of this section) and (ii) In this Example, the plan has sent the the plan sponsor’s employer identifica- notice in a manner that complies with this tion number (EIN). paragraph (f)(3)(i). (6) The effective date of such exemp- (ii) Federal agencies—(A) Church tion. plans. A church plan (as defined in sec- (7) The ability of participants and tion 414(e) of the Internal Revenue beneficiaries to contact the plan ad- Code) claiming the exemption of this ministrator to see how benefits may be paragraph (f) for any benefit package affected as a result of the plan’s elec- must provide notice to the Department tion of the exemption. of the Treasury. This requirement is

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satisfied if the plan sends a copy, to paragraph (b)(1)(i) of this section, the the address designated by the Sec- administrative costs related to those retary in generally applicable guid- claims, and other administrative costs ance, of the notice described in para- attributable to complying with the re- graph (f)(3)(i) of this section identi- quirements for the exemption. In no fying the benefit package to which the event should the summary of informa- exemption applies. tion include any individually identifi- (B) Group health plans subject to Part able information. 7 of Subtitle B of Title I of ERISA. A (g) Special rules for group health insur- group health plan subject to Part 7 of ance coverage—(1) Sale of nonparity poli- Subtitle B of Title I of ERISA, and cies. An issuer may sell a policy with- claiming the exemption of this para- out parity (as described in paragraph graph (f) for any benefit package, must (b) of this section) only to a plan that provide notice to the Department of meets the requirements of paragraph Labor. This requirement is satisfied if (e) or paragraph (f) of this section. the plan sends a copy, to the address (2) Duration of exemption. After a plan designated by the Secretary in gen- meets the requirements of paragraph erally applicable guidance, of the no- (f) of this section, the plan may change tice described in paragraph (f)(3)(i) of issuers without having to meet the re- this section identifying the benefit quirements of paragraph (f) of this sec- package to which the exemption ap- tion again before January 1, 2008. plies. (h) Effective dates—(1) In general. The (C) Non-Federal governmental plans. A requirements of this section are appli- group health plan that is a non-Federal cable for plan years beginning on or governmental plan claiming the ex- after January 1, 1998. emption of this paragraph (f) for any (2) Limitation on actions. (i) Except as benefit package must provide notice to provided in paragraph (h)(3) of this sec- the Department of Health and Human tion, no enforcement action is to be Services (HHS). This requirement is taken by the Secretary against a group satisfied if the plan sends a copy, to health plan that has sought to comply the address designated by the Sec- in good faith with the requirements of retary in generally applicable guid- section 2705 of the PHS Act, with re- ance, of the notice described in para- spect to a violation that occurs before graph (f)(3)(i) of this section identi- the earlier of— fying the benefit package to which the (A) The first day of the first plan exemption applies. year beginning on or after April 1, 1998; (4) Availability of documentation. The or plan (or issuer) must make available to (B) January 1, 1999. participants and beneficiaries (or their (ii) Compliance with the require- representatives), on request and at no ments of this section is deemed to be charge, a summary of the information good faith compliance with the re- on which the exemption was based. An quirements of section 2705 of the PHS individual who is not a participant or Act. beneficiary and who presents a notice (iii) The rules of this paragraph (h)(2) described in paragraph (f)(3)(i) of this are illustrated by the following exam- section is considered to be a represent- ples: ative. A representative may request Example 1. (i) A group health plan has a the summary of information by pro- plan year that is the calendar year. The plan viding the plan a copy of the notice complies with section 2705 of the PHS Act in provided to the participant under para- good faith using assumptions inconsistent graph (f)(3)(i) of this section with any with paragraph (b)(6) of this section relating individually identifiable information to weighted averages for categories of bene- redacted. The summary of information fits. must include the incurred expendi- (ii) In this Example 1, no enforcement ac- tures, the base period, the dollar tion may be taken against the plan with respect to a violation resulting solely from amount of claims incurred during the those assumptions and occurring before Jan- base period that would have been de- uary 1, 1999. nied under the terms of the plan absent Example 2. (i) A group health plan has a amendments required to comply with plan year that is the calendar year. For the

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entire 1998 plan year, the plan applies a (3) For single-employer plans, the $1,000,000 annual limit on medical/surgical name, address, and telephone number benefits and a $100,000 annual limit on men- of the plan sponsor (if different from tal health benefits. the plan administrator) and the plan (ii) In this Example 2, the plan has not sought to comply with the requirements of sponsor’s employer identification num- section 2705 of the PHS Act in good faith and ber (EIN); this paragraph (h)(2) does not apply. (4) The name and telephone number of the individual to contact for further (3) Transition period for increased cost information; and exemption—(i) In general. No enforcement action will be taken against a (5) The signature of the plan adminis- group health plan that is subject to the trator and the date of the signature. requirements of this section based on a (B) The notice must be provided at no violation of this section that occurs be- charge to participants or their rep- fore April 1, 1998 solely because the resentative within 15 days after receipt plan claims the increased cost exemp- of a written or oral request for such no- tion under section 2705(c)(2) of the PHS tification, but in no event before the Act based on assumptions inconsistent notice has been sent to the applicable with the rules under paragraph (f) of federal agency. this section, provided that a plan (i) Sunset. This section does not apply amendment that complies with the re- to benefits for services furnished after quirements of paragraph (b)(1)(i) of this December 31, 2007. section is adopted and effective no [62 FR 66961, Dec. 22, 1997, as amended at 68 later than March 31, 1998 and the plan FR 38208, June 27, 2003; 69 FR 43926, July 23, complies with the notice requirements 2004; 70 FR 42278, July 22, 2005; 71 FR 25093, in paragraph (h)(3)(ii) of this section. Apr. 28, 2006; 72 FR 41231, July 27, 2007] (ii) Notice of plan’s use of transition period. (A) A group health plan satisfies Subpart D—Preemption and the requirements of this paragraph (h)(3)(ii) only if the plan provides no- Special Rules tice to the applicable federal agency § 146.143 Preemption; State flexibility; and posts the notice at the location(s) construction. where documents must be made available for examination by participants (a) Continued applicability of State law and beneficiaries under section 104(b)(2) with respect to health insurance issuers. of ERISA and the regulations there- Subject to paragraph (b) of this section under (29 CFR 2520.104b–1(b)(3)). The no- and except as provided in paragraph (c) tice must indicate the plan’s decision of this section, part A of title XXVII of to use the transition period in para- the PHS Act is not to be construed to graph (h)(3)(i) of this section by 30 days supersede any provision of State law after the first day of the plan year be- which establishes, implements, or con- ginning on or after January 1, 1998, but tinues in effect any standard or re- in no event later than March 31, 1998. quirement solely relating to health in- For a group health plan that is a surance issuers in connection with church plan, the applicable federal group health insurance coverage except agency is the Department of the Treas- to the extent that such standard or re- ury. For a group health plan that is quirement prevents the application of a subject to Part 7 of Subtitle B of Title requirement of this part. I of ERISA, the applicable federal (b) Continued preemption with respect agency is the Department of Labor. to group health plans. Nothing in part A For a group health plan that is a non- of title XXVII of the PHS Act affects federal governmental plan, the applica- or modifies the provisions of section ble federal agency is the Department of 514 of ERISA with respect to group Health and Human Services. The notice health plans. must include— (c) Special rules—(1) In general. Sub- (1) The name of the plan and the plan ject to paragraph (c)(2) of this section, number (PN); the provisions of part A of title XXVII (2) The name, address, and telephone of the PHS Act relating to health in- number of the plan administrator; surance coverage offered by a health

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insurance issuer supersede any provi- the District of Columbia is treated as a sion of State law which establishes, im- State law rather than a law of the plements, or continues in effect a United States. standard or requirement applicable to (2) State. For purposes of this section imposition of a preexisting condition the term State includes a State (as de- exclusion specifically governed by sec- fined in § 144.103), any political subdivi- tion 2701 of the PHS Act which differs sions of a State, or any agency or in- from the standards or requirements strumentality of either. specified in section 2701 of the PHS Act. [69 FR 78797, Dec. 30, 2004; 70 FR 21147, Apr. 25, 2005] (2) Exceptions. Only in relation to health insurance coverage offered by a § 146.145 Special rules relating to health insurance issuer, the provisions group health plans. of this part do not supersede any provision of State law to the extent that (a) Group health plan—(1) Definition. such provision— A group health plan means an em- (i) Shortens the period of time from ployee welfare benefit plan to the ex- the ‘‘6-month period’’ described in sec- tent that the plan provides medical tion 2701(a)(1) of the PHS Act and care (including items and services paid § 146.111(a)(2)(i) (for purposes of identi- for as medical care) to employees (in- fying a preexisting condition); cluding both current and former em- (ii) Shortens the period of time from ployees) or their dependents (as defined the ‘‘12 months’’ and ‘‘18 months’’ de- under the terms of the plan) directly or scribed in section 2701(a)(2) of the PHS through insurance, reimbursement, or Act and § 146.111(a)(2)(ii) (for purposes otherwise. of applying a preexisting condition ex- (2) Determination of number of plans. clusion period); [Reserved] (iii) Provides for a greater number of (b) General exception for certain small days than the ‘‘63-day period’’ de- group health plans. The requirements of scribed in sections 2701(c)(2)(A) and this part, other than § 146.130, do not (d)(4)(A) of the PHS Act and apply to any group health plan (and §§ 146.111(a)(2)(iii) and 146.113 (for pur- group health insurance coverage) for poses of applying the break in coverage any plan year if, on the first day of the rules); plan year, the plan has fewer than two (iv) Provides for a greater number of participants who are current employ- days than the ‘‘30-day period’’ de- ees. scribed in sections 2701(b)(2) and (d)(1) (c) Excepted benefits—(1) In general. of the PHS Act and § 146.111(b) (for pur- The requirements of subparts B and C poses of the enrollment period and pre- of this part do not apply to any group existing condition exclusion periods for health plan (or any group health insur- certain newborns and children that are ance coverage) in relation to its provi- adopted or placed for adoption); sion of the benefits described in para- (v) Prohibits the imposition of any graph (c)(2), (3), (4), or (5) of this sec- preexisting condition exclusion in tion (or any combination of these bene- cases not described in section 2701(d) of fits). the PHS Act or expands the exceptions (2) Benefits excepted in all cir- described therein; cumstances. The following benefits are (vi) Requires special enrollment peri- excepted in all circumstances— ods in addition to those required under (i) Coverage only for accident (in- section 2701(f) of the PHS Act; or cluding accidental death and dis- (vii) Reduces the maximum period memberment); permitted in an affiliation period under (ii) Disability income coverage; section 2701(g)(1)(B) of the PHS Act. (iii) Liability insurance, including (d) Definitions—(1) State law. For pur- general liability insurance and auto- poses of this section the term State law mobile liability insurance; includes all laws, decisions, rules, regu- (iv) Coverage issued as a supplement lations, or other State action having to liability insurance; the effect of law, of any State. A law of (v) Workers’ compensation or similar the United States applicable only to coverage;

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(vi) Automobile medical payment in- (v) Health flexible spending arrange- surance; ments. Benefits provided under a health (vii) Credit-only insurance (for exam- flexible spending arrangement (as de- ple, mortgage insurance); and fined in section 106(c)(2) of the Internal (viii) Coverage for on-site medical Revenue Code) are excepted for a class clinics. of participants only if they satisfy the (3) Limited excepted benefits—(i) In following two requirements— general. Limited-scope dental benefits, (A) Other group health plan coverage, limited-scope vision benefits, or long- not limited to excepted benefits, is term care benefits are excepted if they made available for the year to the class are provided under a separate policy, of participants by reason of their em- certificate, or contract of insurance, or ployment; and are otherwise not an integral part of a (B) The arrangement is structured so group health plan as described in para- that the maximum benefit payable to graph (c)(3)(ii) of this section. In addi- any participant in the class for a year tion, benefits provided under a health cannot exceed two times the partici- flexible spending arrangement are ex- pant’s salary reduction election under cepted benefits if they satisfy the re- the arrangement for the year (or, if quirements of paragraph (c)(3)(v) of greater, cannot exceed $500 plus the this section. amount of the participant’s salary re- (ii) Not an integral part of a group duction election). For this purpose, any health plan. For purposes of this para- amount that an employee can elect to graph (c)(3), benefits are not an inte- receive as taxable income but elects to gral part of a group health plan apply to the health flexible spending (whether the benefits are provided arrangement is considered a salary re- through the same plan or a separate duction election (regardless of whether plan) only if the following two require- the amount is characterized as salary ments are satisfied— or as a credit under the arrangement). (4) —(i) (A) Participants must have the right Noncoordinated benefits Ex- to elect not to receive coverage for the cepted benefits that are not coordinated. Coverage for only a specified disease or benefits; and illness (for example, cancer-only poli- (B) If a participant elects to receive cies) or hospital indemnity or other coverage for the benefits, the partici- fixed indemnity insurance is excepted pant must pay an additional premium only if it meets each of the conditions or contribution for that coverage. specified in paragraph (c)(4)(ii) of this (iii) Limited scope—(A) Dental benefits. section. To be hospital indemnity or Limited scope dental benefits are bene- other fixed indemnity insurance, the fits substantially all of which are for insurance must pay a fixed dollar treatment of the mouth (including any amount per day (or per other period) of organ or structure within the mouth). hospitalization or illness (for example, (B) Vision benefits. Limited scope vi- $100/day) regardless of the amount of sion benefits are benefits substantially expenses incurred. all of which are for treatment of the (ii) Conditions. Benefits are described eye. in paragraph (c)(4)(i) of this section (iv) Long-term care. Long-term care only if— benefits are benefits that are either— (A) The benefits are provided under a (A) Subject to State long-term care separate policy, certificate, or contract insurance laws; of insurance; (B) For qualified long-term care serv- (B) There is no coordination between ices, as defined in section 7702B(c)(1) of the provision of the benefits and an ex- the Internal Revenue Code, or provided clusion of benefits under any group under a qualified long-term care insur- health plan maintained by the same ance contract, as defined in section plan sponsor; and 7702B(b) of the Internal Revenue Code; (C) The benefits are paid with respect or to an event without regard to whether (C) Based on cognitive impairment or benefits are provided with respect to a loss of functional capacity that is ex- the event under any group health plan pected to be chronic. maintained by the same plan sponsor.

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(iii) Example. The rules of this para- plemental program, and is not supplemental graph (c)(4) are illustrated by the fol- to coverage provided under a group health lowing example: plan. Example. (i) Facts. An employer sponsors a (d) Treatment of partnerships. For pur- group health plan that provides coverage through an insurance policy. The policy proposes of this part: vides benefits only for hospital stays at a (1) Treatment as a group health plan. fixed percentage of hospital expenses up to a Any plan, fund, or program that would maximum of $100 a day. not be (but for this paragraph (d)) an (ii) Conclusion. In this Example, even employee welfare benefit plan and that though the benefits under the policy satisfy the conditions in paragraph (c)(4)(ii) of this is established or maintained by a part- section, because the policy pays a percentage nership, to the extent that the plan, of expenses incurred rather than a fixed dol- fund, or program provides medical care lar amount, the benefits under the policy are (including items and services paid for not excepted benefits under this paragraph as medical care) to present or former (c)(4). This is the result even if, in practice, partners in the partnership or to their the policy pays the maximum of $100 for every day of hospitalization. dependents (as defined under the terms of the plan, fund, or program), directly (5) Supplemental benefits. (i) The fol- or through insurance, reimbursement, lowing benefits are excepted only if or otherwise, is treated (subject to they are provided under a separate pol- paragraph (d)(2) of this section) as an icy, certificate, or contract of insurance— employee welfare benefit plan that is a (A) Medicare supplemental health in- group health plan. surance (as defined under section (2) Employment relationship. In the 1882(g)(1) of the Social Security Act; case of a group health plan, the term also known as Medigap or MedSupp in- employer also includes the partnership surance); in relation to any bona fide partner. In (B) Coverage supplemental to the addition, the term employee also in- coverage provided under Chapter 55, cludes any bona fide partner. Whether Title 10 of the United States Code (also or not an individual is a bona fide part- known as TRICARE supplemental pro- ner is determined based on all the rel- grams); and evant facts and circumstances, includ- (C) Similar supplemental coverage ing whether the individual performs provided to coverage under a group services on behalf of the partnership. health plan. To be similar supple- (3) Participants of group health plans. mental coverage, the coverage must be In the case of a group health plan, the specifically designed to fill gaps in primary coverage, such as coinsurance or term participant also includes any indi- deductibles. Similar supplemental cov- vidual described in paragraph (d)(3)(i) erage does not include coverage that or (ii) of this section if the individual becomes secondary or supplemental is, or may become, eligible to receive a only under a coordination-of-benefits benefit under the plan or the individ- provision. ual’s beneficiaries may be eligible to (ii) The rules of this paragraph (c)(5) receive any such benefit. are illustrated by the following exam- (i) In connection with a group health ple: plan maintained by a partnership, the Example. (i) Facts. An employer sponsors a individual is a partner in relation to group health plan that provides coverage for the partnership. both active employees and retirees. The cov- (ii) In connection with a group health erage for retirees supplements benefits pro- plan maintained by a self-employed in- vided by Medicare, but does not meet the re- dividual (under which one or more em- quirements for a supplemental policy under section 1882(g)(1) of the Social Security Act. ployees are participants), the indi- (ii) Conclusion. In this Example, the cov- vidual is the self-employed individual. erage provided to retirees does not meet the (e) Determining the average number of definition of supplemental excepted benefits employees. [Reserved] under this paragraph (c)(5) because the coverage is not Medicare supplemental insur- [69 FR 78798, Dec. 30, 2004] ance as defined under section 1882(g)(1) of the Social Security Act, is not a TRICARE sup-

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Subpart E—Provisions Applicable (ii) Within the service area of the to Only Health Insurance Issuers plan, deny coverage to employers if the issuer has demonstrated to the applica- § 146.150 Guaranteed availability of ble State authority (if required by the coverage for employers in the small State authority) that— group market. (A) It will not have the capacity to (a) Issuance of coverage in the small deliver services adequately to enrollees group market. Subject to paragraphs (c) of any additional groups because of its through (f) of this section, each health obligations to existing group contract insurance issuer that offers health in- holders and enrollees; and surance coverage in the small group (B) It is applying this paragraph market in a State must— (c)(1) uniformly to all employers with- (1) Offer, to any small employer in out regard to the claims experience of the State, all products that are ap- those employers and their employees proved for sale in the small group mar- (and their dependents) or any health ket and that the issuer is actively mar- status-related factor relating to those keting, and must accept any employer employees and dependents. that applies for any of those products; (2) An issuer that denies health in- and surance coverage to an employer in (2) Accept for enrollment under the any service area, in accordance with coverage every eligible individual (as paragraph (c)(1)(ii) of this section, may defined in paragraph (b) of this section) not offer coverage in the small group who applies for enrollment during the market within the service area to any period in which the individual first be- employer for a period of 180 days after comes eligible to enroll under the the date the coverage is denied. This terms of the group health plan, or dur- paragraph (c)(2) does not limit the ing a special enrollment period, and issuer’s ability to renew coverage al- may not impose any restriction on an ready in force or relieve the issuer of eligible individual’s being a participant the responsibility to renew that cov- or beneficiary, which is inconsistent erage. with the nondiscrimination provisions (3) Coverage offered within a service of § 146.121. area after the 180-day period specified (b) Eligible individual defined. For pur- in paragraph (c)(2) of this section is poses of this section, the term ‘‘eligible subject to the requirements of this sec- individual’’ means an individual who is tion. eligible— (d) Application of financial capacity (1) To enroll in group health insur- limits. (1) A health insurance issuer ance coverage offered to a group health may deny health insurance coverage in plan maintained by a small employer, the small group market if the issuer in accordance with the terms of the has demonstrated to the applicable group health plan; State authority (if required by the (2) For coverage under the rules of State authority) that it— the health insurance issuer which are (i) Does not have the financial re- uniformly applicable in the State to serves necessary to underwrite addi- small employers in the small group tional coverage; and market; and (ii) Is applying this paragraph (d)(1) (3) For coverage in accordance with uniformly to all employers in the small all applicable State laws governing the group market in the State consistent issuer and the small group market. with applicable State law and without (c) Special rules for network plans. (1) regard to the claims experience of In the case of a health insurance issuer those employers and their employees that offers health insurance coverage (and their dependents) or any health in the small group market through a status-related factor relating to those network plan, the issuer may— employees and dependents. (i) Limit the employers that may (2) An issuer that denies group health apply for the coverage to those with el- insurance coverage to any small em- igible individuals who live, work, or re- ployer in a State under paragraph (d)(1) side in the service area for the network of this section may not offer coverage plan; and in connection with group health plans

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in the small group market in the State more bona fide associations (as defined before the later of the following dates: in 45 CFR 144.103). (i) The 181st day after the date the (Approved by the Office of Management and issuer denies coverage. Budget under control number 0938–0702) (ii) The date the issuer demonstrates [62 FR 16958, Apr. 8, 1997; 62 FR 31694, June 10, to the applicable State authority, if re- 1997, as amended at 62 FR 35906, July 2, 1997; quired under applicable State law, that 67 FR 48811, July 26, 2002] the issuer has sufficient financial reserves to underwrite additional cov- § 146.152 Guaranteed renewability of erage. coverage for employers in the (3) Paragraph (d)(2) of this section group market. does not limit the issuer’s ability to (a) General rule. Subject to para- renew coverage already in force or re- graphs (b) through (d) of this section, a lieve the issuer of the responsibility to health insurance issuer offering health renew that coverage. insurance coverage in the small or (4) Coverage offered after the 180-day large group market is required to period specified in paragraph (d)(2) of renew or continue in force the coverage this section is subject to the require- at the option of the plan sponsor. ments of this section. (b) Exceptions. An issuer may (5) An applicable State authority nonrenew or discontinue group health may provide for the application of this insurance coverage offered in the small or large group market based only on paragraph (d) on a service-area-specific one or more of the following: basis. (1) Nonpayment of premiums. The plan (e) Exception to requirement for failure sponsor has failed to pay premiums or to meet certain minimum participation or contributions in accordance with the contribution rules. (1) Paragraph (a) of terms of the health insurance coverage, this section does not preclude a health including any timeliness requirements. insurance issuer from establishing em- (2) Fraud. The plan sponsor has per- ployer contribution rules or group par- formed an act or practice that con- ticipation rules for the offering of stitutes fraud or made an intentional health insurance coverage in connec- misrepresentation of material fact in tion with a group health plan in the connection with the coverage. small group market, as allowed under (3) Violation of participation or con- applicable State law. tribution rules. The plan sponsor has (2) For purposes of paragraph (e)(1) of failed to comply with a material plan this section— provision relating to any employer (i) The term ‘‘employer contribution contribution or group participation rule’’ means a requirement relating to rules permitted under § 146.150(e) in the the minimum level or amount of em- case of the small group market or ployer contribution toward the pre- under applicable State law in the case mium for enrollment of participants of the large group market. and beneficiaries; and (4) Termination of plan. The issuer is (ii) The term ‘‘group participation ceasing to offer coverage in the market rule’’ means a requirement relating to in accordance with paragraphs (c) and the minimum number of participants (d) of this section and applicable State law. or beneficiaries that must be enrolled in relation to a specified percentage or (5) Enrollees’ movement outside service area. For network plans, there is no number of eligible individuals or em- longer any enrollee under the group ployees of an employer. health plan who lives, resides, or works (f) Exception for coverage offered only in the service area of the issuer (or in to bona fide association members. Para- the area for which the issuer is author- graph (a) of this section does not apply ized to do business); and in the case of to health insurance coverage offered by the small group market, the issuer ap- a health insurance issuer if that cov- plies the same criteria it would apply erage is made available in the small in denying enrollment in the plan group market only through one or under § 146.150(c).

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(6) Association membership ceases. For State in the market (or markets) are coverage made available in the small discontinued and not renewed. or large group market only through (e) Prohibition on market reentry. An one or more bona fide associations, if issuer who elects to discontinue offer- the employer’s membership in the asso- ing all health insurance coverage in a ciation ceases, but only if the coverage market (or markets) in a State as de- is terminated uniformly without re- scribed in paragraph (d) of this section gard to any health status-related fac- may not issue coverage in the market tor relating to any covered individual. (or markets) and State involved during (c) Discontinuing a particular product. the 5-year period beginning on the date In any case in which an issuer decides of discontinuation of the last coverage to discontinue offering a particular not renewed. product offered in the small or large group market, that product may be dis- (f) Exception for uniform modification continued by the issuer in accordance of coverage. Only at the time of cov- with applicable State law in the par- erage renewal may issuers modify the ticular market only if— health insurance coverage for a prod- (1) The issuer provides notice in writ- uct offered to a group health plan in ing to each plan sponsor provided that the— particular product in that market (and (1) Large group market; and to all participants and beneficiaries (2) Small group market if, for cov- covered under such coverage) of the erage available in this market (other discontinuation at least 90 days before than only through one or more bona the date the coverage will be discon- fide associations), the modification is tinued; consistent with State law and is effec- (2) The issuer offers to each plan tive uniformly among group health sponsor provided that particular prod- plans with that product. uct the option, on a guaranteed issue (g) Application to coverage offered only basis, to purchase all (or, in the case of through associations. In the case of the large group market, any) other health insurance coverage that is made health insurance coverage currently available by a health insurance issuer being offered by the issuer to a group in the small or large group market to health plan in that market; and (3) In exercising the option to dis- employers only through one or more continue that product and in offering associations, the reference to ‘‘plan the option of coverage under paragraph sponsor’’ is deemed, with respect to (c)(2) of this section, the issuer acts coverage provided to an employer uniformly without regard to the claims member of the association, to include a experience of those sponsors or any reference to such employer. health status-related factor relating to (Approved by the Office of Management and any participants or beneficiaries cov- Budget under control number 0938–0702) ered or new participants or beneficiaries who may become eligible for [62 FR 16958, Apr. 8, 1997; 62 FR 31670, June 10, such coverage. 1997, as amended at 62 FR 35906, July 2, 1997] (d) Discontinuing all coverage. An issuer may elect to discontinue offer- § 146.160 Disclosure of information. ing all health insurance coverage in (a) General rule. In connection with the small or large group market or the offering of any health insurance both markets in a State in accordance coverage to a small employer, a health with applicable State law only if— insurance issuer is required to— (1) The issuer provides notice in writ- (1) Make a reasonable disclosure to ing to the applicable State authority the employer, as part of its solicitation and to each plan sponsor (and all par- and sales materials, of the availability ticipants and beneficiaries covered of information described in paragraph under the coverage) of the discontinu- (b) of this section; and ation at least 180 days prior to the date (2) Upon request of the employer, the coverage will be discontinued; and provide that information to the em- (2) All health insurance policies ployer. issued or delivered for issuance in the

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(b) Information described. Subject to is proprietary and trade secret infor- paragraph (d) of this section, informa- mation under applicable law. tion that must be provided under para- (Approved by the Office of Management and graph (a)(2) of this section is informa- Budget under control number 0938–0702) tion concerning the following: [62 FR 16958, Apr. 8, 1997, as amended at 62 (1) Provisions of coverage relating to FR 35906, July 2, 1997] the following: (i) The issuer’s right to change pre- Subpart F—Exclusion of Plans and mium rates and the factors that may Enforcement affect changes in premium rates. (ii) Renewability of coverage. § 146.180 Treatment of non-Federal (iii) Any preexisting condition exclu- governmental plans. sion, including use of the alternative (a) Requirements subject to exemption— method of counting creditable cov- (1) Basic rule. A sponsor of a non-Fed- erage. eral governmental plan may elect to (iv) Any affiliation periods applied by exempt its plan, to the extent that the HMOs. plan is not provided through health in- (v) The geographic areas served by surance coverage, (that is, it is self- HMOs. funded), from any or all of the fol- (2) The benefits and premiums avail- lowing requirements: able under all health insurance cov- (i) Limitations on preexisting condi- erage for which the employer is quali- tion exclusion periods described in fied, under applicable State law. See § 146.111. § 146.150(b) through (f) for allowable (ii) Special enrollment periods for in- limitations on product availability. dividuals and dependents described in § 146.117. (c) Form of information. The informa- (iii) Prohibitions against discrimi- tion must be described in language nating against individual participants that is understandable by the average and beneficiaries based on health sta- small employer, with a level of detail tus described in § 146.121. that is sufficient to reasonably inform (iv) Standards relating to benefits for small employers of their rights and ob- mothers and newborns described in ligations under the health insurance § 146.130. coverage. This requirement is satisfied (v) Parity in the application of cer- if the issuer provides each of the fol- tain limits to mental health benefits lowing with respect to each product of- described in § 146.136. fered: (vi) Required coverage for recon- (1) An outline of coverage. For pur- structive surgery and certain other poses of this section, outline of cov- services following a mastectomy under erage means a description of benefits section 2706 of the PHS Act. in summary form. (2) Limitations. (i) An election under (2) The rate or rating schedule that this section cannot circumvent a re- applies to the product (with and with- quirement of this part to the extent out the preexisting condition exclusion the requirement applied to the plan be- or affiliation period). fore the effective date of the election. (3) The minimum employer contribu- (A) Example 1. A plan is subject to requirements of section 2706 of the PHS tion and group participation rules that Act, under which a plan that covers apply to any particular type of cov- medical and surgical benefits with re- erage. spect to a mastectomy must cover re- (4) In the case of a network plan, a constructive surgery and certain other map or listing of counties served. services following a mastectomy. An (5) Any other information required enrollee who has had a mastectomy re- by the State. ceives reconstructive surgery on Au- (d) Exception. An issuer is not re- gust 24. Claims with respect to the sur- quired to disclose any information that gery are submitted to and processed by the plan in September. The group health plan commences a new plan

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year each September 1. Effective Sep- party to the collective bargaining proc- tember 1, the plan sponsor elects to ex- ess. empt its plan from section 2706 of the (b) Form and manner of election—(1) PHS Act. The plan cannot, on the basis Election requirements. The election must of its exemption election, decline to meet the following requirements: pay for the claims incurred on August (i) Be made in writing. 24. (ii) Be made in conformance with all (B) Example 2. An individual is hired of the plan sponsor’s rules, including by a non-Federal governmental em- any public hearing requirements. ployer and reports to work on August (iii) Specify the beginning and ending 6. The individual has diabetes. Under dates of the period to which the elec- the terms of the plan in effect on Au- tion is to apply. This period can be ei- gust 6, if an individual files an enroll- ther of the following periods: ment application within the first 30 (A) A single specified plan year, as days of employment, enrollment in the defined in § 144.103 of this subchapter. plan is effective as of the first day of (B) The ‘‘term of the agreement,’’ as employment. The individual timely specified in paragraph (b)(2) of this sec- files an enrollment application. The tion, in the case of a plan governed by application is processed on September collective bargaining. 10. The group health plan commences a (iv) Specify the name of the plan and new plan year each September 1. Effec- the name and address of the plan ad- tive September 1, the plan sponsor ministrator, and include the name and elects to exempt its plan from § 146.121, telephone number of a person CMS may which prohibits enrollment discrimina- contact regarding the election. tion based on health status-related fac- (v) State that the plan does not in- tors, by requiring new enrollees to pass clude health insurance coverage, or medical underwriting. The plan cannot identify which portion of the plan is decline to enroll the individual effec- not funded through health insurance tive August 6, even if he would not pass coverage. medical underwriting under the terms (vi) Specify each requirement de- of the plan in effect on September 1. scribed in paragraph (a) of this section (ii) If a group health plan is co-spon- from which the plan sponsor elects to sored by two or more employers, then exempt the plan. only plan enrollees of the non-Federal (vii) Certify that the person signing governmental employer(s) with a valid the election document, including (if ap- election under this section are affected plicable) a third party plan adminis- by the election. trator, is legally authorized to do so by (3) Stop-loss or excess risk coverage. For the plan sponsor. purposes of this section. (i) Subject to (viii) Include, as an attachment, a paragraph (a)(3)(ii), the purchase of copy of the notice described in para- stop-loss or excess risk coverage by a graph (f) of this section. self-funded non-Federal governmental (2) ‘‘Term of the agreement’’ defined. plan does not prevent an election under Except as provided in paragraphs this section. (b)(2)(i) and (b)(2)(ii), for purposes of (ii) Regardless of whether coverage this section ‘‘term of the agreement’’ offered by an issuer is designated as means all group health plan years gov- ‘‘stop-loss’’ coverage or ‘‘excess risk’’ erned by a single collective bargaining coverage, if it is regulated as group agreement. health insurance under an applicable (i) In the case of a group health plan State law, then for purposes of this sec- for which the last plan year governed tion, a non-Federal governmental plan by a prior collective bargaining agree- that purchases the coverage is consid- ment expires during the bargaining ered to be fully insured. In that event, process for a new agreement, the term a plan may not be exempted under this of the prior agreement includes all section from the requirements of this plan years governed by the agreement part. plus the period of time that precedes (4) Construction. Nothing in this part the latest of the following dates, as ap- should be construed as imposing collec- plicable, with respect to the new agree- tive bargaining obligations on any ment:

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(A) The date of an agreement be- election with CMS before the first day tween the governmental employer and of the first plan year governed by a col- union officials. lective bargaining agreement, or by the (B) The date of ratification of an 45th day after the latest applicable agreement between the governmental date specified in paragraph (b)(2)(i) of employer and the union. this section, if the 45th day falls on or (C) The date impasse resolution, arbi- after the first day of the plan year. tration or other closure of the collec- (3) Verifying timely filing. CMS uses tive bargaining process is finalized the postmark on the envelope in which when agreement is not reached. the election is submitted to determine (ii) In the case of a group health plan that the election is timely filed as governed by a collective bargaining specified under paragraphs (d)(1) or agreement for which closure is not (d)(2) of this section, as applicable. If reached before the last plan year under the latest filing date falls on a Satur- the immediately preceding agreement day, Sunday, or a State or Federal hol- expires, the term of the new agreement iday, CMS accepts a postmark on the includes all plan years governed by the next business day. agreement excluding the period that (4) Filing extension based on good precedes the latest applicable date cause. CMS may extend the deadlines specified in paragraph (b)(2)(i) of this specified in paragraphs (d)(1) and (d)(2) section. of this section for good cause if the (3) Construction—(i) Dispute resolution. plan substantially complies with the Nothing in paragraph (b)(1)(ii) of this requirements of paragraph (f) of this section should be construed to mean section. that CMS arbitrates disputes between (5) Failure to file a timely election. Ab- plan sponsors, participants, bene- sent an extension under paragraph ficiaries, or their representatives re- (d)(4) of this section, a plan sponsor’s garding whether an election complies failure to file a timely election under with all of a plan sponsor’s rules. paragraph (d)(1) or (d)(2) of this section (ii) Future elections not preempted. If a makes the plan subject to all require- plan must comply with one or more re- ments of this part for the entire plan quirements of this part for a given plan year to which the election would have year or period of plan coverage, noth- applied, or, in the case of a plan gov- ing in this section should be construed erned by a collective bargaining agree- as preventing a plan sponsor from sub- ment, for any plan years under the mitting an election in accordance with agreement for which the election is not this section for a subsequent plan year timely filed. or period of plan coverage. (e) Additional information required—(1) (c) Mailing address. The plan sponsor Written notification. If an election is should mail the election to: Centers for timely filed, but CMS determines that Medicare & Medicaid Services, Private the election document (or the notice to Health Insurance Group, CMSO, 7500 plan enrollees) does not meet all of the Security Boulevard, S3–16–16, Balti- requirements of this section, CMS may more, MD 21244–1850. notify the plan sponsor, or other entity (d) Filing a timely election—(1) Plan that filed the election, that it must not governed by collective bargaining. submit any additional information Subject to paragraph (d)(4) of this sec- that CMS has determined is necessary tion, if a plan is not governed by a col- to meet those requirements. The addi- lective bargaining agreement, a plan tional information must be filed with sponsor or entity acting on behalf of a CMS by the later of the following plan sponsor must file an election with dates: CMS before the first day of the plan (i) The last day of the plan year. year. (ii) The 45th day after the date of (2) Plan governed by a collective bar- CMS’s written notification requesting gaining agreement. Subject to paragraph additional information. (d)(4) of this section, if a plan is gov- (2) Timely response. CMS uses the erned by a collective bargaining agree- postmark on the envelope in which the ment, a plan sponsor or entity acting additional information is submitted to on behalf of a plan sponsor must file an determine that the information is

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timely filed as specified under para- the plan must provide the initial an- graph (e)(1) of this section. If the latest nual notice of the election to all en- filing date falls on a Saturday, Sunday, rollees before the first day of the plan or a State or Federal holiday, CMS ac- year, or within 30 days after the latest cepts a postmark on the next business applicable date specified in paragraph day. (b)(2)(i) of this section if the 30th day (3) Failure to respond timely. CMS may falls on or after the first day of the invalidate an election if the plan spon- plan year. Also, the plan must provide sor, or other entity that filed the elec- a notice at the time of enrollment to tion, fails to timely submit the addi- individuals who— tional information as specified under (A) Enroll on or after the first day of paragraph (e)(1) of this section. the plan year, when closure of the col- (f) Notice to enrollees—(1) Mandatory lective bargaining process is reached notification. (i) A plan that makes the before the plan year begins; or election described in this section must (B) Enroll on or after the latest ap- notify each affected enrollee of the plicable date specified in paragraph election, and explain the consequences (b)(2)(i) of this section if that date falls of the election. For purposes of this on or after the first day of the plan paragraph (f), if the dependent(s) of a year. participant reside(s) with the partici- (3) Notice content. The notice must in- pant, a plan need only provide notice clude at least the following informa- to the participant. tion: (ii) The notice must be in writing (i) The specific requirements de- and, except as provided in paragraph scribed in paragraph (a)(1) of this sec- (f)(2) of this section with regard to inition from which the plan sponsor is tial notices, must be provided to each electing to exempt the plan, and a enrollee at the time of enrollment statement that, in general, Federal law under the plan, and on an annual basis imposes these requirements upon group no later than the last day of each plan health plans. year (as defined in § 144.103 of this sub- (ii) A statement that Federal law chapter) for which there is an election. gives the plan sponsor of a self-funded (iii) A plan may meet the notifica- non-Federal governmental plan the tion requirements of this paragraph (f) right to exempt the plan in whole, or in by prominently printing the notice in a part, from the listed requirements, and summary plan description, or equiva- that the plan sponsor has elected to do lent description, that it provides to so. each enrollee at the time of enroll- (iii) A statement identifying which ment, and annually. Also, when a plan parts of the plan are subject to the provides a notice to an enrollee at the election. time of enrollment, that notice may (iv) A statement identifying which of serve as the initial annual notice for the listed requirements, if any, apply that enrollee. under the terms of the plan, or as re- (2) Initial notices. (i) If a plan is not quired by State law, without regard to governed by a collective bargaining an exemption under this section. agreement, with regard to the initial (v) A statement informing plan en- plan year to which an election under rollees that the plan provides for cer- this section applies, the plan must pro- tification and disclosure of creditable vide the initial annual notice of the coverage for covered employees and election to all enrollees before the first their dependents who lose coverage day of that plan year, and notice at the under the plan. time of enrollment to all individuals (g) Subsequent elections—(1) Election who enroll during that plan year. renewal. A plan sponsor may renew an (ii) In the case of a collectively bar- election under this section through gained plan (including a self-funded subsequent elections. The timeliness non-Federal governmental plan that standards described in paragraph (d) has been exempted from requirements apply to election renewals under this of this part under § 146.125(a)(2)), with paragraph (g). regard to the initial plan year to which (2) Form and manner of renewal. Ex- an election under this section applies, cept for the requirement to forward to

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CMS a copy of the notice to enrollees (i)(1)(iii) of this section, a substantial under paragraph (b)(1)(viii) of this sec- failure to comply with paragraphs (f) tion, the plan sponsor must comply or (h) of this section results in the in- with the election requirements of para- validation of an election under this graph (b)(1) of this section. In lieu of section with respect to all plan enroll- providing a copy of the notice under ees for the entire plan year. That is, (b)(1)(viii), the plan sponsor may in- the plan is subject to all requirements clude a statement that the notice has of this part for the entire plan year to been, or will be, provided to enrollees which the election otherwise would as specified under paragraph (f) of this have applied. section. (ii) Determination of substantial fail- (3) Election renewal includes provisions ure. CMS determines whether a plan from which plan not previously exempted. has substantially failed to comply with If an election renewal includes a re- a requirement of paragraph (f) or para- quirement described in paragraph (a) of graph (h) of this section based on all this section from which the plan spon- relevant facts and circumstances, in- sor did not elect to exempt the plan for cluding previous record of compliance, the preceding plan year, the advance gravity of the violation and whether a notification requirements of paragraph plan corrects the failure, as warranted, (f)(2) of this section apply with respect within 30 days of learning of the viola- to the additional requirement(s) of tion. However, in general, a plan’s fail- paragraph (a) from which the plan ure to provide a notice of the fact and sponsor is electing to exempt the plan. consequences of an election under this (4) Special rules regarding renewal of section to an individual at the time of an election under a collective bargaining enrollment, or on an annual basis be- agreement. (i) If protracted negotiations fore a given plan year expires, con- with respect to a new agreement result stitutes a substantial failure. in an extension of the term of the prior (iii) Exceptions—(A) Multiple employ- agreement (as provided under para- ers. If the plan is sponsored by multiple graph (b)(2)(i)) under which an election employers, and only certain employers under this section was in effect, the substantially fail to comply with the plan must comply with the enrollee notification requirements of paragraph requirements of paragraphs (f) or (h) of (f)(1), and, following closure of the col- this section, then the election is invali- lective bargaining process, must file an dated with respect to those employers election renewal with CMS as provided only, and not with respect to other em- under paragraph (d)(2) of this section. ployers that complied with those re- (ii) If a single plan applies to more quirements, unless the plan chooses to than one bargaining unit, and the plan cancel its election entirely. is governed by collective bargaining (B) Limited failure to provide notice. If agreements of varying lengths, para- a substantial failure to notify enrollees graph (d)(2) of this section, with re- of the fact and consequences of an elec- spect to an election renewal, applies to tion is limited to certain individuals, the plan as governed by the agreement the election under this section is valid that results in the earliest filing date. only if, for the plan year with respect (h) Certification and disclosure of cred- to which the failure has occurred, the itable coverage. Without regard to an plan agrees not to apply the election election under this section, a non-Fed- with respect to the individuals who eral governmental plan must provide were not notified and so informs those for certification and disclosure of cred- individuals in writing. itable coverage under the plan with re- (2) Examples. (i) Example 1: A self- spect to participants and their depend- funded non-Federal group health plan ents as specified under § 146.115. CMS is co-sponsored by 10 school districts. enforces this requirement as provided Nine of the school districts have fully under paragraph (k) of this section. complied with the requirements of (i) Effect of failure to comply with cer- paragraph (f) of this section, including tification and notification requirements— providing notice to new employees at (1) Substantial failure. (i) General rule. the time of their enrollment in the Except as provided in paragraph plan, regarding the group health plan’s

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exemption under this section from re- ministering the plan in that manner quirements of this part. One school dis- would be too burdensome. Accordingly, trict, which hired 10 new teachers dur- in this example, the plan sponsors ing the summer for the upcoming choose to cancel the election entirely. school year, neglected to notify three Both plan sponsors come into compli- of the new hires about the group health ance with the requirements of this part plan’s exemption election at the time with respect to all enrollees for the they enrolled in the plan. The school plan year for which the substantial district has substantially failed to failure has occurred. comply with a requirement of para- (iv) Example 4: A non-Federal govern- graph (f) with respect to these individ- mental employer has elected to exempt uals. its collectively bargained self-funded The school district learned of the plan from certain requirements of this oversight six weeks into the school part. The collective bargaining agree- year, and promptly (within 30 days of ment applies to five plan years, 2001 learning of the oversight) provided no- through 2005. For the first three plan tice to the three teachers regarding the years, enrollees are notified annually plan’s exemption under this section and at the time of enrollment of the and that the exemption does not apply election under this section. The notice to them, or their dependents, during specifies that the election applies to the plan year of their enrollment be- the period January 1, 2001 through De- cause of the plan’s failure to timely no- cember 31, 2005. Prior to the dissemina- tify them of its exemption. The plan tion of the annual notice for the 2004 complies with the requirements of this plan year, the individual responsible part for these individuals for the plan for disseminating the notice termi- year of their enrollment. CMS would nates employment. His replacement, not require the plan to come into com- who is unaware of the requirement pliance with the requirements of this that plan enrollees be notified annu- part for other enrollees. ally, continues to notify new enrollees (ii) Example 2: Same facts as in Exam- at the time of enrollment but fails to ple 1, except the noncompliant school disseminate the annual notice. CMS district failed to notify any enrollees does not consider that failure to be a regarding an election under this sec- substantial failure because enrollees tion. That is, the school district failed previously had actual notice that the to provide the annual notice to current election under this section applies for plan enrollees as well as the notice at the period January 1, 2001 through De- the time of enrollment to new enroll- cember 31, 2005. Accordingly, CMS ees. The school district has substan- would not invalidate the election for tially failed to comply with the re- the 2004 plan year. quirements of paragraph (f) of this sec- (v) Example 5: A non-Federal govern- tion. At a minimum, the election is in- mental employer has elected to exempt validated with respect to all enrollees its self-funded plan from certain re- of the noncompliant school district for quirements of this part. An individual the plan year for which the substantial terminates employment with the gov- failure has occurred. In this example, ernmental employer, which fails to the plan decides not to cancel its elec- automatically provide a certificate of tion entirely. The election with regard creditable coverage within the period to the other nine school districts re- specified in § 146.115(a)(2)(ii)(A). (The mains in effect. governmental employer generally pro- (iii) Example 3. Two non-Federal gov- vides certificates to terminated em- ernmental employers cosponsor a self- ployees on an automatic basis, but ne- funded group health plan. One em- glected to do so in this case.) The over- ployer substantially fails to comply sight is brought to the employer’s at- with the requirements of paragraph (f) tention when the individual inquires as of this section. While the plan may to why he has not received his certifi- limit the invalidation of the election cate of creditable coverage. The gov- to enrollees of the plan sponsor that is ernmental employer promptly (within responsible for the substantial failure, 30 days) forwards a certificate to the the plan sponsors determine that ad- individual. CMS would not view that

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situation as constituting a substantial (1) Establishing, and enforcing com- failure and would not invalidate the pliance with, the requirements of State election under this section. law (as defined in § 146.143(d)(1)), includ- (j) Election invalidated. If CMS finds ing requirements that parallel provi- cause to invalidate an election under sions of title XXVII of the PHS Act, this section, the following rules apply: that apply to non-Federal govern- (1) CMS notifies the plan sponsor mental plans or sponsors. (and the plan administrator if other (2) Prohibiting a sponsor of a non- than the plan sponsor and the adminis- Federal governmental plan within the trator’s address is known to CMS) in State from making an election under writing that CMS has made a prelimi- this section. nary determination that an election is [67 FR 48811, July 26, 2002] invalid, and states the basis for that determination. (2) CMS’s notice informs the plan PART 147 [RESERVED] sponsor that it has 45 days after the date of CMS’s notice to explain in writ- PART 148—REQUIREMENTS FOR THE ing why it believes its election is valid. INDIVIDUAL HEALTH INSURANCE The plan sponsor should provide appli- MARKET cable statutory and regulatory citations to support its position. Subpart A—General Provisions (3) CMS verifies that the plan spon- Sec. sor’s response is timely filed as pro- 148.101 Basis and purpose. vided under paragraph (d)(3) of this sec- 148.102 Scope, applicability, and effective tion. CMS will not consider a response dates. that is not timely filed. 148.103 Definitions. (4) If CMS’s preliminary determination that an election is invalid remains Subpart B—Requirements Relating to unchanged after CMS considers the Access and Renewability of Coverage plan sponsor’s timely response (or in 148.120 Guaranteed availability of indi- the event that the plan sponsor fails to vidual health insurance coverage to cer- respond timely), CMS provides written tain individuals with prior group cov- notice to the plan sponsor (and the erage. plan administrator if other than the 148.122 Guaranteed renewability of indi- plan sponsor and the administrator’s vidual health insurance coverage. address is known to CMS) of CMS’s 148.124 Certification and disclosure of coverage. final determination that the election is 148.126 Determination of an eligible indi- invalid. Also, CMS informs the plan vidual. sponsor that, within 45 days of the date 148.128 State flexibility in individual mar- of the notice of final determination, ket reforms—alternative mechanisms. the plan, subject to paragraph (i)(1)(iii) of this section, must comply with all Subpart C—Requirements Related to requirements of this part for the speci- Benefits fied period for which CMS has deter- 148.170 Standards relating to benefits for mined the election to be invalid. mothers and newborns. (k) Enforcement. To the extent that an election under this section has not Subpart D—Enforcement; Penalties; been filed or a non-Federal govern- Preemption mental plan otherwise is subject to one 148.210 Preemption. or more requirements of this part, CMS 148.220 Excepted benefits. enforces those requirements under part 150 of this subchapter. This may in- Subpart E—Grants to States for Operation clude imposing a civil money penalty of Qualified High Risk Pools against the plan or the plan sponsor, as determined under § 150.305. 148.306 Basis and scope. 148.308 Definitions. (l) Construction. Nothing in this sec- 148.310 Eligibility requirements for a grant. tion should be construed to prevent a 148.312 Amount of grant payment. State from taking the following ac- 148.314 Periods during which eligible States tions: may apply for a grant.

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148.316 Grant application instructions. gardless of whether a State implements 148.318 Grant application review. an alternative mechanism. 148.320 Grant awards. (b) Effective date. Except as provided AUTHORITY: Secs. 2741 through 2763, 2791, in §§ 148.124 (certificate of coverage), and 2792 of the Public Health Service Act (42 148.128 (alternative State mechanisms), U.S.C. 300gg–41 through 300gg–63, 300gg–91, and 148.170 (standards relating to bene- and 300gg–92). fits for mothers and newborns), the re- SOURCE: 62 FR 16995, Apr. 8, 1997, unless quirements of this part apply to health otherwise noted. insurance coverage offered, sold, issued, renewed, in effect, or operated Subpart A—General Provisions in the individual market after June 30, 1997, regardless of when a period of § 148.101 Basis and purpose. creditable coverage occurs. This part implements sections 2741 [62 FR 16995, Apr. 8, 1997; 62 FR 31695, June 10, through 2763 and 2791 and 2792 of the 1997, as amended at 63 FR 57562, Oct. 27, 1998] PHS Act. Its purpose is to improve access to individual health insurance cov- § 148.103 Definitions. erage for certain eligible individuals Unless otherwise provided, the fol- who previously had group coverage, lowing definition applies: and to guarantee the renewability of all coverage in the individual market. Eligible individual means an indi- It also provides certain protections for vidual who meets the following condi- mothers and newborns with respect to tions: coverage for hospital stays in connec- (1) The individual has at least 18 tion with childbirth. months of creditable coverage (as determined under § 146.113 of this sub- [63 FR 57561, Oct. 27, 1998] chapter) as of the date on which the individual seeks coverage under this § 148.102 Scope, applicability, and ef- part. fective dates. (2) The individual’s most recent prior (a) Scope and applicability. (1) Indi- creditable coverage was under a group vidual health insurance coverage in- health plan, governmental plan, or cludes all health insurance coverage church plan (or health insurance cov- (as defined in § 144.103) that is neither erage offered in connection with any of health insurance coverage sold in con- these plans). nection with an employment-related (3) The individual is not eligible for group health plan, nor short-term, lim- coverage under any of the following: ited-duration coverage as defined in § 144.103 of this subchapter. In some (i) A group health plan. cases, coverage that may be considered (ii) Part A or Part B of Title XVIII group coverage under State law (such (Medicare) of the Social Security Act. as coverage sold through certain asso- (iii) A State plan under Title XIX ciations) is considered individual cov- (Medicaid) of the Social Security Act erage. (or any successor program). (2) The requirements of this part that (4) The individual does not have pertain to guaranteed availability of other health insurance coverage. individual health insurance coverage (5) The individual’s most recent cov- for certain eligible individuals apply to erage was not terminated because of all issuers of individual health insur- nonpayment of premiums or fraud. ance coverage in a State, unless the (For more information about non- State implements an acceptable alter- payment of premiums or fraud, see native mechanism as described in § 146.152(b)(1) and (b)(2) of this sub- § 148.128. The requirements that pertain chapter.) to guaranteed renewability for all indi- (6) If the individual has been offered viduals, and to protections for mothers the option of continuing coverage and newborns with respect to hospital under a COBRA continuation provision stays in connection with childbirth, or a similar State program, the indi- apply to all issuers of individual health vidual has both elected and exhausted insurance coverage in the State, re- the continuation coverage.

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Subpart B—Requirements Relating scribed in paragraph (c)(3) of this sec- to Access and Renewability tion). of Coverage (2) Most popular policies. The two most popular policy forms means the policy § 148.120 Guaranteed availability of informs with the largest, and the second dividual health insurance coverage largest, premium volume for the last to certain individuals with prior reporting year, for policies offered in group coverage. that State. In the absence of applicable (a) General rule. Except as provided State standards, premium volume means for in paragraph (c) of this section, an earned premiums for the last reporting issuer that furnishes health insurance year. In the absence of applicable State coverage in the individual market standards, the last reporting year is must meet the following requirements the period from October 1 through Sep- with respect to any eligible individual tember 30 of the preceding year. Blocks who requests coverage: of business closed under applicable (1) May not decline to offer coverage State law are not included in calcu- or deny enrollment under any policy lating premium volume. forms that it actively markets in the (3) Representative policy forms—(i) Def- individual market, except as permitted inition of weighted average. Weighted av- in paragraph (c) of this section con- erage means the average actuarial cerning alternative coverage when no value of the benefits provided by all State mechanism exists. An issuer is the health insurance coverage issued deemed to meet this requirement if, by one of the following: upon the request of an eligible indi- (A) An issuer in the individual mar- vidual, it acts promptly to do the fol- ket in a State during the previous cal- lowing: endar year, weighted by enrollment for (i) Provide information about all each policy form, but not including available coverage options. coverage issued to eligible individuals. (ii) Enroll the individual in any cov- (B) All issuers in the individual mar- erage option the individual selects. ket in a State if the data are available (2) May not impose any preexisting for the previous calendar year, weight- condition exclusion on the individual. ed by enrollment for each policy form. (b) Exception. The requirements of paragraph (a) of this section do not (ii) Requirements. The two representa- apply to health insurance coverage of- tive policy forms must meet the fol- fered in the individual market in a lowing requirements: State that chooses to implement an ac- (A) Include a lower-level coverage ceptable alternative mechanism de- policy form under which the actuarial scribed in § 148.128. value of benefits under the coverage is (c) Alternative coverage permitted at least 85 percent but not greater than where no State mechanism exists—(1) 100 percent of the weighted average. General rule. If the State does not im- (B) Include a higher-level coverage plement an acceptable alternative policy form under which the actuarial mechanism under § 148.128, an issuer value of the benefits under the cov- may elect to limit the coverage re- erage is at least 15 percent greater quired under paragraph (a) of this sec- than the actuarial value of the lower- tion if it offers eligible individuals at level coverage policy form offered by least two policy forms that meet the an issuer in that State and at least 100 following requirements: percent, but not greater than 120 per- (i) Each policy form must be designed cent, of the weighted average. for, made generally available to, and (C) Include benefits substantially actively marketed to, and enroll, both similar to other individual health ineligible and other individuals. surance coverage offered by the issuer (ii) The policy forms must be either in the State. the issuer’s two most popular policy (D) Provide for risk adjustment, risk forms (as described in paragraph (c)(2) spreading, or a risk spreading mecha- of this section) or representative sam- nism, or otherwise provide some finan- ples of individual health insurance of- cial subsidization for eligible individ- fered by the issuer in the State (as de- uals.

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(E) Meet all applicable State require- out regard to whether the individuals ments. are eligible individuals. (iii) Actuarial value of benefits. The ac- (iii) Not offer any coverage in the in- tuarial value of benefits provided under dividual market, within the service individual health insurance coverage area identified for purposes of para- must be calculated based on a stand- graph (d)(1)(ii) of this section, for a pe- ardized population, and a set of stand- riod of 180 days after the coverage is ardized utilization and cost factors denied. under applicable State law. (2) In those States in which CMS is (4) Election. All issuer elections must enforcing the individual market provi- be applied uniformly to all eligible in- sions of this part in accordance with dividuals in the State and must be ef- § 148.200, the issuer must make the fective for all policies offered during a demonstration described in paragraph period of at least 2 years. (d)(1)(ii) of this section to CMS rather (5) Documentation. The issuer must than to the State, and the issuer may document the actuarial calculations it not deny coverage to any eligible indi- makes as follows: vidual until 30 days after CMS receives (i) Enforcement by State. In a State and approves the information. that elects to enforce the provisions of (e) Application of financial capacity this section in lieu of an alternative limits. (1) An issuer may deny coverage mechanism under § 148.128, the issuer to an eligible individual if the issuer must provide the appropriate State au- has demonstrated the following to the thorities with the documentation re- applicable State authority (if required quired by the State. by the State): (ii) Enforcement by CMS. If CMS acts (i) It does not have the financial re- to enforce the provisions of this section serves necessary to underwrite addi- under § 148.200, the issuer must provide tional coverage. to CMS, within the following time frames, any documentation CMS re- (ii) It uniformly denies coverage to quests: all individuals in the individual mar- (A) For policy forms already being ket, consistent with applicable State marketed as of July 1, 1997—no later law, without regard to any health sta- than September 1, 1997. tus-related factor of the individuals, (B) For other policy forms—90 days and without regard to whether the in- before the beginning of the calendar dividuals are eligible individuals. year in which the issuer wants to mar- (2) In those States in which CMS is ket the policy form. enforcing the individual market provi- (d) Special rules for network plans. (1) sions of this part in accordance with An issuer that offers coverage in the § 148.200, the issuer must make the individual market through a network demonstration described in paragraph plan may take the following actions: (e)(1) of this section to CMS rather (i) Specify that an eligible individual than to the State, and the issuer may may only enroll if he or she lives, re- not deny coverage to any eligible indi- sides, or works within the service area vidual until 30 days after CMS receives for the network plan. and approves the information. (ii) Deny coverage to an eligible indi- (3) An issuer that denies coverage in vidual if the issuer has demonstrated any service area according to para- the following to the applicable State graph (e)(1) of this section is prohibited authority (if required by the State): from offering that coverage in the indi- (A) It does not have the capacity to vidual market for a period of 180 days deliver services adequately to addi- after the later of the date— tional individual enrollees because of (i) The coverage is denied; or its obligations to provide services to (ii) The issuer demonstrates to the current group contract holders and en- applicable State authority (if required rollees, and to current individual en- under applicable State law) that the rollees. issuer has sufficient financial reserves (B) It uniformly denies coverage to to underwrite additional coverage. individuals without regard to any (4) A State may apply the 180-day health status-related factor, and with- suspension described in paragraph

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(e)(3) of this section on a service-area- (g) Clarification of applicability. (1) An specific basis. issuer in the individual market is not (f) Rules for dependents—(1) General required to offer a family coverage op- rule. If an eligible individual elects to tion with any policy form. enroll in individual health insurance (2) An issuer offering health insur- coverage that provides coverage for de- ance coverage only in connection with pendents, the issuer may apply a pre- group health plans, or only through existing condition exclusion on any de- one or more bona fide associations, or pendent who is not an eligible indi- both, is not required to offer that type vidual. of coverage in the individual market. (2) Exception for certain children. A (3) An issuer offering health insur- child is deemed to be an eligible indi- ance coverage in connection with a vidual if the following conditions are group health plan is not deemed to be met: a health insurance issuer offering indi- (i) The child was covered under any vidual health insurance coverage solely creditable coverage within 30 days of because the issuer offers a conversion birth, adoption, or placement for adop- policy. tion (or longer if the State provides for (4) This section does not restrict the a longer special enrollment period than amount of the premium rates that an required under § 146.117(a)(6) of this sub- issuer may charge an individual under chapter). State law for health insurance cov- (ii) The child has not had a signifi- erage provided in the individual mar- cant break in coverage. ket. (3) Examples. The following examples (5) This section does not prevent an illustrate the requirements of this issuer offering health insurance cov- paragraph (f) for certain children: erage in the individual market from es- Example 1: Individual A had self-only cov- tablishing premium discounts or re- erage under his employer’s group health plan bates, or modifying otherwise applica- for five years. A has two children, ages 11 ble copayments or deductibles, in re- and 15, but never enrolled in family coverage. A leaves his job to become self-em- turn for adherence to programs of ployed, and qualifies as an eligible individual health promotion and disease preven- because he is not entitled to any continu- tion. ation coverage, Medicare or Medicaid, and (6) This section does not require has no other health insurance coverage. He issuers to reopen blocks of business applies to Issuer R for coverage in the indi- closed under applicable State law. vidual market under a policy with family coverage that R makes available to eligible (Approved by the Office of Management and individuals. R must sell A the policy, but he Budget under control number 0938–0703) may refuse coverage to A’s children, or may [62 FR 16996, Apr. 8, 1997; 62 FR 31696, June 10, apply a preexisting condition exclusion to 1997, as amended at 62 FR 35906, July 2, 1997] them if allowed under applicable State law, because they did not have prior creditable coverage, and therefore do not qualify as eli- § 148.122 Guaranteed renewability of gible individuals. individual health insurance cov- Example 2: Individual B was also covered erage. under a group health plan for 5 years before (a) Applicability. This section applies losing his job. He originally had coverage to all health insurance coverage in the only for himself and his wife, but 3 months individual market. before his employment ended, his wife had a (b) General rules. (1) Except as pro- baby. B took advantage of the special enrollment period that applied, changed to family vided in paragraph (c) of this section, coverage, and enrolled the baby in the group an issuer must renew or continue in health plan within 20 days. Immediately force the coverage at the option of the after losing his job, B applied to Issuer R for individual. family coverage. B and his wife qualify as el- (2) Medicare eligibility or entitle- igible individuals, and the baby is deemed to ment is not a basis for nonrenewal or be an eligible individual even though she has termination of an individual’s health less than 3 months of creditable coverage. Therefore R must make the policy available insurance coverage in the individual to all three members of the family, and can- market. not impose any preexisting condition exclu- (c) Exceptions to renewing coverage. An sions. issuer may nonrenew or discontinue

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health insurance coverage of an indi- (e) Discontinuing all coverage. An vidual in the individual market based issuer may discontinue offering all only on one or more of the following: health insurance coverage in the indi- (1) Nonpayment of premiums. The individual market in a State only if it vidual has failed to pay premiums or meets the following requirements. contributions in accordance with the (1) Provides notice in writing to the terms of the health insurance coverage, applicable State authority and to each including any timeliness requirements. individual of the discontinuation at (2) Fraud. The individual has per- least 180 days before the date the cov- formed an act or practice that con- erage will expire. stitutes fraud or made an intentional (2) Discontinues and does not renew misrepresentation of material fact all health insurance policies it issues under the terms of the coverage. or delivers for issuance in the State in the individual market. (3) Termination of plan. The issuer is (3) Acts uniformly without regard to ceasing to offer coverage in the indi- any health status-related factor of cov- vidual market in accordance with para- ered individuals or dependents of cov- graphs (d) and (e) of this section and ered individuals who may become eligi- applicable State law. ble for coverage. (4) Movement outside the service area. (f) Prohibition on market reentry. An For network plans, the individual no issuer who elects to discontinue offer- longer resides, lives, or works in the ing all health insurance coverage under service area of the issuer, or area for paragraph (e) of this section may not which the issuer is authorized to do issue coverage in the market and State business, but only if coverage is termi- involved during the 5-year period be- nated uniformly without regard to any ginning on the date of discontinuation health status-related factor of covered of the last coverage not renewed. individuals. (g) Exception for uniform modification (5) Association membership ceases. For of coverage. An issuer may, only at the coverage made available in the indi- time of coverage renewal, modify the vidual market only through one or health insurance coverage for a policy more bona fide associations, the indi- form offered in the individual market vidual’s membership in the association if the modification is consistent with ceases, but only if the coverage is ter- State law and is effective uniformly for minated uniformly without regard to all individuals with that policy form. any health status-related factor of cov- (h) Application to coverage offered only ered individuals. through associations. In the case of (d) Discontinuing a particular type of health insurance coverage that is made coverage. An issuer may discontinue of- available by a health insurance issuer fering a particular type of health insur- in the individual market only through ance coverage offered in the individual one or more associations, any reference market only if it meets the following in this section to an ‘‘individual’’ is requirements: deemed to include a reference to the (1) Provides notice in writing to each association of which the individual is a individual provided coverage of that member. type of health insurance at least 90 (Approved by the Office of Management and days before the date the coverage will Budget under control number 0938–0703) be discontinued. [62 FR 16998, Apr. 8, 1997; 62 FR 31696, June 10, (2) Offers to each covered individual, 1997, as amended at 62 FR 35906, July 2, 1997] on a guaranteed issue basis, the option to purchase any other individual § 148.124 Certification and disclosure health insurance coverage currently of coverage. being offered by the issuer for individ- (a) Applicability—(1) General rule. Ex- uals in that market. cept as provided in paragraph (a)(2) of (3) Acts uniformly without regard to this section, this section applies to all any health status-related factor of cov- issuers of health insurance coverage. ered individuals or dependents of cov- (2) Exception. The provisions of this ered individuals who may become eligi- section do not apply to issuers of the ble for coverage. following types of coverage:

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(i) Health insurance coverage fur- (3) The plan or issuer that would oth- nished in connection with a group erwise receive the certificate agrees to health plan defined in § 144.103 of this accept the information in paragraph subchapter. (These issuers are required (a)(3) of this section through means under § 146.115 of this subchapter to other than a written certificate (for ex- provide a certificate of coverage.) ample, by telephone). (ii) Excepted benefits described in (4) The receiving plan or issuer re- § 148.220. ceives the information from the send- (iii) Short-term, limited duration ing issuer in the prescribed form within coverage defined in § 144.103 of this sub- the time periods required under para- chapter. graph (b)(1) of this section. (b) General rules—(1) Individuals for (ii) Required information. The certifi- whom a certificate must be provided; tim- cate must include the following: ing of issuance. A certificate must be (A) The date the certificate is issued. provided, without charge, for individ- (B) The name of the individual or de- uals and dependents who are or were pendent for whom the certificate ap- covered under an individual health in- plies, and any other information nec- surance policy as follows: essary for the issuer providing the cov- (i) Issuance of automatic certificates. erage specified in the certificate to An automatic certificate must be pro- identify the individual, such as the in- vided within a reasonable time period dividual’s identification number under consistent with State law after the in- the policy and the name of the policy- dividual ceases to be covered under the holder if the certificate is for (or in- policy. cludes) a dependent. (ii) Any individual upon request. Re- (C) The name, address, and telephone quests for certificates may be made by, number of the issuer required to pro- or on behalf of, an individual within 24 vide the certificate. months after coverage ends. For exam- (D) The telephone number to call for ple, an entity that provides coverage to further information regarding the cer- an individual in the future may, if au- tificate (if different from paragraph thorized by the individual, request a (b)(2)(ii)(C) of this section). certificate of the individual’s cred- (E) Either one of the following: itable coverage on behalf of the indi- (1) A statement that the individual vidual from the issuer of the individ- has at least 18 months (for this pur- ual’s prior coverage. After the request pose, 546 days is deemed to be 18 is received, an issuer must provide the months) of creditable coverage, dis- certificate by the earliest date the regarding days of creditable coverage issuer, acting in a reasonable and before a significant break in coverage prompt fashion, can provide the certifi- as defined in § 146.113(b)(2)(iii) of this cate. A certificate must be provided subchapter. under this paragraph even if the indi- (2) Both the date the individual first vidual has previously received a certifi- sought coverage, as evidenced by a sub- cate under this paragraph (b)(1)(ii) or stantially complete application, and an automatic certificate under para- the date creditable coverage began. graph (a)(l)(i) of this section. (F) The date creditable coverage (2) Form and content of certificate—(i) ended, unless the certificate indicates Written certificate—(A) General rule. Ex- that creditable coverage is continuing cept as provided in paragraph as of the date of the certificate. (b)(2)(i)(B) of this section, the issuer (iii) Periods of coverage under a certifi- must provide the certificate in writing cate. If an automatic certificate is pro- (including any form approved by CMS). vided under paragraph (b)(1)(i) of this (B) Other permissible forms. No written section, the period that must be in- certificate must be provided if all of cluded on the certificate is the last pe- the following occur: riod of continuous coverage ending on (1) An individual is entitled to re- the date coverage ceased. If an indi- ceive a certificate. vidual requests a certificate under (2) The individual requests that the paragraph (b)(1)(ii) of this section, a certificate be sent to another plan or certificate must be provided for each issuer instead of to the individual. period of continuous coverage ending

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within the 24-month period ending on (iii) Designated recipients. If an auto- the date of the request (or continuing matic certificate is required to be pro- on the date of the request). A separate vided under paragraph (b)(1)(i) of this certificate may be provided for each section, and the individual or depend- period of continuous coverage. ent entitled to receive the certificate (iv) Single certificate permitted for fami- designates another individual or entity lies. An issuer may provide a single cer- to receive the certificate, the issuer re- tificate for both an individual and the sponsible for providing the certificate individual’s dependents if it provides may provide the certificate to the des- all the required information for each ignated party. If a certificate must be individual and dependent, and sepa- provided upon request under paragraph rately states the information that is (b)(1)(ii) of this section, and the indi- not identical. vidual entitled to receive the certifi- (v) Model certificate. The require- cate designates another individual or ments of paragraph (b)(2)(ii) of this sec- entity to receive the certificate, the tion are satisfied if the issuer provides issuer responsible for providing the cer- a certificate in accordance with a tificates must provide the certificate model certificate as provided by CMS. to the designated party. (vi) Excepted benefits; categories of ben- (4) Special rules concerning dependent efits. No certificate is required to be coverage—(i) Reasonable efforts. An furnished with respect to excepted ben- issuer must use reasonable efforts to efits described in § 148.220. If excepted determine any information needed for benefits are provided concurrently with a certificate relating to dependent cov- other creditable coverage (so that the erage. If an automatic certificate must coverage does not consist solely of ex- be furnished with respect to a depend- cepted benefits), information con- ent under paragraph (b)(1)(i) of this cerning the benefits may be required to section, no individual certificate must be disclosed under paragraph (c) of this be furnished until the issuer knows (or section. making reasonable efforts should (3) Procedures—(i) Method of delivery. know) of the dependent’s cessation of The certificate is required to be pro- coverage under the policy. vided, without charge, to each indi- (ii) Special rules for demonstrating cov- vidual described in paragraph (b)(1) of erage. If a certificate furnished by an this section or an entity requesting the issuer does not provide the name of any certificate on behalf of the individual. dependent of an individual covered by The certificate may be provided by the certificate, the individual may, if first-class mail. If the certificate or necessary, use the procedures described certificates are provided to the indi- in paragraph (d)(3) of this section for vidual and the individual’s spouse at demonstrating dependent status. An the individual’s last known address, individual may, if necessary, use these the requirements of this paragraph procedures to demonstrate that a child (b)(3) are satisfied with respect to all was enrolled within 30 days of birth, individuals and dependents residing at adoption, or placement for adoption, in that address. If a dependent’s last which case the child would not be sub- known address is different than the in- ject to a preexisting condition exclu- dividual’s last known address, a sepa- sion under § 148.120(f)(2). rate certificate must be provided to the (iii) Transition rule for dependent cov- dependent at the dependent’s last erage through June 30, 1998—(A) General known address. If separate certificates rule. An issuer that cannot provide the are provided by mail to individuals and names of dependents (or related cov- dependents who reside at the same ad- erage information) for purposes of pro- dress, separate mailings of each certifi- viding a certificate of coverage for a cate are not required. dependent may satisfy the require- (ii) Procedure for requesting certifi- ments of paragraph (b)(2)(ii)(C) of this cates. An issuer must establish a proce- section by providing the name of the dure for individuals and dependents to policyholder and specifying that the request and receive certificates under type of coverage described in the cer- paragraph (b)(1)(ii) of this section. tificate is for dependent coverage (for

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example, family coverage or indi- (2) Information to be disclosed. The vidual-plus-spouse coverage). prior entity must identify to the re- (B) Certificates provided on request. questing entity the categories of bene- For purposes of certificates provided on fits under which the individual was the request of, or on behalf of, an indi- covered and with respect to which the vidual under paragraph (b)(1)(ii) of this requesting entity is using the alter- section, an issuer must make reason- native method of counting creditable able efforts to obtain and provide the coverage, and the requesting entity names of any dependent covered by the may identify specific information that certificate if the information is re- the requesting entity reasonably needs quested. If a certificate does not in- to determine the individual’s cred- clude the name of any dependent of an itable coverage with respect to any of individual covered by the certificate, those categories. The prior entity must the individual may, if necessary, use promptly disclose to the requesting en- the procedures described in paragraph tity the creditable coverage informa- (d)(3) of this section for submitting tion that was requested. documentation to establish that the (3) Charge for providing information. creditable coverage in the certificate The prior entity furnishing the infor- applies to the dependent. mation under paragraph (c)(2) of this (C) Demonstrating a dependent’s cred- section may charge the requesting en- itable coverage. See paragraph (d)(3) of tity for the reasonable cost of dis- this section for special rules to dem- closing the information. onstrate dependent status. (d) Ability of an individual to dem- (D) Duration. The transitional rules onstrate creditable coverage and waiting of this paragraph (b)(4)(iii) are effective period information—(1) General rule. In- for certifications provided with respect dividuals may establish creditable cov- to an event occurring before July 1, erage through means other than cer- 1998. tificates. If the accuracy of a certifi- (5) Optional notice. This paragraph ap- cate is contested or a certificate is un- plies to events described in paragraph available when needed by the indi- (b)(1)(i) of this section, that occur after vidual, the individual has the right to September 30, 1996, but before June 30, demonstrate creditable coverage (and 1997. An issuer offering individual waiting or affiliation periods) through health insurance coverage is deemed to the presentation of documents or other satisfy paragraphs (b)(1) and (b)(2) of means. For example, the individual this section if a notice is provided in may make a demonstration if one of accordance with the provisions of the following occurs: § 146.125(e)(3)(ii) through (e)(3)(iv) of (i) An entity has failed to provide a this subchapter. certificate within the required time pe- (c) Disclosure of coverage to a plan, or riod. issuer, electing the alternative method of (ii) The individual has creditable cov- creating coverage—(1) General rule. If an erage but an entity may not be re- individual enrolls in a group health quired to provide a certificate of the plan and the plan or issuer uses the al- coverage. ternative method of determining cred- (iii) The coverage is for a period be- itable coverage described in § 146.113(c) fore July 1, 1996. of this subchapter, the individual pro- (iv) The individual has an urgent vides a certificate of coverage under medical condition that necessitates a paragraph (b) of this section or dem- determination before the individual onstrates creditable coverage under can deliver a certificate to the plan. paragraph (d) of this section, and the (v) The individual lost a certificate plan or coverage in which the indi- that the individual had previously re- vidual enrolls requests from the prior ceived and is unable to obtain another entity, the prior entity must disclose certificate. promptly to the requesting plan or (2) Evidence of creditable coverage—(i) issuer (‘‘requesting entity’’) the infor- Consideration of evidence. An issuer mation set forth in paragraph (c)(2) of must take into account all information this section. that it obtains or that is presented on

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behalf of an individual to make a de- to the dependency and the period of the termination, based on the relevant status and the individual cooperates facts and circumstances, whether or with the issuer’s efforts to verify the not an individual has 18 months of dependent status. creditable coverage. An issuer must treat the individual as having fur- (Approved by the Office of Management and nished a certificate if the individual at- Budget under control number 0938–0703) tests to the period of creditable cov- [62 FR 16998, Apr. 8, 1997; 62 FR 31696, June 10, erage, the individual presents relevant 1997, as amended at 62 FR 35906, July 2, 1997] corroborating evidence of some creditable coverage during the period, and § 148.126 Determination of an eligible the individual cooperates with the individual. issuer’s efforts to verify the individ- (a) General rule. Each issuer offering ual’s coverage. For this purpose, co- health insurance coverage in the indi- operation includes providing (upon the vidual market is responsible for deter- issuer’s request) a written authoriza- mining whether an applicant for cov- tion for the issuer to request a certifi- erage is an eligible individual as de- cate on behalf of the individual, and co- fined in § 148.103. operating in efforts to determine the (b) Specific requirements. (1) The issuer validity of the corroborating evidence must exercise reasonable diligence in and the dates of creditable coverage. While an issuer may refuse to credit making this determination. coverage if the individual fails to co- (2) The issuer must promptly deter- operate with the issuer’s efforts to mine whether an applicant is an eligi- verify coverage, the issuer may not ble individual. consider an individual’s inability to ob- (3) If an issuer determines that an in- tain a certificate to be evidence of the dividual is an eligible individual, the absence of creditable coverage. issuer must promptly issue a policy to (ii) Documents. Documents that may that individual. establish creditable coverage (and (c) Insufficient information—(1) Gen- waiting periods or affiliation periods) eral rule. If the information presented in the absence of a certificate include in or with an application is substan- explanations of benefit claims (EOB) or tially insufficient for the issuer to other correspondence from a plan or make the determination described in issuer indicating coverage, pay stubs paragraph (b)(2) of this section, the showing a payroll deduction for health issuer may immediately request addi- coverage, a health insurance identifica- tional information from the individual, tion card, a certificate of coverage and must act promptly to make its de- under a group health policy, records termination after receipt of the re- from medical care providers indicating quested information health coverage, third party statements verifying periods of coverage, (2) Failure to provide a certification of and any other relevant documents that creditable coverage. If an entity fails to evidence periods of health coverage. provide the certificate that is required (iii) Other evidence. Creditable cov- under this part or part 146 of this sub- erage (and waiting period or affiliation chapter to the applicant, the issuer is period information) may be established subject to the procedures set forth in through means other than documenta- § 148.124(d)(1) concerning an individual’s tion, such as by a telephone call from right to demonstrate creditable cov- the issuer to a third party verifying erage. creditable coverage. [62 FR 17000, Apr. 8, 1997] (3) Demonstrating dependent status. If, in the course of providing evidence (in- EFFECTIVE DATE NOTE: At 62 FR 17000, Apr. cluding a certificate) of creditable cov- 8, 1997, § 148.126 was added. This section con- erage, an individual is required to dem- tains information collection and record- onstrate dependent status, the issuer keeping requirements and will not become must treat the individual as having effective until approval has been given by furnished a certificate showing the de- the Office of Management and Budget. pendent status if the individual attests

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§ 148.128 State flexibility in individual August 21, 1996), but only if the model market reforms—alternative mecha- has been revised in State regulations nisms. to meet all of the requirements of this (a) Waiver of requirements. The re- part and title 27 of the PHS Act. quirements of § 148.120, which set forth (iii) One of the following mecha- Federal requirements for guaranteed nisms: availability in the individual market, (A) Any other mechanism that pro- do not apply in a State that imple- vides for risk adjustment, risk spread- ments an acceptable alternative mech- ing, or a risk-spreading mechanism anism in accordance with the following (among issuers or policies of an issuer) criteria: or otherwise provides for some finan- (1) The alternative mechanism meets cial subsidization for eligible individ- the following conditions: uals, including through assistance to (i) Offers health insurance coverage participating issuers. to all eligible individuals. (B) A mechanism that provides a (ii) Prohibits imposing preexisting choice for each eligible individual of all condition exclusions and affiliation pe- individual health insurance coverage riods for coverage of an eligible indi- otherwise available. vidual. (b) Permissible forms of mechanisms. A (iii) Offers an eligible individual a private or public individual health in- choice of coverage that includes at surance mechanism (such as a health least one policy form of coverage that insurance coverage pool or program, a is comparable to either one of the fol- mandatory group conversion policy, lowing: guaranteed issue of one or more plans (A) Comprehensive coverage offered of individual health insurance cov- in the individual market in the State. erage, or open enrollment by one or (B) A standard option of coverage more health insurance issuers), or com- available under the group or individual bination of these mechanisms, that is health insurance laws of the State. designed to provide access to health (2) The State is implementing one of benefits for individuals in the indi- the following provisions relating to vidual market in the State, in accord- risk: ance with this section, may constitute (i) One of the following model acts, as an acceptable alternative mechanism. adopted by the NAIC on June 3, 1996, (c) Establishing an acceptable alter- but only if the model has been revised native mechanism—transition rules. CMS in State regulations to meet all of the presumes a State to be implementing requirements of this part and title 27 of an acceptable alternative mechanism the PHS Act. as of July 1, 1997 if the following condi- (A) The Small Employer and Indi- tions are met: vidual Health Insurance Availability (1) By not later than April 1, 1997, as Model Act to the extent it applies to evidenced by a postmark date, or other individual health insurance coverage. such date, the chief executive officer of (B) The Individual Health Insurance the State takes the following actions: Portability Model Act. (i) Notifies CMS that the State has (ii) A qualified high risk pool, which, enacted or intends to enact by not for purposes of this section, is a high later than January 1, 1998 (unless it is risk pool that meets the following con- a State described in paragraph (d) of ditions: this section), any legislation necessary (A) Provides to all eligible individ- to provide for the implementation of a uals health insurance coverage (or mechanism reasonably designed to be comparable coverage) that does not im- an acceptable alternative mechanism pose any preexisting condition exclu- as of January 1, 1998. sion or affiliation periods for coverage (ii) Provides CMS with the informa- of an eligible individual. tion necessary to review the mecha- (B) Provides for premium rates and nism and its implementation (or pro- covered benefits for the coverage con- posed implementation). sistent with standards included in the (2) CMS has not made a determina- NAIC Model Health Plan for Uninsur- tion, in accordance with the procedure able Individuals Act (as in effect as of in paragraph (e)(4) of this section, that

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the State will not be implementing a ceived by CMS, and ends 90 days later, mechanism reasonably designed to be not counting any days during which an acceptable alternative mechanism the review period is suspended under as of January 1, 1998. paragraph (e)(3)(ii) of this section. (d) Delay permitted for certain States. If (ii) Suspension of review period. During a State notifies CMS that its legisla- any review period, if CMS notifies the ture is not meeting in a regular session State of the need for additional infor- between August 21, 1996 and August 20, mation or further discussion on its sub- 1997, CMS continues to presume until mission, CMS suspends the review pe- July 1, 1998 that the State is imple- riod until the State provides the nec- menting an acceptable alternative essary information. mechanism, if the chief executive offi- (4) Determination by CMS—(i) Prelimi- cer of the State takes the following ac- nary determination. If CMS finds after tions: reviewing the submitted information, (1) Notifies CMS by April 1, 1997, that and after consultation with the chief the State intends to submit an alter- executive officer of the State and the native mechanism and intends to enact chief insurance regulatory official of any necessary legislation to provide for the State, that the mechanism is not the implementation of an acceptable an acceptable alternative mechanism, alternative mechanism as of July 1, CMS takes the following actions: 1998. (A) Notifies the State, in writing, of (2) Notifies CMS by April 1, 1998, that the preliminary determination. the State has enacted any necessary (B) Informs the State that if it fails legislation to provide for the imple- to implement an acceptable alternative mentation of an acceptable alternative mechanism, the Federal guaranteed mechanism as of July 1, 1998. availability provisions of § 148.120 will (3) Provides CMS with the informa- take effect. tion necessary to review the mecha- (C) Permits the State a reasonable nism and its implementation (or pro- opportunity to modify the mechanism posed implementation). (or to adopt another mechanism). (e) Submitting an alternative mecha- (ii) Final determination. If, after pro- nism after April 1, 1997—(1) Notice with viding notice and a reasonable oppor- information. A State that wishes to im- tunity for the State to modify its plement an acceptable alternative mechanism, CMS makes a final deter- mechanism must take the following ac- mination that the design of the State’s tions: alternative mechanism is not accept- (i) Notify CMS that it has enacted able or that the State is not substan- legislation necessary to provide for the tially enforcing an acceptable alter- implementation of a mechanism rea- native mechanism, CMS notifies the sonably designed to be an acceptable State in writing of the following: alternative mechanism, and (A) CMS’s final determination. (ii) Provide CMS with the informa- (B) That the requirements of § 148.120 tion necessary for CMS to review the concerning guaranteed availability mechanism and its implementation (or apply to health insurance coverage of- proposed implementation). fered in the individual market in the (2) An acceptable alternative mecha- State as of a date specified in the no- nism. If the State takes the actions de- tice from CMS. scribed in paragraph (e)(1) of this sec- (iii) State request for early notice. A tion, the mechanism is considered to be State may request that CMS notify the an acceptable alternative mechanism State before the end of the review pe- unless CMS makes a preliminary deter- riod if CMS is not making a prelimi- mination (under paragraph (e)(4)(i) of nary determination. this section), within the review period (5) Effective date. If CMS does not (defined in paragraph (e)(3) of this sec- make a preliminary determination tion), that the mechanism is not an ac- within the review period, the accept- ceptable alternative mechanism. able alternative mechanism is effective (3) Review period—(i) General. The re- 90 days after the end of the 90-day review period begins on the date the view period described in paragraph State’s notice and information are re- (e)(3)(i) of this section.

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(f) Continued application. A State al- viduals with a choice of all available ternative mechanism may continue to individual health insurance coverage. be presumed to be acceptable, if the (5) Has the State enacted all legisla- State provides information to CMS tion necessary for implementing the that meets the following requirements: alternative mechanism? (1) If the State makes a significant (6) If the State has not enacted all change to its alternative mechanism, it legislation necessary for implementing provides the information before mak- the alternative mechanism, will the ing a change. necessary legislation be enacted by (2) Every 3 years from the later of January 1, 1998? implementing the alternative mecha- (h) Limitation of CMS’s authority. CMS nism or implementing a significant does not make a preliminary or final change, it provides CMS with information. determination on any basis other than (g) Review criteria. CMS reviews each that a mechanism is not considered an State’s submission to determine acceptable alternative mechanism or is whether it addresses all of the fol- not being implemented. lowing requirements: (Approved by the Office of Management and (1) Is the mechanism reasonably de- Budget under control number 0938–0703) signed to provide all eligible individuals with a choice of health insurance [62 FR 16995, Apr. 8, 1997; 62 FR 17005, Apr. 8, 1997; 62 FR 31696, June 10, 1997, as amended at coverage? 62 FR 35906, July 2, 1997] (2) Does the choice offered to eligible individuals include at least one policy form that meets one of the following Subpart C—Requirements Related requirements? to Benefits (i) Is the policy form comparable to comprehensive health insurance cov- § 148.170 Standards relating to bene- erage offered in the individual market fits for mothers and newborns. in the State? (a) Hospital length of stay—(1) General (ii) Is the policy form comparable to rule. Except as provided in paragraph a standard option of coverage available (a)(5) of this section, an issuer offering under the group or individual health health insurance coverage in the indi- insurance laws of the State? vidual market that provides benefits (3) Does the mechanism prohibit pre- for a hospital length of stay in connec- existing condition exclusions for all el- tion with childbirth for a mother or igible individuals? her newborn may not restrict benefits (4) Is the State implementing one of for the stay to less than— the following: (i) 48 hours following a vaginal deliv- (i) The NAIC Small Employer and In- ery; or dividual Health Insurance Availability (ii) 96 hours following a delivery by Model Act (Availability Model), adopt- cesarean section. ed on June 3, 1996, revised to reflect HIPAA requirements. (2) When stay begins—(i) Delivery in a (ii) The Individual Health Insurance hospital. If delivery occurs in a hos- Portability Model Act (Portability pital, the hospital length of stay for Model), adopted on June 3, 1996, revised the mother or newborn child begins at to reflect HIPAA requirements. the time of delivery (or in the case of (iii) A qualified high-risk pool that multiple births, at the time of the last provides eligible individuals health in- delivery). surance or comparable coverage with- (ii) Delivery outside a hospital. If deliv- out a preexisting condition exclusion, ery occurs outside a hospital, the hos- and with premiums and benefits con- pital length of stay begins at the time sistent with the NAIC Model Health the mother or newborn is admitted as a Plan for Uninsurable Individuals Act hospital inpatient in connection with (as in effect August 21, 1996), revised to childbirth. The determination of reflect HIPAA requirements. whether an admission is in connection (iv) A mechanism that provides for with childbirth is a medical decision to risk spreading or provides eligible indi- be made by the attending provider.

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(3) Examples. The rules of paragraphs whether a longer stay is medically nec- (a)(1) and (a)(2) of this section are illus- essary. trated by the following examples. In (ii) In this Example, the requirement that each example, the issuer provides bene- an attending provider complete a certificate fits for hospital lengths of stay in con- of medical necessity to obtain authorization for the period between 72 hours and 96 hours nection with childbirth and is subject following a delivery by cesarean section is to the requirements of this section, as prohibited by this paragraph (a)(4). follows: (5) Exceptions—(i) Discharge of mother. Example 1. (i) A pregnant woman covered If a decision to discharge a mother ear- under a policy issued in the individual mar- lier than the period specified in para- ket goes into labor and is admitted to the hospital at 10 p.m. on June 11. She gives graph (a)(1) of this section is made by birth by vaginal delivery at 6 a.m. on June an attending provider, in consultation 12. with the mother, the requirements of (ii) In this Example 1, the 48-hour period de- paragraph (a)(1) of this section do not scribed in paragraph (a)(1)(i) of this section apply for any period after the dis- ends at 6 a.m. on June 14. charge. Example 2. (i) A woman covered under a (ii) Discharge of newborn. If a decision policy issued in the individual market gives birth at home by vaginal delivery. After the to discharge a newborn child earlier delivery, the woman begins bleeding exces- than the period specified in paragraph sively in connection with the childbirth and (a)(1) of this section is made by an at- is admitted to the hospital for treatment of tending provider, in consultation with the excessive bleeding at 7 p.m. on October 1. the mother (or the newborn’s author- (ii) In this Example 2, the 48-hour period de- ized representative), the requirements scribed in paragraph (a)(1)(i) of this section of paragraph (a)(1) of this section do ends at 7 p.m. on October 3. not apply for any period after the dis- Example 3. (i) A woman covered under a policy issued in the individual market gives charge. birth by vaginal delivery at home. The child (iii) Attending provider defined. For later develops pneumonia and is admitted to purposes of this section, attending pro- the hospital. The attending provider deter- vider means an individual who is li- mines that the admission is not in connec- censed under applicable State law to tion with childbirth. provide maternity or pediatric care and (ii) In this Example 3, the hospital length- who is directly responsible for proof-stay requirements of this section do not viding maternity or pediatric care to a apply to the child’s admission to the hospital because the admission is not in connection mother or newborn child. with childbirth. (iv) Example. The rules of this paragraph (a)(5) are illustrated by the fol- (4) —(i) Authorization not required In lowing example: general. An issuer may not require that a physician or other health care pro- Example. (i) A pregnant woman covered vider obtain authorization from the under a policy offered by an issuer subject to issuer for prescribing the hospital the requirements of this section goes into length of stay required under para- labor and is admitted to a hospital. She gives birth by cesarean section. On the third day graph (a)(1) of this section. (See also after the delivery, the attending provider for paragraphs (b)(2) and (c)(3) of this sec- the mother consults with the mother, and tion for rules and examples regarding the attending provider for the newborn other authorization and certain notice consults with the mother regarding the new- requirements.) born. The attending providers authorize the (ii) Example. The rule of this para- early discharge of both the mother and the graph (a)(4) is illustrated by the fol- newborn. Both are discharged approximately lowing example: 72 hours after the delivery. The issuer pays for the 72-hour hospital stays. Example. (i) In the case of a delivery by ce- (ii) In this Example, the requirements of sarean section, an issuer subject to the re- this paragraph (a) have been satisfied with quirements of this section automatically respect to the mother and the newborn. If ei- provides benefits for any hospital length of ther is readmitted, the hospital stay for the stay of up to 72 hours. For any longer stay, readmission is not subject to this section. the issuer requires an attending provider to complete a certificate of medical necessity. (b) Prohibitions—(1) With respect to The issuer then makes a determination, mothers—(i) In general. An issuer may based on the certificate of medical necessity, not—

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(A) Deny a mother or her newborn (ii) Example. The rules of this para- child eligibility or continued eligibility graph (b)(2) are illustrated by the fol- to enroll in or renew coverage solely to lowing example: avoid the requirements of this section; Example. (i) An issuer subject to the re- or quirements of this section provides benefits (B) Provide payments (including pay- for hospital lengths of stay in connection ments-in-kind) or rebates to a mother with childbirth. In the case of a delivery by to encourage her to accept less than cesarean section, the issuer automatically the minimum protections available pays for the first 48 hours. With respect to under this section. each succeeding 24-hour period, the covered individual must call the issuer to obtain (ii) Examples. The rules of this para- precertification from a utilization reviewer, graph (b)(1) are illustrated by the fol- who determines if an additional 24-hour pe- lowing examples. In each example, the riod is medically necessary. If this approval issuer is subject to the requirements of is not obtained, the issuer will not provide this section, as follows: benefits for any succeeding 24-hour period. (ii) In this Example, the requirement to ob- Example 1. (i) An issuer provides benefits tain precertification for the two 24-hour peri- for at least a 48-hour hospital length of stay ods immediately following the initial 48-hour following a vaginal delivery. If a mother and stay is prohibited by this paragraph (b)(2) be- newborn covered under a policy issued in the cause benefits for the latter part of the stay individual market are discharged within 24 are restricted in a manner that is less favor- hours after the delivery, the issuer will able than benefits for a preceding portion of waive the copayment and deductible. the stay. (However, this section does not pro- (ii) In this Example 1, because waiver of the hibit an issuer from requiring copayment and deductible is in the nature of precertification for any period after the first a rebate that the mother would not receive if 96 hours.) In addition, if the issuer’s utiliza- she and her newborn remained in the hos- tion reviewer denied any mother or her new- pital, it is prohibited by this paragraph born benefits within the 96-hour stay, the (b)(1). (In addition, the issuer violates para- issuer would also violate paragraph (a) of graph (b)(2) of this section because, in effect, this section. no copayment or deductible is required for (3) With respect to attending providers. the first portion of the stay and a double copayment and a deductible are required for An issuer may not directly or indi- the second portion of the stay.) rectly— Example 2. (i) An issuer provides benefits (i) Penalize (for example, take dis- for at least a 48-hour hospital length of stay ciplinary action against or retaliate following a vaginal delivery. In the event against), or otherwise reduce or limit that a mother and her newborn are dis- the compensation of, an attending pro- charged earlier than 48 hours and the dis- vider because the provider furnished charges occur after consultation with the care to a covered individual in accord- mother in accordance with the requirements ance with this section; or of paragraph (a)(5) of this section, the issuer (ii) Provide monetary or other incen- provides for a follow-up visit by a nurse within 48 hours after the discharges to pro- tives to an attending provider to in- vide certain services that the mother and her duce the provider to furnish care to a newborn would otherwise receive in the hos- covered individual in a manner incon- pital. sistent with this section, including pro- (ii) In this Example 2, because the follow-up viding any incentive that could induce visit does not provide any services beyond an attending provider to discharge a what the mother and her newborn would re- mother or newborn earlier than 48 ceive in the hospital, coverage for the follow- hours (or 96 hours) after delivery. up visit is not prohibited by this paragraph (c) Construction. With respect to this (b)(1). section, the following rules of con- (2) With respect to benefit restrictions— struction apply: (i) In general. Subject to paragraph (1) Hospital stays not mandatory. This (c)(3) of this section, an issuer may not section does not require a mother to— restrict the benefits for any portion of (i) Give birth in a hospital; or a hospital length of stay required (ii) Stay in the hospital for a fixed under paragraph (a) of this section in a period of time following the birth of manner that is less favorable than the her child. benefits provided for any preceding (2) Hospital stay benefits not mandated. portion of the stay. This section does not apply to any

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issuer that does not provide benefits (5) Applicability. This section applies for hospital lengths of stay in connec- to all health insurance coverage issued tion with childbirth for a mother or in the individual market, and is not her newborn child. limited in its application to coverage (3) Cost-sharing rules—(i) In general. that is provided to eligible individuals This section does not prevent an issuer as defined in section 2741(b) of the PHS from imposing deductibles, coinsur- Act. ance, or other cost-sharing in relation (d) Notice requirement. Except as pro- to benefits for hospital lengths of stay vided in paragraph (d)(4) of this sec- in connection with childbirth for a tion, an issuer offering health insur- mother or a newborn under the cov- ance in the individual market must erage, except that the coinsurance or meet the following requirements with other cost-sharing for any portion of respect to benefits for hospital lengths the hospital length of stay required of stay in connection with childbirth: under paragraph (a) of this section may (1) Required statement. The insurance not be greater than that for any pre- contract must disclose information ceding portion of the stay. that notifies covered individuals of (ii) Examples. The rules of this para- their rights under this section. graph (c)(3) are illustrated by the fol- (2) Disclosure notice. To meet the dis- lowing examples. In each example, the closure requirement set forth in para- issuer is subject to the requirements of graph (d)(1) of this section, the fol- this section, as follows: lowing disclosure notice must be used:

Example 1. (i) An issuer provides benefits STATEMENT OF RIGHTS UNDER THE NEWBORNS’ for at least a 48-hour hospital length of stay AND MOTHERS’ HEALTH PROTECTION ACT in connection with vaginal deliveries. The issuer covers 80 percent of the cost of the Under federal law, health insurance issuers stay for the first 24-hour period and 50 per- generally may not restrict benefits for any cent of the cost of the stay for the second 24- hospital length of stay in connection with hour period. Thus, the coinsurance paid by childbirth for the mother or newborn child the patient increases from 20 percent to 50 to less than 48 hours following a vaginal de- percent after 24 hours. livery, or less than 96 hours following a de- (ii) In this Example 1, the issuer violates livery by cesarean section. However, the the rules of this paragraph (c)(3) because co- issuer may pay for a shorter stay if the at- insurance for the second 24-hour period of tending provider (e.g., your physician, nurse the 48-hour stay is greater than that for the midwife, or physician assistant), after con- preceding portion of the stay. (In addition, sultation with the mother, discharges the the issuer also violates the similar rule in mother or newborn earlier. paragraph (b)(2) of this section.) Also, under federal law, issuers may not Example 2. (i) An issuer generally covers 70 set the level of benefits or out-of-pocket percent of the cost of a hospital length of costs so that any later portion of the 48-hour stay in connection with childbirth. However, (or 96-hour) stay is treated in a manner less the issuer will cover 80 percent of the cost of favorable to the mother or newborn than any the stay if the covered individual notifies the earlier portion of the stay. issuer of the pregnancy in advance of admis- In addition, an issuer may not, under fed- sion and uses whatever hospital the issuer eral law, require that a physician or other may designate. health care provider obtain authorization for (ii) In this Example 2, the issuer does not prescribing a length of stay of up to 48 hours violate the rules of this paragraph (c)(3) be- (or 96 hours). However, to use certain pro- cause the level of benefits provided (70 per- viders or facilities, or to reduce your out-of- cent or 80 percent) is consistent throughout pocket costs, you may be required to obtain the 48-hour (or 96-hour) hospital length of precertification. For information on stay required under paragraph (a) of this sec- precertification, contact your issuer. tion. (In addition, the issuer does not violate (3) Timing of disclosure. The disclosure the rules in paragraph (a)(4) or paragraph notice in paragraph (d)(2) of this sec- (b)(2) of this section.) tion shall be furnished to the covered (4) Compensation of attending provider. individuals in the form of a copy of the This section does not prevent an issuer contract, or a rider (or equivalent from negotiating with an attending amendment to the contract), not later provider the level and type of com- than March 1, 1999. pensation for care furnished in accord- (4) Exception. The requirements of ance with this section (including para- this paragraph (d) do not apply with re- graph (b) of this section). spect to coverage regulated under a

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State law described in paragraph (e) of Subpart D—Enforcement; this section. Penalties; Preemption (e) Applicability in certain States—(1) Health insurance coverage. The require- § 148.210 Preemption. ments of section 2751 of the PHS Act (a) Scope. (1) This section describes and this section do not apply with re- the effect of sections 2741 through 2763 spect to health insurance coverage in and 2791 of the PHS Act on a State’s the individual market if there is a authority to regulate health insurance State law regulating the coverage that issuers in the individual market. This meets any of the following criteria: section makes clear that States remain (i) The State law requires the cov- subject to section 514 of ERISA, which erage to provide for at least a 48-hour generally preempts State law that re- hospital length of stay following a vag- lates to ERISA-covered plans. inal delivery and at least a 96-hour hos- (2) Sections 2741 through 2763 and 2791 pital length of stay following a deliv- of the PHS Act cannot be construed to ery by cesarean section. affect or modify the provisions of sec- (ii) The State law requires the cov- tion 514 of ERISA. erage to provide for maternity and pe- (b) Regulation of insurance issuers. The diatric care in accordance with guide- individual market rules of this part do lines established by the American Col- not prevent a State law from estab- lege of Obstetricians and Gyne- lishing, implementing, or continuing in effect standards or requirements unless cologists, the American Academy of the standards or requirements prevent Pediatrics, or any other established the application of a requirement of this professional medical association. part. (iii) The State law requires, in connection with the coverage for mater- § 148.220 Excepted benefits. nity care, that the hospital length of The requirements of this part do not stay for such care is left to the decision apply to individual health insurance of (or is required to be made by) the at- coverage in relation to its provision of tending provider in consultation with the benefits described in paragraphs (a) the mother. State laws that require the and (b) of this section (or any combina- decision to be made by the attending tion of the benefits). provider with the consent of the moth- (a) Benefits excepted in all cir- er satisfy the criterion of this para- cumstances. The following benefits are graph (e)(1)(iii). excepted in all circumstances: (2) Relation to section 2762(a) of the (1) Coverage only for accident (in- PHS Act. The preemption provisions cluding accidental death and dis- contained in section 2762(a) of the PHS memberment). Act and § 148.210(b) do not supersede a (2) Disability income insurance. State law described in paragraph (e)(1) (3) Liability insurance, including of this section. general liability insurance and auto- (f) Effective date. Section 2751 of the mobile liability insurance. PHS Act applies to health insurance (4) Coverage issued as a supplement coverage offered, sold, issued, renewed, to liability insurance. in effect, or operated in the individual (5) Workers’ compensation or similar market on or after January 1, 1998. insurance. This section applies to health insur- (6) Automobile medical payment in- ance coverage offered, sold, issued, re- surance. newed, in effect, or operated in the in- (7) Credit-only insurance (for example, mortgage insurance). dividual market on or after January 1, (8) Coverage for on-site medical clin- 1999. ics. [63 FR 57562, Oct. 27, 1998] (b) Other excepted benefits. The requirements of this part do not apply to individual health insurance coverage described in paragraphs (b)(1) through (b)(6) of this section if the benefits are

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provided under a separate policy, cer- have qualified high risk pools that tificate, or contract of insurance. meet the specific requirements de- These benefits include the following: scribed in § 148.310. It also provides spe- (1) Limited scope dental or vision cific instructions on how to apply for benefits. These benefits are dental or the grants and outlines the grant revision benefits that are limited in view and grant award processes. scope to a narrow range or type of ben- [72 FR 41236, July 27, 2007] efits that are generally excluded from benefit packages that combine hos- § 148.308 Definitions. pital, medical, and surgical benefits. For the purposes of this subpart, the (2) Long-term care benefits. These following definitions apply: benefits are benefits that are either— Bonus grants means funds that the (i) Subject to State long-term care Secretary provides from the appro- insurance laws; priated grant funds to be used to pro- (ii) For qualified long-term care in- vide supplemental consumer benefits surance services, as defined in section to enrollees or potential enrollees in 7702B(c)(1) of the Code, or provided qualified high risk pools. under a qualified long-term care insur- CMS stands for Centers for Medicare ance contract, as defined in section & Medicaid Services. 7702B(b) of the Code; or Loss means the difference between (iii) Based on cognitive impairment expenses incurred by a qualified high or a loss of functional capacity that is risk pool, including payment of claims expected to be chronic. and administrative expenses, and the (3) Coverage only for a specified dis- premiums collected by the pool. ease or illness (for example, cancer Qualified high risk pool as defined in policies), or hospital indemnity or sections 2744(c)(2) and 2745(g) of the other fixed indemnity insurance (for PHS Act means a risk pool that— example, $100/day) if the policies meet (1) Provides to all eligible individuals the requirements of § 146.145(b)(4)(ii)(B) health insurance coverage (or com- and (b)(4)(ii)(C) of this subchapter re- parable coverage) that does not impose garding noncoordination of benefits. any preexisting condition exclusion (4) Medicare supplemental health in- with respect to such coverage for all el- surance (as defined under section igible individuals, except that it may 1882(g)(1) of the Social Security Act. 42 provide for enrollment of eligible indi- U.S.C. 1395ss, also known as Medigap or viduals through an acceptable alter- MedSupp insurance). native mechanism (as defined for pur- (5) Coverage supplemental to the cov- poses of section 2744 of the PHS Act) erage provided under Chapter 55, Title that includes a high risk pool as a com- 10 of the United States Code (also ponent; and known as CHAMPUS supplemental pro- (2) Provides for premium rates and grams). covered benefits for such coverage con- (6) Similar supplemental coverage sistent with standards included in the provided to coverage under a group NAIC Model Health Plan for Uninsur- health plan. able Individuals Act that was in effect at the time of the enactment of the [62 FR 16995, Apr. 8, 1997; 62 FR 31696, June 10, 1997] Health Insurance Portability and Ac- countability Act of 1996 (August 21, 1996) but only if the model has been re- Subpart E—Grants to States for vised in State regulations to meet all Operation of Qualified High of the requirements of this part and Risk Pools title 27 of the PHS Act. Standard risk rate means a rate devel- SOURCE: 68 FR 23414, May 2, 2003, unless oped by a State using reasonable actu- otherwise noted. arial techniques and taking into account the premium rates charged by § 148.306 Basis and scope. other insurers offering health insur- This subpart implements section 2745 ance coverage to individuals in the of the Public Health Service Act (PHS same geographical service area to Act). It extends grants to States that which the rate applies. The standard

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rate may be adjusted based upon age, (2) Reduction in premium trends, ac- sex, and geographical location. tual premium or other cost-sharing re- State means any of the 50 States and quirements; the District of Columbia and includes (3) An expansion or broadening of the the U.S. Territories of Puerto Rico, the pool of individuals eligible for cov- Virgin Islands, Guam, American Samoa erage, such as through eliminating and the Northern Mariana Islands. waiting lists, increasing enrollment State fiscal year, for purposes of this caps, or providing flexibility in subpart, means the fiscal year used for enrolment rules; (4) Less stringent rules or additional accounting purposes by either a State waiver authority with respect to cov- or a risk pool entity to which a State erage of pre-existing conditions; has delegated the authority to conduct (5) Increased benefits; and risk pool operations. (6) The establishment of disease man- [68 FR 23414, May 2, 2003, as amended at 69 agement programs. FR 15700, Mar. 26, 2004; 72 FR 41236, July 27, [68 FR 23414, May 2, 2003, as amended at 72 2007] FR 41236, July 27, 2007]

§ 148.310 Eligibility requirements for a § 148.312 Amount of grant payment. grant. (a) An eligible State may receive a A State must meet all of the fol- grant to fund up to 100 percent of the lowing requirements to be eligible for a losses incurred in the operation of its grant: qualified high risk pool during the pe- (a) The State has a qualified high riod for which it is applying or a lesser risk pool as defined in § 148.308. amount based on the limits of the al- (b) The pool restricts premiums lotment under the formula. charged under the pool to no more than (b) Funds will be allocated in accord- 200 percent of the premium for applica- ance with this paragraph to each State ble standard risk rates for the State. that meets the eligibility requirements (c) The pool offers a choice of two or of § 148.310 and files an application in more coverage options through the accordance with § 148.316. The amount pool. will be divided among the States that (d) The pool has in effect a mecha- apply and are awarded grants accord- nism reasonably designed to ensure ing to the allotment rules that gen- continued funding of losses incurred by erally provide that: 40 percent will be the State after the end of each fiscal equally divided among those States; 30 year for which the State applies for percent will be divided among States Federal Funding in fiscal years 2005– and territories based on their number 2010 in connection with the operation of uninsured residents in the State dur- of the pool. ing the specified year as compared to all States that apply; and 30 percent (e) The pool has incurred a loss in a will be divided among States and terri- period described in § 148.314. tories based on the number of people in (f) In the case of a qualified high risk State high risk pools during the speci- pool in a State that charges premiums fied year as compared to all States that exceed 150 percent of the premium that apply. For the purposes of this for applicable standard risks, the State paragraph: will use at least 50 percent of the (1) The number of uninsured individ- amount of the grant provided to the uals is calculated for each eligible State to reduce premiums for enroll- State by taking a 3-year average of the ees. number of uninsured individuals in (g) In no case will the aggregate that State in the Current Population amount allotted and made available to Survey (CPS) of the Census Bureau the U.S. Territories for a fiscal year ex- during the period for which it is apply- ceed $1,000,000 in total. ing. The 3-year average will be cal- (h) Bonus grant funding must be used culated using numbers available as of for one or more of the following bene- March 1 of each year. fits: (2) The number of individuals en- (1) Low income premium subsidies; rolled in health care coverage through

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the qualified high risk pool of the (c) of this section will receive an initial State will be determined by attestation distribution of grant funds using the by the State in its grant application following methodology: Grant applica- and verified for reasonability by the tions for losses will be on a retrospec- Secretary through acceptable industry tive basis. For example, grant applica- data sources. tions for 2006 funds are based on the (c) The amount awarded to each eli- State’s fiscal year 2005 incurred losses. gible State will be the lesser of the 50 Grant funding is appropriated for Fed- percent of losses incurred by its quali- eral fiscal year 2006 and authorized to fied risk pool for the fiscal year in be appropriated for Federal fiscal years question or its allotment under the for- 2007 through 2010. mula. (e) Grant allocations. Grant alloca- (d) One-third of the total appropriations for each fiscal year will be deter- tion will be available for the bonus mined by taking all grant applications grants. In no case will a State for a fis- during the period for which States are cal year receive bonus grants that ex- applying and allocating the funds in ceed 10 percent of the total allotted accordance with § 148.312. funds for bonus grants. (1) In no case will a State receive [68 FR 23414, May 2, 2003, as amended at 69 funds greater than 100 percent of their FR 15700, Mar. 26, 2004; 72 FR 41237, July 27, losses. 2007] (2) If any excess funds remain after the initial calculation, these excess § 148.314 Periods during which eligible funds will be proportionately redistrib- States may apply for a grant. uted to the States whose allocations (a) General rule. A State that meets have not exceeded 100 percent of their the eligibility requirements in § 148.310 losses. may apply for a grant to fund losses that were incurred during the State’s [72 FR 41237, July 27, 2007] fiscal year 2005, 2006, 2007, 2008 and 2009 § 148.316 Grant application instruc- in connection with the operation of its tions. qualified high risk pool. Funding for FY 2007 through 2010 under Pub. L. 109– Funding for FY 2007 through FY 2010 172 requires subsequent enactment of under Pub. L. 109–172 requires the sub- appropriations authority. States will sequent enactment of appropriations. be unable to apply for grants unless States will be unable to apply for and until such funding becomes avail- grants unless and until such funding able. Grants funding is on a retrospec- becomes available. tive basis and applies to the States pre- (a) Application for operational losses. vious fiscal year. If a State becomes el- Each State must compile an applica- igible for a grant in the middle of its tion package that documents that it fiscal year, a State may apply for has met the requirements for a grant. losses incurred in a partial fiscal year If a risk pool entity applies on behalf of if a partial year audit is done. Only a State, it must provide documentation losses that are incurred after eligi- that it has been delegated appropriate bility is established will qualify for a authority by the State. At a minimum, grant. the application package must include a (b) Maximum number of grants. An eli- completed standard form application gible State may only be awarded a kit (see paragraph (b) of this section) maximum of five grants, with one along with the following information: grant per fiscal year. A grant for a par- (1) History and description of the quali- tial fiscal year counts as a full grant. fied high risk pool. Provide a detailed (c) Deadline for submitting grant appli- description of the qualified high risk cations. The deadlines for submitting pool that includes the following: grant applications are stated in (i) Brief history, including date of in- § 148.316(d). ception. (d) Distribution of grant funds. States (ii) Enrollment criteria (including that meet all of the eligibility require- provisions for the admission of eligible ments in § 148.310 and submit timely re- individuals as defined in § 148.103) and quests in accordance with paragraph number of enrollees.

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(iii) Description of how coverage is (A) Low income premium subsidies; provided administratively in the quali- (B) Reduction in premium trends, ac- fied high risk pool (that is, self-in- tual premium or other cost-sharing re- sured, through a private carrier, etc.). quirements; (iv) Benefits options and packages of- (C) An expansion or broadening of the fered in the qualified high risk pool to pool of individuals eligible for cov- both eligible individual (as defined in erage, such as through eliminating § 148.103) and other applicants. waiting lists, increasing enrollment (v) Outline of plan benefits and cov- caps, or providing flexibility in enroll- erage offered in the pool. Provide evi- ment; dence that the level of plan benefits is (D) Less stringent rules, or addi- consistent with either Alternative One tional waiver authority with respect to or Alternative Two in Section 8 of the coverage of pre-existing conditions; NAIC Model Health Plan for Uninsur- (E) Increased benefits; and able Individuals Act. See Appendix for (F) The establishment of disease the text of Section 8 of the NAIC management programs. Model. (ii) A description of the population or (vi) Premiums charged (in terms of subset population that will be eligible dollars and in percentage of standard for the supplemental consumer bene- risk rate) and other cost-sharing mech- fits. anisms, such as co-pays and (iii) A projected budget for the use of deductibles, imposed on enrollees (both bonus grant funds using the SF 424 A. eligible individuals (as defined in (4) Contact person. Identify the name, § 148.103) and non-eligible individuals if position title, address, e-mail address, a distinction is made). and telephone number of the person to (vii) How the standard risk rate for contact for further information and the State is calculated and when it was questions. last calculated. (b) Standard form application kit— (viii) Revenue sources for the quali- (1) Forms. (i) The following standard fied high risk pool, including current forms must be completed with an origi- funding mechanisms and, if different, nal signature and enclosed as part of future funding mechanisms. Provide the application package: current projections of future income. SF–424 Application for Federal Assist- (ix) Copies of all governing authori- ance. ties of the pool, including statutes, reg- SF–424A Budget Information. ulations and plan of operation. SF–424B Assurances Non-Construction (2) Accounting of risk pool losses. Pro- Program. vide a detailed accounting of claims SF–LLL Disclosure of Lobbying Ac- paid, administrative expenses, and pre- tivities Biographical Sketch. miums collected for the fiscal year for (ii) These forms can be accessed from which the grant is being requested. In- the following Web site: http:// dicate the timing of the fiscal year www.grants.gov. upon which the accounting is based. (2) Other narrative. All other nar- Provide the methodology of projecting rative in the application must be sub- losses and expenses, and include cur- mitted on 81⁄2 x 11 inch white paper. rent projections of future operating (c) Application submission. Submission losses (this information is needed to of application package is through judge compliance with the require- http://www.grants.gov. Submissions by ments in § 148.310(d)). facsimile (fax) transmissions will not (3) Bonus grants for supplemental con- be accepted. sumer benefits. Provide detailed infor- (d) Application deadlines. (1) The dead- mation about the following supple- line for States to submit an application mental consumer benefits for which for losses incurred in a State fiscal the entity is applying: year is June 30 of the next Federal fis- (i) A narrative description of one or cal year that begins after the end of more of the following of the supple- the State fiscal year. Funding for FY mental consumer benefits to be pro- 2007 through 2010 under Pub. L. 109–172 vided to enrollees and/or potential en- requires subsequent enactment of ap- rollees in the high risk pool: propriations authority. States will be

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unable to apply for grants unless and qualified high risk pool in the period until such funding becomes available. for when it is applying. (2) Deadline for States to submit an ap- (d) Review criteria. If the review team plication for losses incurred in their fiscal determines that a State meets the eli- year 2005. States had to submit an ap- gibility requirements described in plication to CMS no later than June 30, § 148.310, the review team will use the 2006. following additional criteria in review- (3) Deadline for States to submit an ap- ing the applications: plication for losses incurred in their fiscal year 2006. States must submit an appli- (1) Documentation of expenses incurred cation to CMS by no later than June during operation of the qualified high risk 30, 2007. pool. The losses and expenses incurred (4) Deadline for States to submit an ap- in the operation of a State’s pool are plication for losses incurred in their fiscal sufficiently documented. year 2007. States must submit an appli- (2) Funding mechanism. The State has cation to CMS by no later than June outlined funding sources, such as as- 30, 2008. sessments and State general revenues, (5) Deadline for States to submit an ap- which can cover the projected costs plication for losses incurred in their fiscal and are reasonably designed to ensure year 2008. States must submit an appli- continued funding of losses a State in- cation to CMS by no later than June curs in connection with the operation 30, 2009. of the qualified high risk pool after (6) Deadline for States to submit an ap- each fiscal year for which it is applying plication for losses incurred in their fiscal for grant funds. year 2009. States must submit an application to CMS by no later than June [68 FR 23414, May 2, 2003, as amended at 72 30, 2010. FR 41238, July 27, 2007] (e) Where to submit an application. Ap- plications must be submitted to http:// § 148.320 Grant awards. www.grants.gov. Submissions by fac- (a) Notification and award letter. (1) simile (fax) transmissions will not be Each State applicant will be notified in accepted. writing of CMS’s decision on its appli- [68 FR 23414, May 2, 2003, as amended at 69 cation. FR 15701, Mar. 26, 2004; 72 FR 41237, July 27, (2) If the State applicant is awarded a 2007] grant, the award letter will contain the following terms and conditions: § 148.318 Grant application review. (i) All funds awarded to the grantee (a) Executive Order 12372. This grant under this program must be used exclu- program is not listed by the Secretary sively for the operation of a qualified under § 100.3 of this title, and therefore high risk pool that meets the eligi- the grant program is not subject to re- bility requirements for this program. view by States under part 100 of this (ii) The grantee must keep sufficient title, which implements Executive records of the grant expenditures for Order 12372, ‘‘Intergovernmental Re- audit purposes (see part 92 of this view of Federal Programs’’ (see part 100 title). of this title). (iii) The grantee will be required to (b) Review team. A team consisting of staff from CMS and the Department of submit quarterly progress and finan- Health and Human Services will review cial reports under part 92 of this title all applications. The team will meet as and in accordance with section 2745(f) necessary on an ongoing basis as appli- of the Public Health Service Act, re- cations are received. quiring the Secretary to make an an- (c) Eligibility criteria. To be eligible nual report to Congress that includes for a grant, a State must submit suffi- information on the use of these grant cient documentation that its high risk funds by States. pool meets the eligibility requirements (b) Grantees letter of acceptance. described in § 148.310. A State must in- Grantees must submit a letter of ac- clude sufficient documentation of the ceptance to CMS’ Acquisition and losses incurred in the operation of the Grants Group within 30 days of the

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date of the award agreeing to the terms 150.325 Settlement authority. and conditions of the award letter. 150.341 Limitations on penalties. 150.343 Notice of proposed penalty. [68 FR 23414, May 2, 2003, as amended at 72 150.345 Appeal of proposed penalty. FR 41238, July 27, 2007] 150.347 Failure to request a hearing.

PART 149 [RESERVED] Subpart D—Administrative Hearings 150.401 Definitions. PART 150—CMS ENFORCEMENT IN 150.403 Scope of ALJ’s authority. GROUP AND INDIVIDUAL INSUR- 150.405 Filing of request for hearing. 150.407 Form and content of request for ANCE MARKETS hearing. 150.409 Amendment of notice of assessment Subpart A—General Provisions or request for hearing. 150.411 Dismissal of request for hearing. Sec. 150.413 Settlement. 150.101 Basis and scope. 150.415 Intervention. 150.103 Definitions. 150.417 Issues to be heard and decided by ALJ. Subpart B—CMS Enforcement Processes for 150.419 Forms of hearing. Determining Whether States Are Failing 150.421 Appearance of counsel. To Substantially Enforce HIPAA Re- 150.423 Communications with the ALJ. quirements 150.425 Motions. 150.427 Form and service of submissions. 150.201 State enforcement. 150.429 Computation of time and extensions 150.203 Circumstances requiring CMS en- of time. forcement. 150.431 Acknowledgment of request for hear- 150.205 Sources of information triggering an ing. investigation of State enforcement. 150.435 Discovery. 150.207 Procedure for determining that a 150.437 Submission of briefs and proposed State fails to substantially enforce hearing exhibits. HIPAA requirements. 150.439 Effect of submission of proposed 150.209 Verification of exhaustion of rem- hearing exhibits. edies and contact with State officials. 150.441 Prehearing conferences. 150.211 Notice to the State. 150.443 Standard of proof. 150.213 Form and content of notice. 150.445 Evidence. 150.215 Extension for good cause. 150.447 The record. 150.217 Preliminary determination. 150.449 Cost of transcripts. 150.219 Final determination. 150.451 Posthearing briefs. 150.221 Transition to State enforcement. 150.453 ALJ decision. 150.455 Sanctions. Subpart C—CMS Enforcement With Re- 150.457 Review by Administrator. spect to Issuers and Non-Federal Gov- 150.459 Judicial review. ernmental Plans—Civil Money Pen- 150.461 Failure to pay assessment. alties 150.463 Final order not subject to review. 150.465 Collection and use of penalty funds. 150.301 General rule regarding the imposi- AUTHORITY: Secs. 2701 through 2763, 2791, tion of civil money penalties. and 2792 of the PHS Act (42 U.S.C. 300gg 150.303 Basis for initiating an investigation through 300gg–63, 300gg–91, and 300gg–92). of a potential violation. 150.305 Determination of entity liable for SOURCE: 64 FR 45795, Aug. 20, 1999, unless civil money penalty. otherwise noted. 150.307 Notice to responsible entities. 150.309 Request for extension. 150.311 Responses to allegations of non- Subpart A—General Provisions compliance. 150.313 Market conduct examinations. § 150.101 Basis and scope. 150.315 Amount of penalty—General. (a) Basis. CMS’s enforcement author- 150.317 Factors CMS uses to determine the ity under sections 2722 and 2761 of the amount of penalty. PHS Act and its rulemaking authority 150.319 Determining the amount of the pen- under section 2792 of the PHS Act pro- alty—mitigating circumstances. vide the basis for issuing regulations 150.321 Determining the amount of penalty—aggravating circumstances. under this part 150. 150.323 Determining the amount of pen- (b) Scope—(1) Enforcement with respect alty—other matters as justice may re- to group heath plans. The provisions of quire. 680

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title XXVII of the PHS Act that apply contract issued by an issuer to a plan to group health plans that are non-Fed- sponsor with respect to a group health eral governmental plans are enforced plan (including a plan that is a non- by CMS using the procedures described Federal governmental plan) that con- in § 150.301 et seq. tains the conditions and terms of the (2) Enforcement with respect to health insurance that covers the group. insurance issuers. The States have pri- HIPAA requirements means the re- mary enforcement authority with requirements of title XXVII of the PHS spect to the requirements of title Act and its implementing regulations XXVII of the PHS Act that apply to in parts 146 and 148 of this subchapter. health insurance issuers offering cov- Individual health insurance policy or erage in the group or individual health individual policy means the legal docu- insurance market. If CMS determines ment or contract issued by the issuer under subpart B of this part that a to an individual that contains the con- State is not substantially enforcing ditions and terms of the insurance. title XXVII of the PHS Act, including Any association or trust arrangement the implementing regulations in part that is not a group health plan as de- 146 and part 148 of this subchapter, fined in § 144.103 of this subchapter or CMS enforces them under subpart C of does not provide coverage in connec- this part. tion with one or more group health plans is individual coverage subject to § 150.103 Definitions. the requirements of part 148 of this The definitions that appear in part subchapter. The term ‘‘individual 144 of this subchapter apply to this health insurance policy’’ includes a part 150, unless stated otherwise. As policy that is— used in this part: (1) Issued to an association that Amendment, endorsement, or rider makes coverage available to individ- means a document that modifies or uals other than in connection with one changes the terms or benefits of an in- or more group health plans; or dividual policy, group policy, or certifi- (2) Administered, or placed in a trust, cate of insurance. and is not sold in connection with a Application means a signed statement group health plan subject to the provi- of facts by a potential insured that an sions of part 146 of this subchapter. issuer uses as a basis for its decision Plan document means the legal docu- whether, and on what basis to insure ment that provides the terms of the an individual, or to issue a certificate plan to individuals covered under a of insurance, or that a non-Federal group health plan, such as a non-Fed- governmental health plan uses as a eral governmental health plan. basis for a decision whether to enroll State law means all laws, decisions, an individual under the plan. rules, regulations, or other State ac- Certificate of insurance means the doc- tion having the effect of law, of any ument issued to a person or entity cov- State as defined in § 144.103 of this sub- ered under an insurance policy issued chapter. A law of the United States ap- to a group health plan or an associa- plicable to the District of Columbia is tion or trust that summarizes the ben- treated as a State law rather than a efits and principal provisions of the law of the United States. policy. Complaint means any expression, Subpart B—CMS Enforcement written or oral, indicating a potential denial of any right or protection con- Processes for Determining tained in HIPAA requirements (wheth- Whether States Are Failing To er ultimately justified or not) by an in- Substantially Enforce HIPAA dividual, a personal representative or Requirements other entity acting on behalf of an individual, or any entity that believes § 150.201 State enforcement. such a right is being or has been denied Except as provided in subpart C of an individual. this part, each State enforces HIPAA Group health insurance policy or group requirements with respect to health in- policy means the legal document or surance issuers that issue, sell, renew,

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or offer health insurance coverage in various States regarding the status of the State. their enforcement of HIPAA requirements. § 150.203 Circumstances requiring (e) Information obtained during peri- CMS enforcement. odic review of State health care legis- CMS enforces HIPAA requirements lation. CMS may review State health to the extent warranted (as determined care and insurance legislation and reg- by CMS) in any of the following cir- ulations to determine whether they cumstances: are: (a) Notification by State. A State noti- (1) Consistent with HIPAA require- fies CMS that it has not enacted legis- ments. lation to enforce or that it is not oth- (2) Not pre-empted as provided in erwise enforcing HIPAA requirements. § 146.143 (relating to group market pro- (b) Determination by CMS. If CMS revisions) and § 148.120 (relating to indi- ceives or obtains information that a vidual market requirements) on the State may not be substantially enforc- basis that they prevent the application ing HIPAA requirements, it may ini- of a HIPAA requirement. tiate the process described in this sub- (f) Any other information that indi- chapter to determine whether the cates a possible failure to substantially State is failing to substantially enforce enforce. these requirements. (c) Special rule for guaranteed avail- § 150.207 Procedure for determining ability in the individual market. If a that a State fails to substantially State has notified CMS that it is im- enforce HIPAA requirements. plementing an acceptable alternative Sections 150.209 through 150.219 de- mechanism in accordance with § 148.128 scribe the procedures CMS follows to of this subchapter instead of complying determine whether a State is substan- with the guaranteed availability re- tially enforcing HIPAA requirements. quirements of § 148.120, CMS’s determination focuses on the following: § 150.209 Verification of exhaustion of (1) Whether the State’s mechanism remedies and contact with State officials. meets the requirements for an acceptable alternative mechanism. If CMS receives a complaint or other (2) Whether the State is imple- information indicating that a State is menting the acceptable alternative failing to enforce HIPAA requirements, mechanism. CMS assesses whether the affected in- (d) Consequence of a State not imple- dividual or entity has made reasonable menting an alternative mechanism. If a efforts to exhaust available State rem- State is not implementing an accept- edies. As part of its assessment, CMS able alternative mechanism, CMS de- may contact State officials regarding termines whether the State is substan- the questions raised. tially enforcing the requirements of §§ 148.101 through 148.126 and § 148.170 of § 150.211 Notice to the State. this subchapter. If CMS is satisfied that there is a reasonable question whether there has § 150.205 Sources of information trig- been a failure to substantially enforce gering an investigation of State en- HIPAA requirements, CMS sends, in forcement. writing, the notice described in § 150.213 Information that may trigger an in- of this part, to the following State offi- vestigation of State enforcement in- cials: cludes, but is not limited to, any of the (a) The governor or chief executive following: officer of the State. (a) A complaint received by CMS. (b) The insurance commissioner or (b) Information learned during infor- chief insurance regulatory official. mal contact between CMS and State of- (c) If the alleged failure involves ficials. HMOs, the official responsible for regu- (c) A report in the news media. lating HMOs if different from the offi- (d) Information from the governors cial listed in paragraph (b) of this sec- and commissioners of insurance of the tion.

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§ 150.213 Form and content of notice. that the failure to substantially en- The notice provided to the State is in force has not been corrected, it will writing and does the following: send the State a written notice of its (a) Identifies the HIPAA requirement final determination. The notice in- or requirements that have allegedly cludes the following: not been substantially enforced. (a) Identification of the HIPAA re- (b) Describes the factual basis for the quirements that CMS is enforcing. allegation of a failure or failures to en- (b) The effective date of CMS’s enforce HIPAA requirements. forcement. (c) Explains that the consequence of a State’s failure to substantially en- § 150.221 Transition to State enforce- force HIPAA requirements is that CMS ment. enforces them. (a) If CMS determines that a State (d) Advises the State that it has 30 for which it has assumed enforcement days from the date of the notice to re- authority has enacted and imple- spond, unless the time for response is mented legislation to enforce HIPAA extended as described in § 150.215 of this requirements and also determines that subpart. The State’s response should it is appropriate to return enforcement include any information that the State authority to the State, CMS will enter wishes CMS to consider in making the into discussions with State officials to preliminary determination described in ensure that a transition is effected § 150.217. with respect to the following: § 150.215 Extension for good cause. (1) Consumer complaints and inquiries. CMS may extend, for good cause, the (2) Instructions to issuers. time the State has for responding to the notice described in § 150.213 of this (3) Any other pertinent aspect of op- subpart. Examples of good cause in- erations. clude an agreement between CMS and (b) CMS may also negotiate a process the State that there should be a public to ensure that, to the extent prac- hearing on the State’s enforcement, or ticable, and as permitted by law, its evidence that the State is undertaking records documenting issuer compliance expedited enforcement activities. and other relevant areas of CMS’s enforcement operations are made avail- § 150.217 Preliminary determination. able for incorporation into the records If, at the end of the 30-day period of the State regulatory authority that (and any extension), the State has not will assume enforcement responsi- established to CMS’s satisfaction that bility. it is substantially enforcing the HIPAA requirements described in the notice, Subpart C—CMS Enforcement CMS takes the following actions: With Respect to Issuers and (a) Consults with the appropriate Non-Federal Governmental State officials identified in § 150.211 (or their designees). Plans—Civil Money Penalties (b) Notifies the State of CMS’s pre- § 150.301 General rule regarding the liminary determination that the State imposition of civil money penalties. has failed to substantially enforce the requirements and that the failure is If any health insurance issuer that is continuing. subject to CMS’s enforcement author- (c) Permits the State a reasonable ity under § 150.101(b)(2), or any non-Fed- opportunity to show evidence of sub- eral governmental plan (or employer stantial enforcement. that sponsors a non-Federal governmental plan) that is subject to CMS’s § 150.219 Final determination. enforcement authority under If, after providing notice and a rea- § 150.101(b)(1), fails to comply with sonable opportunity for the State to HIPAA requirements, it may be subject show that it has corrected any failure to a civil money penalty as described to substantially enforce, CMS finds in this subpart.

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§ 150.303 Basis for initiating an inves- (2) Individual health insurance policy. tigation of a potential violation. To the extent an individual health in- (a) Information. Any information that surance policy is subject to an applica- indicates that any issuer may be fail- ble HIPAA requirement, a health insur- ing to meet the HIPAA requirements ance issuer is subject to a civil money or that any non-Federal governmental penalty if the policy itself, or the man- plan that is a group health plan as de- ner in which the policy is marketed or fined in section 2791(a)(1) of the PHS administered, violates any applicable Act and 45 CFR § 144.103 may be failing HIPAA requirement. to meet an applicable HIPAA require- (b) Non-Federal governmental plan is ment, may warrant an investigation. responsible entity—(1) Basic rule. If a CMS may consider, but is not limited non-Federal governmental plan is to, the following sources or types of in- sponsored by two or more employers formation: and fails to comply with an applicable (1) Complaints. HIPAA requirement, the plan is subject (2) Reports from State insurance departments, the National Association of to a civil money penalty, irrespective Insurance Commissioners, and other of whether a civil money penalty is im- Federal and State agencies. posed under paragraph (a) of this sec- (3) Any other information that indi- tion. The plan is the responsible entity cates potential noncompliance with irrespective of whether the plan is ad- HIPAA requirements. ministered by a health insurance (b) Who may file a complaint. Any en- issuer, an employer sponsoring the tity or individual, or any entity or per- plan, or a third-party administrator. sonal representative acting on that in- (2) Exception. In the case of a non- dividual’s behalf, may file a complaint Federal governmental plan that is not with CMS if he or she believes that a provided through health insurance cov- right to which the aggrieved person is erage, this paragraph (b) does not apply entitled under HIPAA requirements is to the extent that the non-Federal gov- being, or has been, denied or abridged ernmental employers have elected as a result of any action or failure to under § 146.180 to exempt the plan from act on the part of an issuer or other re- applicable HIPAA requirements. sponsible entity as defined in § 150.305. (c) Employer is responsible entity—(1) (c) Where a complaint should be di- Basic rule. If a non-Federal govern- rected. A complaint may be directed to mental plan is sponsored by a single any CMS regional office. employer and fails to comply with an § 150.305 Determination of entity lia- applicable HIPAA requirement, the ble for civil money penalty. employer is subject to a civil money If a failure to comply is established penalty, irrespective of whether a civil under this Part, the responsible entity, money penalty is imposed under para- as determined under this section, is lia- graph (a) of this section. The employer ble for any civil money penalty im- is the responsible entity irrespective of posed. whether the plan is administered by a (a) Health insurance issuer is respon- health insurance issuer, the employer, sible entity—(1) Group health insurance or a third-party administrator. policy. To the extent a group health in- (2) Exception. In the case of a non- surance policy issued, sold, renewed, or Federal governmental plan that is not offered to a private plan sponsor or a provided through health insurance cov- non-Federal governmental plan sponsor erage, this paragraph (c) does not apply is subject to applicable HIPAA require- to the extent the non-Federal governments, a health insurance issuer is sub- mental employer has elected under ject to a civil money penalty, irrespec- § 146.180 to exempt the plan from appli- tive of whether a civil money penalty cable HIPAA requirements. is imposed under paragraphs (b) or (c) (d) Actions or inactions of agent. A of this section, if the policy itself or the manner in which the policy is mar- principal is liable for penalties assessed keted or administered fails to comply for the actions or inactions of its with an applicable HIPAA requirement. agent.

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§ 150.307 Notice to responsible entities. vertising material, or any other documents if those documents form the If an investigation under § 150.303 in- basis of a complaint or allegation of dicates a potential violation, CMS pro- noncompliance, or the basis for the re- vides written notice to the responsible sponsible entity to refute the com- entity or entities identified under plaint or allegation. § 150.305. The notice does the following: (b) Any other evidence that refutes (a) Describes the substance of any an alleged noncompliance. complaint or other information. (c) Evidence that the entity did not (b) Provides 30 days from the date of know, and exercising due diligence the notice for the responsible entity or could not have known, of the violation. entities to respond with additional in- (d) Documentation that the policies, formation, including documentation of certificates of insurance, or non-Fed- compliance as described in § 150.311. eral governmental plan documents (c) States that a civil money penalty have been amended to comply with may be assessed. HIPAA requirements either by revision [64 FR 45795, Aug. 20, 1999, as amended at 70 of the contracts or by the development FR 71023, Nov. 25, 2005] of riders, amendments, or endorse- ments. § 150.309 Request for extension. (e) Documentation of the entity’s In circumstances in which an entity issuance of conforming policies, certifi- cannot prepare a response to CMS cates of insurance, plan documents, or within the 30 days provided in the no- amendments to policyholders or cer- tice, the entity may make a written re- tificate holders before the issuance of quest for an extension from CMS de- the notice to the responsible entity or tailing the reason for the extension re- entities described in § 150.307. quest and showing good cause. If CMS (f) Evidence documenting the devel- grants the extension, the responsible opment and implementation of inter- entity must respond to the notice with- nal policies and procedures by an in the time frame specified in CMS’s issuer, or non-Federal governmental letter granting the extension of time. health plan or employer, to ensure Failure to respond within 30 days, or compliance with HIPAA requirements. within the extended time frame, may Those policies and procedures may in- result in CMS’s imposition of a civil clude or consist of a voluntary compli- money penalty based upon the com- ance program. Any such program plaint or other information alleging or should do the following: indicating a violation of HIPAA re- (1) Effectively articulate and dem- quirements. onstrate the fundamental mission of compliance and the issuer’s, or non- § 150.311 Responses to allegations of Federal governmental health plan’s or noncompliance. employer’s, commitment to the com- In determining whether to impose a pliance process. civil money penalty, CMS reviews and (2) Include the name of the individual considers documentation provided in in the organization responsible for any complaint or other information, as compliance. well as any additional information pro- (3) Include an effective monitoring vided by the responsible entity to dem- system to identify practices that do onstrate that it has complied with not comply with HIPAA requirements HIPAA requirements. The following and to provide reasonable assurance are examples of documentation that a that fraud, abuse, and systemic errors potential responsible entity may sub- are detected in a timely manner. mit for CMS’s consideration in deter- (4) Address procedures to improve in- mining whether a civil money penalty ternal policies when noncompliant should be assessed and the amount of practices are identified. any civil money penalty: (g) Evidence documenting the enti- (a) Any individual policy, group pol- ty’s record of previous compliance with icy, certificate of insurance, applica- HIPAA requirements. tion, rider, amendment, endorsement, [64 FR 45795, Aug. 20, 1999, as amended at 70 certificate of creditable coverage, ad- FR 71023, Nov. 25, 2005]

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§ 150.313 Market conduct examina- submitting illustrative examples where tions. appropriate. (a) Definition. A market conduct ex- (3) CMS’s reply to a response from an amination means the examination of issuer or other responsible entity. Upon health insurance operations of an receipt of a response from the issuer or issuer, or the operation of a non-Fed- other responsible entity, CMS will pro- eral governmental plan, involving the vide a letter containing its reply to review of one or more (or a combina- each examination issue. CMS’s reply tion) of a responsible entity’s business will consist of one of the following: or operational affairs, or both, to (i) Concurrence with the issuer’s or verify compliance with HIPAA require- non-Federal governmental plan’s posi- ments. tion. (b) General. If, based on the informa- (ii) Approval of the issuer’s or non- tion described in § 150.303, CMS finds Federal governmental plan’s proposed evidence that a specific entity may be plan of correction. in violation of a HIPAA requirement, (iii) Conditional approval of the CMS may initiate a market conduct issuer’s or non-Federal governmental examination to determine whether the plan’s proposed plan of correction, entity is out of compliance. CMS may which will include any modifications conduct the examinations either at the CMS requires. site of the issuer or other responsible (iv) Notice to the issuer or non-Fed- entity or a site CMS selects. When eral governmental plan that there ex- CMS selects a site, it may direct the ists a potential violation of HIPAA re- issuer or other responsible entity to quirements. forward any documentation CMS considers relevant for purposes of the ex- § 150.315 Amount of penalty—General. amination to that site. A civil money penalty for each viola- (c) Appointment of examiners. When tion of 42 U.S.C. 300gg et seq. may not CMS identifies an issue that warrants exceed $100 for each day, for each re- investigation, CMS will appoint one or sponsible entity, for each individual af- more examiners to perform the exam- fected by the violation. Penalties im- ination and instruct them as to the posed under this part are in addition to scope of the examination. any other penalties prescribed or al- (d) Appointment of professionals and lowed by law. specialists. When conducting an examination under this part, CMS may re- § 150.317 Factors CMS uses to deter- tain attorneys, independent actuaries, mine the amount of penalty. independent market conduct exam- In determining the amount of any iners, or other professionals and spe- penalty, CMS takes into account the cialists as examiners. following: (e) Report of market conduct examina- (a) The entity’s previous record of com- tion—(1) CMS review. When CMS re- pliance. This may include any of the ceives a report, it will review the re- following: port, together with the examination (1) Any history of prior violations by work papers and any other relevant in- the responsible entity, including formation, and prepare a final report. whether, at any time before determina- The final examination report will be tion of the current violation or viola- provided to the issuer or other respon- tions, CMS or any State found the re- sible entity. sponsible entity liable for civil or ad- (2) Response from issuer or other re- ministrative sanctions in connection sponsible entity. With respect to each with a violation of HIPAA require- examination issue identified in the re- ments. port, the issuer or other responsible en- (2) Documentation that the respon- tity may: sible entity has submitted its policy (i) Concur with CMS’s position(s) as forms to CMS for compliance review. outlined in the report, explaining the (3) Evidence that the responsible en- plan of correction to be implemented. tity has never had a complaint for non- (ii) Dispute CMS’s position(s), clearly compliance with HIPAA requirements outlining the basis for its dispute and filed with a State or CMS.

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(4) Such other factors as justice may erage or provided a certificate of cred- require. itable coverage in a manner that com- (b) The gravity of the violation. This plies with HIPAA requirements that may include any of the following: were violated so that, to the extent (1) The frequency of the violation, practicable, that employer, employee, taking into consideration whether any individual, or non-Federal govern- violation is an isolated occurrence, mental entity is in the same position represents a pattern, or is widespread. that he, she, or it would have been in (2) The level of financial and other had the violation not occurred. impacts on affected individuals. (iv) The adjustments are completed (3) Other factors as justice may re- in a timely manner. quire. (2) Discovered areas of noncompliance without notice from CMS and vol- § 150.319 Determining the amount of untarily reported that noncompliance, the penalty—mitigating cir- provided that the responsible entity cumstances. submits the following: For every violation subject to a civil (i) Documentation verifying that the money penalty, if there are substantial rights and protections of all individ- or several mitigating circumstances, uals adversely affected by the non- the aggregate amount of the penalty is compliance have been restored; and set at an amount sufficiently below the (ii) A plan of correction to prevent maximum permitted by § 150.315 to re- future similar violations. flect that fact. As guidelines for taking (3) Demonstrated that the violation into account the factors listed in is an isolated occurrence. § 150.317, CMS considers the following: (4) Demonstrated that the financial (a) Record of prior compliance. It and other impacts on affected individ- should be considered a mitigating cir- uals is negligible or nonexistent. cumstance if the responsible entity has (5) Demonstrated that the non- done any of the following: compliance is correctable and that a (1) Before receipt of the notice issued high percentage of the violations were under § 150.307, implemented and fol- corrected. lowed a compliance plan as described § 150.321 Determining the amount of in § 150.311(f). penalty—aggravating cir- (2) Had no previous complaints cumstances. against it for noncompliance. For every violation subject to a civil (b) Gravity of the violation(s). It should money penalty, if there are substantial be considered a mitigating cir- or several aggravating circumstances, cumstance if the responsible entity has CMS sets the aggregate amount of the done any of the following: penalty at an amount sufficiently close (1) Made adjustments to its business to or at the maximum permitted by practices to come into compliance with § 150.315 to reflect that fact. CMS con- HIPAA requirements so that the fol- siders the following circumstances to lowing occur: be aggravating circumstances: (i) All employers, employees, individ- (a) The frequency of violation indi- uals and non-Federal governmental en- cates a pattern of widespread occur- tities are identified that are or were rence. issued any policy, certificate of insur- (b) The violation(s) resulted in sig- ance or plan document, or any form nificant financial and other impacts on used in connection therewith that the average affected individual. failed to comply. (c) The entity does not provide docu- (ii) All employers, employees, indi- mentation showing that substantially viduals, and non-Federal governmental all of the violations were corrected. plans are identified that were denied coverage or were denied a right pro- § 150.323 Determining the amount of vided under HIPAA requirements. penalty—other matters as justice (iii) Each employer, employee, indi- may require. vidual, or non-Federal governmental CMS may take into account other plan adversely affected by the viola- circumstances of an aggravating or tion has been, for example, offered cov- mitigating nature if, in the interests of

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justice, they require either a reduction based its determination, including the or an increase of the penalty in order basis for determining the number of af- to assure the achievement of the pur- fected individuals and the number of poses of this part, and if those cir- days for which the violations occurred. cumstances relate to the entity’s pre- (c) The amount of the proposed pen- vious record of compliance or the grav- alty as of the date of the notice. ity of the violation. (d) Any circumstances described in §§ 150.317 through 150.323 that were con- § 150.325 Settlement authority. sidered when determining the amount Nothing in §§ 150.315 through 150.323 of the proposed penalty. limits the authority of CMS to settle (e) A specific statement of the re- any issue or case described in the no- sponsible entity’s right to a hearing. tice furnished in accordance with (f) A statement that failure to re- § 150.307 or to compromise on any pen- quest a hearing within 30 days permits alty provided for in §§ 150.315 through the assessment of the proposed penalty 150.323. without right of appeal in accordance with § 150.347. § 150.341 Limitations on penalties. (a) Circumstances under which a civil § 150.345 Appeal of proposed penalty. money penalty is not imposed. CMS does Any entity against which CMS has not impose any civil money penalty on assessed a penalty may appeal that any failure for the period of time dur- penalty in accordance with § 150.401 et ing which none of the responsible enti- seq. ties knew, or exercising reasonable diligence would have known, of the § 150.347 Failure to request a hearing. failure. CMS also does not impose a If the responsible entity does not re- civil money penalty for the period of quest a hearing within 30 days of the time after any of the responsible enti- issuance of the notice described in ties knew, or exercising reasonable § 150.343, CMS may assess the proposed diligence would have known of the fail- civil money penalty, a less severe pen- ure, if the failure was due to reasonable alty, or a more severe penalty. CMS cause and not due to willful neglect notifies the responsible entity in writ- and the failure was corrected within 30 ing of any penalty that has been as- days of the first day that any of the en- sessed and of the means by which the tities against whom the penalty would responsible entity may satisfy the be imposed knew, or exercising reason- judgment. The responsible entity has able diligence would have known, that no right to appeal a penalty with re- the failure existed. spect to which it has not requested a (b) Burden of establishing knowledge. hearing in accordance with § 150.405 un- The burden is on the responsible entity less the responsible entity can show or entities to establish to CMS’s satis- good cause, as determined under faction that no responsible entity § 150.405(b), for failing to timely exer- knew, or exercising reasonable dili- cise its right to a hearing. gence would have known, that the failure existed. Subpart D—Administrative § 150.343 Notice of proposed penalty. Hearings If CMS proposes to assess a penalty in accordance with this part, it delivers § 150.401 Definitions. to the responsible entity, or sends to In this subpart, unless the context that entity by certified mail, return re- indicates otherwise: ceipt requested, written notice of its ALJ means administrative law judge intent to assess a penalty. The notice of the Departmental Appeals Board of includes the following: the Department of Health and Human (a) A description of the HIPAA re- Services. quirements that CMS has determined Filing date means the date post- that the responsible entity violated. marked by the U.S. Postal Service, de- (b) A description of any complaint or posited with a carrier for commercial other information upon which CMS delivery, or hand delivered.

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Hearing includes a hearing on a writ- § 150.407 Form and content of request ten record as well as an in-person or for hearing. telephone hearing. (a) The request for hearing must do Party means CMS or the respondent. the following: Receipt date means five days after the (1) Identify any factual or legal bases date of a document, unless there is a for the assessment with which the re- showing that it was in fact received spondent disagrees. later. (2) Describe with reasonable speci- Respondent means an entity that re- ficity the basis for the disagreement, ceived a notice of proposed assessment including any affirmative facts or legal of a civil money penalty issued pursu- arguments on which the respondent is ant to § 150.343. relying. (b) The request for hearing must § 150.403 Scope of ALJ’s authority. identify the relevant notice of assessment by date and attach a copy of the (a) The ALJ has the authority, in- notice. cluding all of the authority conferred by the Administrative Procedure Act, § 150.409 Amendment of notice of as- to adopt whatever procedures may be sessment or request for hearing. necessary or proper to carry out in an The ALJ may permit CMS to amend efficient and effective manner the its notice of assessment, or permit the ALJ’s duty to provide a fair and impar- respondent to amend a request for tial hearing on the record and to issue hearing that complies with § 150.407(a), an initial decision concerning the im- if the ALJ finds that no undue preju- position of a civil money penalty. dice to either party will result. (b) The ALJ’s authority includes the authority to modify, consistent with § 150.411 Dismissal of request for hear- the Administrative Procedure Act (5 ing. U.S.C. 552a), any hearing procedures An ALJ will order a request for hear- set out in this subpart. ing dismissed if the ALJ determines (c) The ALJ does not have the au- that: thority to find invalid or refuse to fol- (a) The request for hearing was not low Federal statutes or regulations. filed within 30 days as specified by § 150.405(a) or any extension of time § 150.405 Filing of request for hearing. granted by the ALJ pursuant to § 150.405(b). (a) A respondent has a right to a (b) The request for hearing fails to hearing before an ALJ if it files a re- meet the requirements of § 150.407. quest for hearing that complies with (c) The entity that filed the request § 150.407(a), within 30 days after the for hearing is not a respondent under date of issuance of either CMS’s notice § 150.401. of proposed assessment under § 150.343 (d) The respondent has abandoned its or notice that an alternative dispute request. resolution process has terminated. The (e) The respondent withdraws its re- request for hearing should be addressed quest for hearing. as instructed in the notice of proposed determination. ‘‘Date of issuance’’ is § 150.413 Settlement. five (5) days after the filing date, un- CMS has exclusive authority to set- less there is a showing that the docu- tle any issue or any case, without the ment was received earlier. consent of the administrative law (b) The ALJ may extend the time for judge at any time before or after the filing a request for hearing only if the administrative law judge’s decision. ALJ finds that the respondent was prevented by events or circumstances be- § 150.415 Intervention. yond its control from filing its request (a) The ALJ may grant the request of within the time specified above. Any an entity, other than the respondent, request for an extension of time must to intervene if all of the following be made promptly by written motion. occur:

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(1) The entity has a significant inter- diced. The ALJ may require submission est relating to the subject matter of of a witness’ direct testimony in writ- the case. ing only if the witness is available for (2) Disposition of the case will, as a cross-examination. practical matter, likely impair or im- (b) The ALJ may decide a case based pede the entity’s ability to protect solely on the written record where that interest. there is no disputed issue of material (3) The entity’s interest is not ade- fact the resolution of which requires quately represented by the existing the receipt of oral testimony. parties. (4) The intervention will not unduly § 150.421 Appearance of counsel. delay or prejudice the adjudication of the rights of the existing parties. Any attorney who is to appear on be- (b) A request for intervention must half of a party must promptly file, with specify the grounds for intervention the ALJ, a notice of appearance. and the manner in which the entity § 150.423 Communications with the seeks to participate in the proceedings. ALJ. Any participation by an intervenor must be in the manner and by any No party or person (except employees deadline set by the ALJ. of the ALJ’s office) may communicate (c) The Department of Labor or the in any way with the ALJ on any mat- IRS may intervene without regard to ter at issue in a case, unless on notice paragraphs (a)(1) through (a)(3) of this and opportunity for both parties to section. participate. This provision does not prohibit a party or person from inquir- § 150.417 Issues to be heard and de- ing about the status of a case or asking cided by ALJ. routine questions concerning adminis- (a) The ALJ has the authority to trative functions or procedures. hear and decide the following issues: (1) Whether a basis exists to assess a § 150.425 Motions. civil money penalty against the re- (a) Any request to the ALJ for an spondent. order or ruling must be by motion, (2) Whether the amount of the as- stating the relief sought, the authority sessed civil money penalty is reason- relied upon, and the facts alleged. All able. motions must be in writing, with a (b) In deciding whether the amount copy served on the opposing party, ex- of a civil money penalty is reasonable, cept in either of the following situa- the ALJ— tions: (1) Applies the factors that are identified in § 150.317. (1) The motion is presented during an (2) May consider evidence of record oral proceeding before an ALJ at which relating to any factor that CMS did not both parties have the opportunity to be apply in making its initial determina- present. tion, so long as that factor is identified (2) An extension of time is being re- in this subpart. quested by agreement of the parties or (c) If the ALJ finds that a basis ex- with waiver of objections by the oppos- ists to assess a civil money penalty, ing party. the ALJ may sustain, reduce, or in- (b) Unless otherwise specified in this crease the penalty that CMS assessed. subpart, any response or opposition to a motion must be filed within 20 days § 150.419 Forms of hearing. of the party’s receipt of the motion. (a) All hearings before an ALJ are on The ALJ does not rule on a motion be- the record. The ALJ may receive argu- fore the time for filing a response to ment or testimony in writing, in per- the motion has expired except where son, or by telephone. The ALJ may re- the response is filed at an earlier date, ceive testimony by telephone only if where the opposing party consents to the ALJ determines that doing so is in the motion being granted, or where the the interest of justice and economy and ALJ determines that the motion that no party will be unduly preju- should be denied.

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§ 150.427 Form and service of submis- § 150.431 Acknowledgment of request sions. for hearing. (a) Every submission filed with the After receipt of the request for hear- ALJ must be filed in triplicate, including, the ALJ assigned to the case or ing one original of any signed docu- someone acting on behalf of the ALJ ments, and include: will send a letter to the parties that (1) A caption on the first page, set- acknowledges receipt of the request for ting forth the title of the case, the hearing, identifies the docket number docket number (if known), and a de- assigned to the case, provides instruc- scription of the submission (such as tions for filing submissions and other ‘‘Motion for Discovery’’). general information concerning proce- (2) The signatory’s name, address, dures, and sets out the next steps in and telephone number. the case. (3) A signed certificate of service, specifying each address to which a copy § 150.435 Discovery. of the submission is sent, the date on (a) The parties must identify any which it is sent, and the method of need for discovery from the opposing service. party as soon as possible, but no later (b) A party filing a submission with than the time for the reply specified in the ALJ must, at the time of filing, § 150.437(c). Upon request of a party, the serve a copy of such submission on the ALJ may stay proceedings for a rea- opposing party. An intervenor filing a sonable period pending completion of submission with the ALJ must, at the discovery if the ALJ determines that a time of filing, serve a copy of the sub- party would not be able to make the mission on all parties. Service must be submissions required by § 150.437 with- made by mailing or hand delivering a out discovery. The parties should at- copy of the submission to the opposing tempt to resolve any discovery issues party. If a party is represented by an informally before seeking an order attorney, service must be made on the from the ALJ. attorney. (b) Discovery devices may include re- § 150.429 Computation of time and ex- quests for production of documents, re- tensions of time. quests for admission, interrogatories, (a) For purposes of this subpart, in depositions, and stipulations. The ALJ computing any period of time, the time orders interrogatories or depositions begins with the day following the act, only if these are the only means to de- event, or default and includes the last velop the record adequately on an issue day of the period unless it is a Satur- that the ALJ must resolve to decide day, Sunday, or legal holiday observed the case. by the Federal government, in which (c) Each discovery request must be event it includes the next business day. responded to within 30 days of receipt, When the period of time allowed is less unless that period of time is extended than seven days, intermediate Satur- for good cause by the ALJ. days, Sundays, and legal holidays ob- (d) A party to whom a discovery reserved by the Federal government are quest is directed may object in writing excluded from the computation. for any of the following reasons: (b) The period of time for filing any (1) Compliance with the request is responsive pleading or papers is deter- unduly burdensome or expensive. mined by the date of receipt (as defined (2) Compliance with the request will in § 150.401) of the submission to which unduly delay the proceedings. a response is being made. (3) The request seeks information (c) The ALJ may grant extensions of that is wholly outside of any matter in the filing deadlines specified in these dispute. regulations or set by the ALJ for good (4) The request seeks privileged infor- cause shown (except that requests for mation. Any party asserting a claim of extensions of time to file a request for privilege must sufficiently describe the hearing may be granted only on the information or document being with- grounds specified in section held to show that the privilege applies. § 150.405(b)). If an asserted privilege applies to only

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part of a document, a party with- (2) Any documents supporting CMS’s holding the entire document must response not already submitted as part state why the nonprivileged part is not of the respondent’s proposed hearing segregable. exhibits, organized and indexed as indi- (e) Any motion to compel discovery cated in paragraph (a)(2) of this section must be filed within 10 days after re- (CMS’s proposed hearing exhibits). ceipt of objections to the party’s dis- (3) A statement regarding whether covery request, within 10 days after the there is a need for an in-person hearing time for response to the discovery re- and, if so, a list of proposed witnesses quest has elapsed if no response is re- and a summary of their expected testi- ceived, or within 10 days after receipt mony that refers to any factual dispute of an incomplete response to the dis- to which the testimony will relate. covery request. The motion must be (4) Any admissions or stipulations. reasonably specific as to the informa- (c) Within 15 days of its receipt of tion or document sought and must CMS’s submission required by para- state its relevance to the issues in the graph (b) of this section, the respond- case. ent may file with the ALJ a reply to CMS’s submission. § 150.437 Submission of briefs and proposed hearing exhibits. § 150.439 Effect of submission of pro- (a) Within 60 days of its receipt of the posed hearing exhibits. acknowledgment provided for in (a) Any proposed hearing exhibit sub- § 150.431, the respondent must file the mitted by a party in accordance with following with the ALJ: § 150.437 is deemed part of the record (1) A statement of its arguments con- unless the opposing party raises an ob- cerning CMS’s notice of assessment jection to that exhibit and the ALJ (respondent’s brief), including citations rules to exclude it from the record. An to the respondent’s hearing exhibits objection must be raised either in writ- provided in accordance with paragraph ing prior to the prehearing conference (a)(2) of this section. The brief may not provided for in § 150.441 or at the pre- address factual or legal bases for the hearing conference. The ALJ may re- assessment that the respondent did not quire a party to submit the original identify as disputed in its request for hearing exhibit on his or her own mo- hearing or in an amendment to that re- tion or in response to a challenge to quest permitted by the ALJ. the authenticity of a proposed hearing (2) All documents (including any affi- exhibit. davits) supporting its arguments, (b) A party may introduce a proposed tabbed and organized chronologically hearing exhibit following the times for and accompanied by an indexed list submission specified in § 150.437 only if identifying each document (respond- the party establishes to the satisfac- ent’s proposed hearing exhibits). tion of the ALJ that it could not have (3) A statement regarding whether produced the exhibit earlier and that there is a need for an in-person hearing the opposing party will not be preju- and, if so, a list of proposed witnesses diced. and a summary of their expected testimony that refers to any factual dispute § 150.441 Prehearing conferences. to which the testimony will relate. An ALJ may schedule one or more (4) Any stipulations or admissions. prehearing conferences (generally con- (b) Within 30 days of its receipt of the ducted by telephone) on the ALJ’s own respondent’s submission required by motion or at the request of either paragraph (a) of this section, CMS will party for the purpose of any of the fol- file the following with the ALJ: lowing: (1) A statement responding to the re- (a) Hearing argument on any out- spondent’s brief, including the respond- standing discovery request. ent’s proposed hearing exhibits, if ap- (b) Establishing a schedule for any propriate. The statement may include supplements to the submissions re- citations to CMS’s proposed hearing quired by § 150.437 because of informa- exhibits submitted in accordance with tion obtained through discovery. paragraph (b)(2) of this section. (c) Hearing argument on a motion.

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(d) Discussing whether the parties provided in the Federal Rules of Evi- can agree to submission of the case on dence. a stipulated record. (g) Evidence of acts other than those (e) Establishing a schedule for an in- at issue in the instant case is admis- person hearing, including setting dead- sible in determining the amount of any lines for the submission of written di- civil money penalty if those acts are rect testimony or for the written reused under §§ 150.317 and 150.323 of this ports of experts. part to consider the entity’s prior (f) Discussing whether the issues for record of compliance, or to show mo- a hearing can be simplified or nar- tive, opportunity, intent, knowledge, rowed. preparation, identity, or lack of mis- (g) Discussing potential settlement of take. This evidence is admissible re- the case. gardless of whether the acts occurred (h) Discussing any other procedural during the statute of limitations period or substantive issues. applicable to the acts that constitute the basis for liability in the case and § 150.443 Standard of proof. regardless of whether CMS’s notice (a) In all cases before an ALJ— sent in accordance with §§ 150.307 and (1) CMS has the burden of coming for- 150.343 referred to them. ward with evidence sufficient to estab- (h) The ALJ will permit the parties lish a prima facie case; to introduce rebuttal witnesses and (2) The respondent has the burden of evidence. coming forward with evidence in re- (i) All documents and other evidence sponse, once CMS has established a offered or taken for the record will be prima facie case; and open to examination by all parties, un- (3) CMS has the burden of persuasion less the ALJ orders otherwise for good regarding facts material to the assess- cause shown. ment; and (j) The ALJ may not consider evi- (4) The respondent has the burden of dence regarding the willingness and persuasion regarding facts relating to ability to enter into and successfully an affirmative defense. complete a corrective action plan when (b) The preponderance of the evi- that evidence pertains to matters oc- dence standard applies to all cases be- curring after CMS’s notice under fore the ALJ. § 150.307.

§ 150.445 Evidence. § 150.447 The record. (a) The ALJ will determine the ad- (a) Any testimony that is taken in- missibility of evidence. person or by telephone is recorded and (b) Except as provided in this part, transcribed. The ALJ may order that the ALJ will not be bound by the Fed- other proceedings in a case, such as a eral Rules of Evidence. However, the prehearing conference or oral argu- ALJ may apply the Federal Rules of ment of a motion, be recorded and Evidence where appropriate; for exam- transcribed. ple, to exclude unreliable evidence. (c) The ALJ excludes irrelevant or (b) The transcript of any testimony, immaterial evidence. exhibits and other evidence that is ad- (d) Although relevant, evidence may mitted, and all pleadings and other be excluded if its probative value is documents that are filed in the case substantially outweighed by the danger constitute the record for purposes of an of unfair prejudice, confusion of the ALJ decision. issues, or by considerations of undue (c) For good cause, the ALJ may delay or needless presentation of cumu- order appropriate redactions made to lative evidence. the record. (e) Although relevant, evidence is excluded if it is privileged under Federal § 150.449 Cost of transcripts. law. Generally, each party is responsible (f) Evidence concerning offers of com- for 50 percent of the transcript cost. promise or settlement made in this ac- Where there is an intervenor, the ALJ tion will be inadmissible to the extent determines what percentage of the

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transcript cost is to be paid for by the § 150.457 Review by Administrator. intervenor. (a) The Administrator of CMS (which for purposes of this subsection may in- § 150.451 Posthearing briefs. clude his or her delegate), at his or her Each party is entitled to file pro- discretion, may review in whole or in posed findings and conclusions, and part any initial agency decision issued supporting reasons, in a posthearing under § 150.453. brief. The ALJ will establish the sched- (b) The Administrator may decide to ule by which such briefs must be filed. review an initial agency decision if it The ALJ may direct the parties to appears from a preliminary review of brief specific questions in a case and the decision (or from a preliminary re- may impose page limits on posthearing view of the record on which the initial briefs. Additionally, the ALJ may agency decision was based, if available allow the parties to file posthearing at the time) that: reply briefs. (1) The ALJ made an erroneous interpretation of law or regulation. § 150.453 ALJ decision. (2) The initial agency decision is not supported by substantial evidence. The ALJ will issue an initial agency (3) The ALJ has incorrectly assumed decision based only on the record and or denied jurisdiction or extended his on applicable law; the decision will or her authority to a degree not pro- contain findings of fact and conclu- vided for by statute or regulation. sions of law. The ALJ’s decision is final (4) The ALJ decision requires clari- and appealable after 30 days unless it is fication, amplification, or an alter- modified or vacated under § 150.457. native legal basis for the decision. (5) The ALJ decision otherwise re- § 150.455 Sanctions. quires modification, reversal, or re- (a) The ALJ may sanction a party or mand. an attorney for failing to comply with (c) Within 30 days of the date of the an order or other directive or with a re- initial agency decision, the Adminis- quirement of a regulation, for abandon- trator will mail a notice advising the ment of a case, or for other actions respondent of any intent to review the that interfere with the speedy, orderly decision in whole or in part. or fair conduct of the hearing. Any (d) Within 30 days of receipt of a no- sanction that is imposed will relate tice that the Administrator intends to reasonably to the severity and nature review an initial agency decision, the of the failure or action. respondent may submit, in writing, to (b) A sanction may include any of the the Administrator any arguments in following actions: support of, or exceptions to, the initial (1) In the case of failure or refusal to agency decision. provide or permit discovery, drawing (e) This submission of the informa- negative fact inferences or treating tion indicated in paragraph (d) of this such failure or refusal as an admission section must be limited to issues the by deeming the matter, or certain Administrator has identified in his or facts, to be established. her notice of intent to review, if the Administrator has given notice of an (2) Prohibiting a party from intro- intent to review the initial agency de- ducing certain evidence or otherwise cision only in part. A copy of this sub- advocating a particular claim or de- mission must be sent to the other fense. party. (3) Striking pleadings, in whole or in (f) After receipt of any submissions part. made pursuant to paragraph (d) of this (4) Staying the case. section and any additional submissions (5) Dismissing the case. for which the Administrator may pro- (6) Entering a decision by default. vide, the Administrator will affirm, re- (7) Refusing to consider any motion verse, modify, or remand the initial or other document that is not filed in agency decision. The Administrator a timely manner. will mail a copy of his or her decision (8) Taking other appropriate action. to the respondent.

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(g) The Administrator’s decision will unless they are found to be unsup- be based on the record on which the ported by substantial evidence, as pro- initial agency decision was based (as vided by 5 U.S.C. 706(2)(E). forwarded by the ALJ to the Adminis- trator) and any materials submitted § 150.461 Failure to pay assessment. pursuant to paragraphs (b), (d), and (f) If any entity fails to pay an assess- of this section. ment after it becomes a final order, or (h) The Administrator’s decision may after the court has entered final judg- rely on decisions of any courts and ment in favor of CMS, CMS refers the other applicable law, whether or not matter to the Attorney General, who cited in the initial agency decision. brings an action against the entity in the appropriate United States district § 150.459 Judicial review. court to recover the amount assessed. (a) Filing of an action for review. Any responsible entity against whom a final § 150.463 Final order not subject to re- order imposing a civil money penalty view. is entered may obtain review in the In an action brought under § 150.461, United States District Court for any the validity and appropriateness of the district in which the entity is located final order described in § 150.459 is not or in the United States District Court subject to review. for the District of Columbia by doing the following: § 150.465 Collection and use of penalty (1) Filing a notice of appeal in that funds. court within 30 days from the date of a final order. (a) Any funds collected under § 150.461 (2) Simultaneously sending a copy of are paid to CMS. the notice of appeal by registered mail (b) The funds are available without to CMS. appropriation until expended. (b) Certification of administrative (c) The funds may be used only for record. CMS promptly certifies and files the purpose of enforcing the HIPAA re- with the court the record upon which quirements for which the penalty was the penalty was assessed. assessed. (c) Standard of review. The findings of CMS and the ALJ may not be set aside PARTS 151–159 [RESERVED]

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PART 160—GENERAL 160.504 Hearing before an ALJ. 160.506 Rights of the parties. ADMINISTRATIVE REQUIREMENTS 160.508 Authority of the ALJ. 160.510 Ex parte contacts. Subpart A—General Provisions 160.512 Prehearing conferences. 160.514 Authority to settle. Sec. 160.101 Statutory basis and purpose. 160.516 Discovery. 160.102 Applicability. 160.518 Exchange of witness lists, witness 160.103 Definitions. statements, and exhibits. 160.104 Modifications. 160.520 Subpoenas for attendance at hearing. Subpart B—Preemption of State Law 160.522 Fees. 160.524 Form, filing, and service of papers. 160.201 Applicability. 160.526 Computation of time. 160.202 Definitions. 160.528 Motions. 160.203 General rule and exceptions. 160.530 Sanctions. 160.204 Process for requesting exception de- 160.532 Collateral estoppel. terminations. 160.534 The hearing. 160.205 Duration of effectiveness of excep- 160.536 Statistical sampling. tion determinations. 160.538 Witnesses. 160.540 Evidence. Subpart C—Compliance and 160.542 The record. Investigations 160.544 Post hearing briefs. 160.300 Applicability. 160.546 ALJ’s decision. 160.302 Definitions. 160.548 Appeal of the ALJ’s decision. 160.304 Principles for achieving compliance. 160.550 Stay of the Secretary’s decision. 160.306 Complaints to the Secretary. 160.552 Harmless error. 160.308 Compliance reviews. AUTHORITY: 42 U.S.C. 1302(a), 42 U.S.C. 160.310 Responsibilities of covered entities. 1320d—1320d–8, sec. 264 of Pub. L.104–191, 110 160.312 Secretarial action regarding com- Stat. 2033–2034 (42 U.S.C. 1320d–2 (note)), and plaints and compliance reviews. 5 U.S.C. 552. 160.314 Investigational subpoenas and inquiries. SOURCE: 65 FR 82798, Dec. 28, 2000, unless 160.316 Refraining from intimidation or re- otherwise noted. taliation. Subpart A—General Provisions Subpart D—Imposition of Civil Money Penalties § 160.101 Statutory basis and purpose. 160.400 Applicability. The requirements of this subchapter 160.402 Basis for a civil money penalty. implement sections 1171 through 1179 of 160.404 Amount of a civil money penalty. the Social Security Act (the Act), as 160.406 Violations of an identical require- added by section 262 of Public Law 104– ment or prohibition. 160.408 Factors considered in determining 191, and section 264 of Public Law 104– the amount of a civil money penalty. 191. 160.410 Affirmative defenses. 160.412 Waiver. § 160.102 Applicability. 160.414 Limitations. (a) Except as otherwise provided, the 160.416 Authority to settle. standards, requirements, and imple- 160.418 Penalty not exclusive. 160.420 Notice of proposed determination. mentation specifications adopted under 160.422 Failure to request a hearing. this subchapter apply to the following 160.424 Collection of penalty. entities: 160.426 Notification of the public and other (1) A health plan. agencies. (2) A health care clearinghouse. (3) A health care provider who trans- Subpart E—Procedures for Hearings mits any health information in elec- 160.500 Applicability. tronic form in connection with a trans- 160.502 Definitions. action covered by this subchapter.

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(b) To the extent required under the (2) A covered entity participating in Social Security Act, 42 U.S.C. 1320a– an organized health care arrangement 7c(a)(5), nothing in this subchapter that performs a function or activity as shall be construed to diminish the au- described by paragraph (1)(i) of this thority of any Inspector General, in- definition for or on behalf of such orga- cluding such authority as provided in nized health care arrangement, or that the Inspector General Act of 1978, as provides a service as described in para- amended (5 U.S.C. App.). graph (1)(ii) of this definition to or for [65 FR 82798, Dec. 28, 2000, as amended at 67 such organized health care arrange- FR 53266, Aug. 14, 2002] ment, does not, simply through the performance of such function or activ- § 160.103 Definitions. ity or the provision of such service, be- Except as otherwise provided, the fol- come a business associate of other cov- lowing definitions apply to this sub- ered entities participating in such or- chapter: ganized health care arrangement. Act means the Social Security Act. (3) A covered entity may be a busi- ANSI stands for the American Na- ness associate of another covered enti- tional Standards Institute. ty. Business associate: (1) Except as pro- CMS stands for Centers for Medicare vided in paragraph (2) of this defini- & Medicaid Services within the Depart- tion, business associate means, with re- ment of Health and Human Services. spect to a covered entity, a person who: Compliance date means the date by (i) On behalf of such covered entity which a covered entity must comply or of an organized health care arrange- with a standard, implementation speci- ment (as defined in § 164.501 of this sub- fication, requirement, or modification chapter) in which the covered entity adopted under this subchapter. participates, but other than in the ca- Covered entity means: pacity of a member of the workforce of (1) A health plan. such covered entity or arrangement, (2) A health care clearinghouse. performs, or assists in the performance (3) A health care provider who trans- of: mits any health information in elec- (A) A function or activity involving tronic form in connection with a trans- the use or disclosure of individually action covered by this subchapter. identifiable health information, includ- Disclosure means the release, trans- ing claims processing or administra- fer, provision of, access to, or divulging tion, data analysis, processing or ad- in any other manner of information ministration, utilization review, qual- outside the entity holding the informa- ity assurance, billing, benefit manage- tion. ment, practice management, and re- EIN stands for the employer identi- pricing; or fication number assigned by the Inter- (B) Any other function or activity nal Revenue Service, U.S. Department regulated by this subchapter; or of the Treasury. The EIN is the tax- (ii) Provides, other than in the capac- payer identifying number of an indi- ity of a member of the workforce of vidual or other entity (whether or not such covered entity, legal, actuarial, an employer) assigned under one of the accounting, consulting, data aggrega- following: tion (as defined in § 164.501 of this sub- (1) 26 U.S.C. 6011(b), which is the por- chapter), management, administrative, tion of the Internal Revenue Code deal- accreditation, or financial services to ing with identifying the taxpayer in or for such covered entity, or to or for tax returns and statements, or cor- an organized health care arrangement responding provisions of prior law. in which the covered entity partici- (2) 26 U.S.C. 6109, which is the portion pates, where the provision of the serv- of the Internal Revenue Code dealing ice involves the disclosure of individ- with identifying numbers in tax re- ually identifiable health information turns, statements, and other required from such covered entity or arrange- documents. ment, or from another business asso- Electronic media means: ciate of such covered entity or arrange- (1) Electronic storage media includ- ment, to the person. ing memory devices in computers (hard

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drives) and any removable/transport- palliative care, and counseling, service, able digital memory medium, such as assessment, or procedure with respect magnetic tape or disk, optical disk, or to the physical or mental condition, or digital memory card; or functional status, of an individual or (2) Transmission media used to ex- that affects the structure or function change information already in elec- of the body; and tronic storage media. Transmission (2) Sale or dispensing of a drug, de- media include, for example, the inter- vice, equipment, or other item in ac- net (wide-open), extranet (using inter- cordance with a prescription. net technology to link a business with Health care clearinghouse means a information accessible only to collabo- public or private entity, including a rating parties), leased lines, dial-up billing service, repricing company, lines, private networks, and the phys- community health management infor- ical movement of removable/transport- mation system or community health able electronic storage media. Certain information system, and ‘‘value-added’’ transmissions, including of paper, via networks and switches, that does ei- facsimile, and of voice, via telephone, ther of the following functions: are not considered to be transmissions (1) Processes or facilitates the proc- via electronic media, because the infor- essing of health information received mation being exchanged did not exist from another entity in a nonstandard in electronic form before the trans- format or containing nonstandard data mission. content into standard data elements or Electronic protected health information a standard transaction. means information that comes within (2) Receives a standard transaction paragraphs (1)(i) or (1)(ii) of the defini- from another entity and processes or tion of protected health information as facilitates the processing of health in- specified in this section. formation into nonstandard format or Employer is defined as it is in 26 nonstandard data content for the re- U.S.C. 3401(d). ceiving entity. Group health plan (also see definition Health care provider means a provider of health plan in this section) means an of services (as defined in section 1861(u) employee welfare benefit plan (as de- of the Act, 42 U.S.C. 1395x(u)), a pro- fined in section 3(1) of the Employee vider of medical or health services (as Retirement Income and Security Act of defined in section 1861(s) of the Act, 42 1974 (ERISA), 29 U.S.C. 1002(1)), includ- U.S.C. 1395x(s)), and any other person ing insured and self-insured plans, to or organization who furnishes, bills, or the extent that the plan provides med- is paid for health care in the normal ical care (as defined in section course of business. 2791(a)(2) of the Public Health Service Health information means any infor- Act (PHS Act), 42 U.S.C. 300gg–91(a)(2)), mation, whether oral or recorded in including items and services paid for as any form or medium, that: medical care, to employees or their de- (1) Is created or received by a health pendents directly or through insur- care provider, health plan, public ance, reimbursement, or otherwise, health authority, employer, life in- that: surer, school or university, or health (1) Has 50 or more participants (as de- care clearinghouse; and fined in section 3(7) of ERISA, 29 U.S.C. (2) Relates to the past, present, or fu- 1002(7)); or ture physical or mental health or con- (2) Is administered by an entity other dition of an individual; the provision of than the employer that established and health care to an individual; or the maintains the plan. past, present, or future payment for HHS stands for the Department of the provision of health care to an indi- Health and Human Services. vidual. Health care means care, services, or Health insurance issuer (as defined in supplies related to the health of an in- section 2791(b)(2) of the PHS Act, 42 dividual. Health care includes, but is U.S.C. 300gg–91(b)(2) and used in the not limited to, the following: definition of health plan in this section) (1) Preventive, diagnostic, thera- means an insurance company, insur- peutic, rehabilitative, maintenance, or ance service, or insurance organization

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(including an HMO) that is licensed to (xiii) The Federal Employees Health engage in the business of insurance in Benefits Program under 5 U.S.C. 8902, a State and is subject to State law that et seq. regulates insurance. Such term does (xiv) An approved State child health not include a group health plan. plan under title XXI of the Act, pro- Health maintenance organization viding benefits for child health assist- (HMO) (as defined in section 2791(b)(3) ance that meet the requirements of of the PHS Act, 42 U.S.C. 300gg–91(b)(3) section 2103 of the Act, 42 U.S.C. 1397, et and used in the definition of health plan seq. in this section) means a federally (xv) The Medicare+Choice program qualified HMO, an organization recog- under Part C of title XVIII of the Act, nized as an HMO under State law, or a 42 U.S.C. 1395w–21 through 1395w–28. similar organization regulated for sol- (xvi) A high risk pool that is a mech- vency under State law in the same anism established under State law to manner and to the same extent as such provide health insurance coverage or an HMO. comparable coverage to eligible indi- Health plan means an individual or viduals. group plan that provides, or pays the (xvii) Any other individual or group cost of, medical care (as defined in sec- plan, or combination of individual or tion 2791(a)(2) of the PHS Act, 42 U.S.C. group plans, that provides or pays for 300gg–91(a)(2)). the cost of medical care (as defined in (1) Health plan includes the following, section 2791(a)(2) of the PHS Act, 42 singly or in combination: U.S.C. 300gg–91(a)(2)). (i) A group health plan, as defined in (2) Health plan excludes: this section. (i) Any policy, plan, or program to (ii) A health insurance issuer, as de- the extent that it provides, or pays for fined in this section. the cost of, excepted benefits that are (iii) An HMO, as defined in this sec- listed in section 2791(c)(1) of the PHS tion. Act, 42 U.S.C. 300gg–91(c)(1); and (ii) A government-funded program (iv) Part A or Part B of the Medicare (other than one listed in paragraph program under title XVIII of the Act. (1)(i)–(xvi) of this definition): (v) The Medicaid program under title (A) Whose principal purpose is other XIX of the Act, 42 U.S.C. 1396, et seq. than providing, or paying the cost of, (vi) An issuer of a Medicare supple- health care; or mental policy (as defined in section (B) Whose principal activity is: 1882(g)(1) of the Act, 42 U.S.C. (1) The direct provision of health care 1395ss(g)(1)). to persons; or (vii) An issuer of a long-term care (2) The making of grants to fund the policy, excluding a nursing home fixed- direct provision of health care to per- indemnity policy. sons. (viii) An employee welfare benefit Implementation specification means plan or any other arrangement that is specific requirements or instructions established or maintained for the pur- for implementing a standard. pose of offering or providing health Individual means the person who is benefits to the employees of two or the subject of protected health infor- more employers. mation. (ix) The health care program for ac- Individually identifiable health infor- tive military personnel under title 10 of mation is information that is a subset the United States Code. of health information, including demo- (x) The veterans health care program graphic information collected from an under 38 U.S.C. chapter 17. individual, and: (xi) The Civilian Health and Medical (1) Is created or received by a health Program of the Uniformed Services care provider, health plan, employer, (CHAMPUS) (as defined in 10 U.S.C. or health care clearinghouse; and 1072(4)). (2) Relates to the past, present, or fu- (xii) The Indian Health Service pro- ture physical or mental health or con- gram under the Indian Health Care Im- dition of an individual; the provision of provement Act, 25 U.S.C. 1601, et seq. health care to an individual; or the

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past, present, or future payment for (4) A group health plan and one or the provision of health care to an indi- more other group health plans each of vidual; and which are maintained by the same plan (i) That identifies the individual; or sponsor; or (ii) With respect to which there is a (5) The group health plans described reasonable basis to believe the infor- in paragraph (4) of this definition and mation can be used to identify the indi- health insurance issuers or HMOs with vidual. respect to such group health plans, but Modify or modification refers to a only with respect to protected health change adopted by the Secretary, information created or received by through regulation, to a standard or an such health insurance issuers or HMOs implementation specification. that relates to individuals who are or Organized health care arrangement have been participants or beneficiaries means: in any of such group health plans. (1) A clinically integrated care set- Person means a natural person, trust ting in which individuals typically re- or estate, partnership, corporation, ceive health care from more than one professional association or corporation, health care provider; or other entity, public or private. (2) An organized system of health Protected health information means in- care in which more than one covered dividually identifiable health informa- entity participates and in which the tion: participating covered entities: (1) Except as provided in paragraph (i) Hold themselves out to the public (2) of this definition, that is: as participating in a joint arrange- (i) Transmitted by electronic media; ment; and (ii) Maintained in electronic media; (ii) Participate in joint activities or that include at least one of the fol- (iii) Transmitted or maintained in lowing: any other form or medium. (A) Utilization review, in which (2) Protected health information ex- health care decisions by participating cludes individually identifiable health covered entities are reviewed by other information in: participating covered entities or by a (i) Education records covered by the third party on their behalf; Family Educational Rights and Pri- (B) Quality assessment and improve- vacy Act, as amended, 20 U.S.C. 1232g; ment activities, in which treatment provided by participating covered enti- (ii) Records described at 20 U.S.C. ties is assessed by other participating 1232g(a)(4)(B)(iv); and covered entities or by a third party on (iii) Employment records held by a their behalf; or covered entity in its role as employer. (C) Payment activities, if the finan- Secretary means the Secretary of cial risk for delivering health care is Health and Human Services or any shared, in part or in whole, by partici- other officer or employee of HHS to pating covered entities through the whom the authority involved has been joint arrangement and if protected delegated. health information created or received Small health plan means a health plan by a covered entity is reviewed by with annual receipts of $5 million or other participating covered entities or less. by a third party on their behalf for the Standard means a rule, condition, or purpose of administering the sharing of requirement: financial risk. (1) Describing the following informa- (3) A group health plan and a health tion for products, systems, services or insurance issuer or HMO with respect practices: to such group health plan, but only (i) Classification of components. with respect to protected health infor- (ii) Specification of materials, per- mation created or received by such formance, or operations; or health insurance issuer or HMO that (iii) Delineation of procedures; or relates to individuals who are or who (2) With respect to the privacy of in- have been participants or beneficiaries dividually identifiable health informa- in such group health plan; tion.

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Standard setting organization (SSO) Workforce means employees, volun- means an organization accredited by teers, trainees, and other persons the American National Standards In- whose conduct, in the performance of stitute that develops and maintains work for a covered entity, is under the standards for information transactions direct control of such entity, whether or data elements, or any other stand- or not they are paid by the covered en- ard that is necessary for, or will facili- tity. tate the implementation of, this part. State refers to one of the following: [65 FR 82798, Dec. 28, 2000, as amended at 67 (1) For a health plan established or FR 38019, May 31, 2002; 67 FR 53266, Aug. 14, regulated by Federal law, State has the 2002; 68 FR 8374, Feb. 20, 2003; 71 FR 8424, Feb. 16, 2006] meaning set forth in the applicable section of the United States Code for such § 160.104 Modifications. health plan. (2) For all other purposes, State (a) Except as provided in paragraph means any of the several States, the (b) of this section, the Secretary may District of Columbia, the Common- adopt a modification to a standard or wealth of Puerto Rico, the Virgin Is- implementation specification adopted lands, and Guam. under this subchapter no more fre- Trading partner agreement means an quently than once every 12 months. agreement related to the exchange of (b) The Secretary may adopt a modi- information in electronic transactions, fication at any time during the first whether the agreement is distinct or year after the standard or implementa- part of a larger agreement, between tion specification is initially adopted, each party to the agreement. (For ex- if the Secretary determines that the ample, a trading partner agreement modification is necessary to permit may specify, among other things, the compliance with the standard or imple- duties and responsibilities of each mentation specification. party to the agreement in conducting a (c) The Secretary will establish the standard transaction.) compliance date for any standard or Transaction means the transmission implementation specification modified of information between two parties to under this section. carry out financial or administrative (1) The compliance date for a modi- activities related to health care. It in- fication is no earlier than 180 days cludes the following types of information transmissions: after the effective date of the final rule (1) Health care claims or equivalent in which the Secretary adopts the encounter information. modification. (2) Health care payment and remit- (2) The Secretary may consider the tance advice. extent of the modification and the (3) Coordination of benefits. time needed to comply with the modi- (4) Health care claim status. fication in determining the compliance (5) Enrollment and disenrollment in a date for the modification. health plan. (3) The Secretary may extend the (6) Eligibility for a health plan. compliance date for small health plans, (7) Health plan premium payments. as the Secretary determines is appro- (8) Referral certification and author- priate. ization. [65 FR 82798, Dec. 28, 2000, as amended at 67 (9) First report of injury. FR 38019, May 31, 2002] (10) Health claims attachments. (11) Other transactions that the Sec- Subpart B—Preemption of State retary may prescribe by regulation. Law Use means, with respect to individually identifiable health information, § 160.201 Applicability. the sharing, employment, application, utilization, examination, or analysis of The provisions of this subpart imple- such information within an entity that ment section 1178 of the Act, as added maintains such information. by section 262 of Public Law 104–191.

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§ 160.202 Definitions. tion, increase the privacy protections For purposes of this subpart, the fol- afforded (such as by expanding the cri- lowing terms have the following mean- teria for), or reduce the coercive effect ings: of the circumstances surrounding the Contrary, when used to compare a express legal permission, as applicable. provision of State law to a standard, (5) With respect to recordkeeping or requirement, or implementation speci- requirements relating to accounting of fication adopted under this subchapter, disclosures, provides for the retention means: or reporting of more detailed informa- (1) A covered entity would find it im- tion or for a longer duration. possible to comply with both the State (6) With respect to any other matter, and federal requirements; or provides greater privacy protection for (2) The provision of State law stands the individual who is the subject of the as an obstacle to the accomplishment individually identifiable health infor- and execution of the full purposes and mation. objectives of part C of title XI of the Act or section 264 of Pub. L. 104–191, as Relates to the privacy of individually applicable. identifiable health information means, More stringent means, in the context with respect to a State law, that the of a comparison of a provision of State State law has the specific purpose of law and a standard, requirement, or protecting the privacy of health infor- implementation specification adopted mation or affects the privacy of health under subpart E of part 164 of this sub- information in a direct, clear, and subchapter, a State law that meets one or stantial way. more of the following criteria: State law means a constitution, stat- (1) With respect to a use or disclo- ute, regulation, rule, common law, or sure, the law prohibits or restricts a other State action having the force and use or disclosure in circumstances effect of law. under which such use or disclosure otherwise would be permitted under this [65 FR 82798, Dec. 28, 2000, as amended at 67 subchapter, except if the disclosure is: FR 53266, Aug. 14, 2002] (i) Required by the Secretary in connection with determining whether a § 160.203 General rule and exceptions. covered entity is in compliance with A standard, requirement, or imple- this subchapter; or mentation specification adopted under (ii) To the individual who is the sub- this subchapter that is contrary to a ject of the individually identifiable provision of State law preempts the health information. provision of State law. This general (2) With respect to the rights of an rule applies, except if one or more of individual, who is the subject of the in- the following conditions is met: dividually identifiable health informa- (a) A determination is made by the tion, regarding access to or amendment Secretary under § 160.204 that the provi- of individually identifiable health in- sion of State law: formation, permits greater rights of access or amendment, as applicable. (1) Is necessary: (3) With respect to information to be (i) To prevent fraud and abuse related provided to an individual who is the to the provision of or payment for subject of the individually identifiable health care; health information about a use, a dis- (ii) To ensure appropriate State regu- closure, rights, and remedies, provides lation of insurance and health plans to the greater amount of information. the extent expressly authorized by (4) With respect to the form, sub- statute or regulation; stance, or the need for express legal (iii) For State reporting on health permission from an individual, who is care delivery or costs; or the subject of the individually identifiable health information, for use or disclosure of individually identifiable health information, provides requirements that narrow the scope or dura-

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(iv) For purposes of serving a compel- tional data to be collected based on the ling need related to public health, safe- exception, as appropriate; ty, or welfare, and, if a standard, re- (4) How health care providers, health quirement, or implementation speci- plans, and other entities would be af- fication under part 164 of this sub- fected by the exception; chapter is at issue, if the Secretary de- (5) The reasons why the State law termines that the intrusion into pri- should not be preempted by the federal vacy is warranted when balanced standard, requirement, or implementa- against the need to be served; or tion specification, including how the (2) Has as its principal purpose the State law meets one or more of the cri- regulation of the manufacture, reg- teria at § 160.203(a); and istration, distribution, dispensing, or (6) Any other information the Sec- other control of any controlled sub- retary may request in order to make stances (as defined in 21 U.S.C. 802), or the determination. that is deemed a controlled substance (b) Requests for exception under this by State law. section must be submitted to the Sec- (b) The provision of State law relates retary at an address that will be pub- to the privacy of individually identifi- lished in the FEDERAL REGISTER. Until able health information and is more the Secretary’s determination is made, stringent than a standard, require- the standard, requirement, or implement, or implementation specification mentation specification under this sub- adopted under subpart E of part 164 of chapter remains in effect. this subchapter. (c) The Secretary’s determination (c) The provision of State law, in- under this section will be made on the cluding State procedures established basis of the extent to which the infor- under such law, as applicable, provides mation provided and other factors dem- for the reporting of disease or injury, onstrate that one or more of the cri- child abuse, birth, or death, or for the teria at § 160.203(a) has been met. conduct of public health surveillance, investigation, or intervention. § 160.205 Duration of effectiveness of (d) The provision of State law re- exception determinations. quires a health plan to report, or to An exception granted under this sub- provide access to, information for the part remains in effect until: purpose of management audits, finan- (a) Either the State law or the fed- cial audits, program monitoring and eral standard, requirement, or imple- evaluation, or the licensure or certifi- mentation specification that provided cation of facilities or individuals. the basis for the exception is materially changed such that the ground for [65 FR 82798, Dec. 28, 2000, as amended at 67 FR 53266, Aug. 14, 2002] the exception no longer exists; or (b) The Secretary revokes the excep- § 160.204 Process for requesting exception, based on a determination that the tion determinations. ground supporting the need for the exception no longer exists. (a) A request to except a provision of State law from preemption under § 160.203(a) may be submitted to the Subpart C—Compliance and Secretary. A request by a State must Investigations be submitted through its chief elected official, or his or her designee. The re- SOURCE: 71 FR 8424, Feb. 16, 2006, unless quest must be in writing and include otherwise noted. the following information: (1) The State law for which the ex- § 160.300 Applicability. ception is requested; This subpart applies to actions by (2) The particular standard, require- the Secretary, covered entities, and ment, or implementation specification others with respect to ascertaining the for which the exception is requested; compliance by covered entities with, (3) The part of the standard or other and the enforcement of, the applicable provision that will not be implemented provisions of this part 160 and parts 162 based on the exception or the addi- and 164 of this subchapter.

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§ 160.302 Definitions. omission complained of occurred, un- As used in this subpart and subparts less this time limit is waived by the D and E of this part, the following Secretary for good cause shown. terms have the following meanings: (4) The Secretary may prescribe addi- Administrative simplification provision tional procedures for the filing of com- means any requirement or prohibition plaints, as well as the place and man- established by: ner of filing, by notice in the FEDERAL (1) 42 U.S.C. 1320d—1320d–4, 1320d–7, REGISTER. and 1320d–8; (c) Investigation. The Secretary may (2) Section 264 of Pub. L. 104–191; or investigate complaints filed under this (3) This subchapter. section. Such investigation may in- ALJ means Administrative Law clude a review of the pertinent policies, Judge. procedures, or practices of the covered Civil money penalty or penalty means entity and of the circumstances regard- the amount determined under § 160.404 ing any alleged violation. At the time of this part and includes the plural of of initial written communication with these terms. the covered entity about the com- Respondent means a covered entity plaint, the Secretary will describe the upon which the Secretary has imposed, act(s) and/or omission(s) that are the or proposes to impose, a civil money basis of the complaint. penalty. Violation or violate means, as the con- § 160.308 Compliance reviews. text may require, failure to comply with an administrative simplification The Secretary may conduct compli- provision. ance reviews to determine whether covered entities are complying with the § 160.304 Principles for achieving com- applicable administrative simplifica- pliance. tion provisions. (a) Cooperation. The Secretary will, § 160.310 Responsibilities of covered to the extent practicable, seek the co- entities. operation of covered entities in obtaining compliance with the applicable ad- (a) Provide records and compliance re- ministrative simplification provisions. ports. A covered entity must keep such (b) Assistance. The Secretary may records and submit such compliance re- provide technical assistance to covered ports, in such time and manner and entities to help them comply volun- containing such information, as the tarily with the applicable administra- Secretary may determine to be nec- tive simplification provisions. essary to enable the Secretary to ascertain whether the covered entity has § 160.306 Complaints to the Secretary. complied or is complying with the ap- (a) Right to file a complaint. A person plicable administrative simplification who believes a covered entity is not provisions. complying with the administrative (b) Cooperate with complaint investiga- simplification provisions may file a tions and compliance reviews. A covered complaint with the Secretary. entity must cooperate with the Sec- (b) Requirements for filing complaints. retary, if the Secretary undertakes an Complaints under this section must investigation or compliance review of meet the following requirements: the policies, procedures, or practices of (1) A complaint must be filed in writ- the covered entity to determine wheth- ing, either on paper or electronically. er it is complying with the applicable (2) A complaint must name the per- administrative simplification provi- son that is the subject of the complaint sions. and describe the acts or omissions be- (c) Permit access to information. (1) A lieved to be in violation of the applica- covered entity must permit access by ble administrative simplification pro- the Secretary during normal business vision(s). hours to its facilities, books, records, (3) A complaint must be filed within accounts, and other sources of informa- 180 days of when the complainant knew tion, including protected health infor- or should have known that the act or mation, that are pertinent to

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ascertaining compliance with the ap- (ii) If, following action pursuant to plicable administrative simplification paragraph (a)(3)(i) of this section, the provisions. If the Secretary determines Secretary finds that a civil money pen- that exigent circumstances exist, such alty should be imposed, inform the cov- as when documents may be hidden or ered entity of such finding in a notice destroyed, a covered entity must per- of proposed determination in accord- mit access by the Secretary at any ance with § 160.420 of this part. time and without notice. (b) Resolution when no violation is (2) If any information required of a found. If, after an investigation pursu- covered entity under this section is in ant to § 160.306 or a compliance review the exclusive possession of any other pursuant to § 160.308, the Secretary de- agency, institution, or person and the termines that further action is not other agency, institution, or person warranted, the Secretary will so in- fails or refuses to furnish the informa- form the covered entity and, if the tion, the covered entity must so certify matter arose from a complaint, the and set forth what efforts it has made complainant, in writing. to obtain the information. (3) Protected health information ob- § 160.314 Investigational subpoenas tained by the Secretary in connection and inquiries. with an investigation or compliance re- (a) The Secretary may issue sub- view under this subpart will not be dis- poenas in accordance with 42 U.S.C. closed by the Secretary, except if nec- 405(d) and (e), 1320a–7a(j), and 1320d–5 to essary for ascertaining or enforcing require the attendance and testimony compliance with the applicable admin- of witnesses and the production of any istrative simplification provisions, or other evidence during an investigation if otherwise required by law. or compliance review pursuant to this part. For purposes of this paragraph, a § 160.312 Secretarial action regarding person other than a natural person is complaints and compliance reviews. termed an ‘‘entity.’’ (a) Resolution when noncompliance is (1) A subpoena issued under this indicated. (1) If an investigation of a paragraph must— complaint pursuant to § 160.306 or a (i) State the name of the person (in- compliance review pursuant to § 160.308 cluding the entity, if applicable) to indicates noncompliance, the Sec- whom the subpoena is addressed; retary will attempt to reach a resolu- (ii) State the statutory authority for tion of the matter satisfactory to the the subpoena; Secretary by informal means. Informal (iii) Indicate the date, time, and means may include demonstrated com- place that the testimony will take pliance or a completed corrective ac- place; tion plan or other agreement. (iv) Include a reasonably specific de- (2) If the matter is resolved by infor- scription of any documents or items re- mal means, the Secretary will so in- quired to be produced; and form the covered entity and, if the (v) If the subpoena is addressed to an matter arose from a complaint, the entity, describe with reasonable par- complainant, in writing. ticularity the subject matter on which (3) If the matter is not resolved by in- testimony is required. In that event, formal means, the Secretary will— the entity must designate one or more (i) So inform the covered entity and natural persons who will testify on its provide the covered entity an oppor- behalf, and must state as to each such tunity to submit written evidence of person that person’s name and address any mitigating factors or affirmative and the matters on which he or she will defenses for consideration under testify. The designated person must §§ 160.408 and 160.410 of this part. The testify as to matters known or reason- covered entity must submit any such ably available to the entity. evidence to the Secretary within 30 (2) A subpoena under this section days (computed in the same manner as must be served by— prescribed under § 160.526 of this part) (i) Delivering a copy to the natural of receipt of such notification; and person named in the subpoena or to the

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entity named in the subpoena at its gages in conduct likely to delay or ob- last principal place of business; or struct the investigational inquiry, the (ii) Registered or certified mail ad- Secretary may seek enforcement of the dressed to the natural person at his or subpoena under paragraph (a)(5) of this her last known dwelling place or to the section. entity at its last known principal place (8) The proceedings will be recorded of business. and transcribed. The witness is entitled (3) A verified return by the natural to a copy of the transcript, upon pay- person serving the subpoena setting ment of prescribed costs, except that, forth the manner of service or, in the for good cause, the witness may be lim- case of service by registered or cer- ited to inspection of the official tran- tified mail, the signed return post of- script of his or her testimony. fice receipt, constitutes proof of service. (9)(i) The transcript will be sub- (4) Witnesses are entitled to the same mitted to the witness for signature. fees and mileage as witnesses in the (A) Where the witness will be pro- district courts of the United States (28 vided a copy of the transcript, the U.S.C. 1821 and 1825). Fees need not be transcript will be submitted to the wit- paid at the time the subpoena is ness for signature. The witness may served. submit to the Secretary written pro- (5) A subpoena under this section is posed corrections to the transcript, enforceable through the district court with such corrections attached to the of the United States for the district transcript. If the witness does not re- where the subpoenaed natural person turn a signed copy of the transcript or resides or is found or where the entity proposed corrections within 30 days transacts business. (computed in the same manner as pre- (b) Investigational inquiries are non- scribed under § 160.526 of this part) of public investigational proceedings con- its being submitted to him or her for ducted by the Secretary. signature, the witness will be deemed (1) Testimony at investigational in- to have agreed that the transcript is quiries will be taken under oath or af- true and accurate. firmation. (B) Where, as provided in paragraph (2) Attendance of non-witnesses is (b)(8) of this section, the witness is lim- discretionary with the Secretary, except that a witness is entitled to be ac- ited to inspecting the transcript, the companied, represented, and advised by witness will have the opportunity at an attorney. the time of inspection to propose cor- (3) Representatives of the Secretary rections to the transcript, with correc- are entitled to attend and ask questions attached to the transcript. The tions. witness will also have the opportunity (4) A witness will have the oppor- to sign the transcript. If the witness tunity to clarify his or her answers on does not sign the transcript or offer the record following questioning by the corrections within 30 days (computed Secretary. in the same manner as prescribed (5) Any claim of privilege must be as- under § 160.526 of this part) of receipt of serted by the witness on the record. notice of the opportunity to inspect (6) Objections must be asserted on the transcript, the witness will be the record. Errors of any kind that deemed to have agreed that the tran- might be corrected if promptly pre- script is true and accurate. sented will be deemed to be waived un- (ii) The Secretary’s proposed correc- less reasonable objection is made at tions to the record of transcript will be the investigational inquiry. Except attached to the transcript. where the objection is on the grounds (c) Consistent with § 160.310(c)(3), tes- of privilege, the question will be an- timony and other evidence obtained in swered on the record, subject to objection. an investigational inquiry may be used (7) If a witness refuses to answer any by HHS in any of its activities and may question not privileged or to produce be used or offered into evidence in any requested documents or items, or en- administrative or judicial proceeding.

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§ 160.316 Refraining from intimidation tablished that another member of the or retaliation. affiliated covered entity was respon- A covered entity may not threaten, sible for the violation. intimidate, coerce, harass, discrimi- (c) Violation attributed to a covered en- nate against, or take any other retalia- tity. A covered entity is liable, in ac- tory action against any individual or cordance with the federal common law other person for— of agency, for a civil money penalty for (a) Filing of a complaint under a violation based on the act or omis- § 160.306; sion of any agent of the covered entity, (b) Testifying, assisting, or partici- including a workforce member, acting pating in an investigation, compliance within the scope of the agency, un- review, proceeding, or hearing under less— this part; or (1) The agent is a business associate (c) Opposing any act or practice made of the covered entity; unlawful by this subchapter, provided (2) The covered entity has complied, the individual or person has a good with respect to such business associate, faith belief that the practice opposed is with the applicable requirements of unlawful, and the manner of opposition §§ 164.308(b) and 164.502(e) of this sub- is reasonable and does not involve a chapter; and disclosure of protected health informa- (3) The covered entity did not— tion in violation of subpart E of part (i) Know of a pattern of activity or 164 of this subchapter. practice of the business associate, and (ii) Fail to act as required by Subpart D—Imposition of Civil §§ 164.314(a)(1)(ii) and 164.504(e)(1)(ii) of Money Penalties this subchapter, as applicable. § 160.404 Amount of a civil money pen- SOURCE: 71 FR 8426, Feb. 16, 2006, unless alty. otherwise noted. (a) The amount of a civil money pen- § 160.400 Applicability. alty will be determined in accordance This subpart applies to the imposi- with paragraph (b) of this section and tion of a civil money penalty by the §§ 160.406, 160.408, and 160.412. Secretary under 42 U.S.C. 1320d–5. (b) The amount of a civil money penalty that may be imposed is subject to § 160.402 Basis for a civil money pen- the following limitations: alty. (1) The Secretary may not impose a (a) General rule. Subject to § 160.410, civil money penalty— the Secretary will impose a civil (i) In the amount of more than $100 money penalty upon a covered entity if for each violation; or the Secretary determines that the cov- (ii) In excess of $25,000 for identical ered entity has violated an administra- violations during a calendar year (Jan- tive simplification provision. uary 1 through the following December (b) Violation by more than one covered 31). entity. (1) Except as provided in para- (2) If a requirement or prohibition in graph (b)(2) of this section, if the Sec- one administrative simplification pro- retary determines that more than one vision is repeated in a more general covered entity was responsible for a form in another administrative sim- violation, the Secretary will impose a plification provision in the same sub- civil money penalty against each such part, a civil money penalty may be im- covered entity. posed for a violation of only one of (2) A covered entity that is a member these administrative simplification of an affiliated covered entity, in ac- provisions. cordance with § 164.105(b) of this subchapter, is jointly and severally liable § 160.406 Violations of an identical re- for a civil money penalty for a viola- quirement or prohibition. tion of part 164 of this subchapter The Secretary will determine the based on an act or omission of the af- number of violations of an administra- filiated covered entity, unless it is es- tive simplification provision based on

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the nature of the covered entity’s obli- (e) The financial condition of the gation to act or not act under the pro- covered entity, including but not lim- vision that is violated, such as its obli- ited to: gation to act in a certain manner, or (1) Whether the covered entity had fi- within a certain time, or to act or not nancial difficulties that affected its act with respect to certain persons. In ability to comply; the case of continuing violation of a (2) Whether the imposition of a civil provision, a separate violation occurs money penalty would jeopardize the each day the covered entity is in viola- ability of the covered entity to con- tion of the provision. tinue to provide, or to pay for, health care; and § 160.408 Factors considered in deter- (3) The size of the covered entity. mining the amount of a civil money penalty. (f) Such other matters as justice may require. In determining the amount of any civil money penalty, the Secretary § 160.410 Affirmative defenses. may consider as aggravating or miti- (a) As used in this section, the fol- gating factors, as appropriate, any of lowing terms have the following mean- the following: ings: (a) The nature of the violation, in light of the purpose of the rule vio- Reasonable cause means cir- lated. cumstances that would make it unrea- (b) The circumstances, including the sonable for the covered entity, despite consequences, of the violation, includ- the exercise of ordinary business care ing but not limited to: and prudence, to comply with the ad- (1) The time period during which the ministrative simplification provision violation(s) occurred; violated. (2) Whether the violation caused Reasonable diligence means the busi- physical harm; ness care and prudence expected from a (3) Whether the violation hindered or person seeking to satisfy a legal re- facilitated an individual’s ability to quirement under similar cir- obtain health care; and cumstances. (4) Whether the violation resulted in Willful neglect means conscious, in- financial harm. tentional failure or reckless indiffer- (c) The degree of culpability of the ence to the obligation to comply with covered entity, including but not lim- the administrative simplification pro- ited to: vision violated. (1) Whether the violation was inten- (b) The Secretary may not impose a tional; and civil money penalty on a covered enti- (2) Whether the violation was beyond ty for a violation if the covered entity the direct control of the covered enti- establishes that an affirmative defense ty. exists with respect to the violation, in- (d) Any history of prior compliance cluding the following: with the administrative simplification (1) The violation is an act punishable provisions, including violations, by the under 42 U.S.C. 1320d–6; covered entity, including but not lim- (2) The covered entity establishes, to ited to: the satisfaction of the Secretary, that (1) Whether the current violation is it did not have knowledge of the viola- the same or similar to prior violation, determined in accordance with tion(s); the federal common law of agency, and, (2) Whether and to what extent the by exercising reasonable diligence, covered entity has attempted to cor- would not have known that the viola- rect previous violations; tion occurred; or (3) How the covered entity has re- (3) The violation is— sponded to technical assistance from (i) Due to reasonable cause and not the Secretary provided in the context willful neglect; and of a compliance effort; and (ii) Corrected during either: (4) How the covered entity has re- (A) The 30-day period beginning on sponded to prior complaints. the date the covered entity liable for

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the penalty knew, or by exercising rea- (3) The reason(s) why the violation(s) sonable diligence would have known, subject(s) the respondent to a penalty; that the violation occurred; or (4) The amount of the proposed pen- (B) Such additional period as the alty; Secretary determines to be appropriate (5) Any circumstances described in based on the nature and extent of the § 160.408 that were considered in deter- failure to comply. mining the amount of the proposed penalty; and § 160.412 Waiver. (6) Instructions for responding to the For violations described in notice, including a statement of the re- § 160.410(b)(3)(i) that are not corrected spondent’s right to a hearing, a state- within the period described in ment that failure to request a hearing § 160.410(b)(3)(ii), the Secretary may within 90 days permits the imposition waive the civil money penalty, in of the proposed penalty without the whole or in part, to the extent that right to a hearing under § 160.504 or a payment of the penalty would be exces- right of appeal under § 160.548 of this sive relative to the violation. part, and the address to which the hearing request must be sent. § 160.414 Limitations. (b) The respondent may request a No action under this subpart may be hearing before an ALJ on the proposed entertained unless commenced by the penalty by filing a request in accord- Secretary, in accordance with § 160.420, ance with § 160.504 of this part. within 6 years from the date of the occurrence of the violation. § 160.422 Failure to request a hearing. If the respondent does not request a § 160.416 Authority to settle. hearing within the time prescribed by Nothing in this subpart limits the § 160.504 of this part and the matter is authority of the Secretary to settle not settled pursuant to § 160.416, the any issue or case or to compromise any Secretary will impose the proposed penalty. penalty or any lesser penalty permitted by 42 U.S.C. 1320d–5. The Sec- § 160.418 Penalty not exclusive. retary will notify the respondent by Except as otherwise provided by 42 certified mail, return receipt re- U.S.C. 1320d-5(b)(1), a penalty imposed quested, of any penalty that has been under this part is in addition to any imposed and of the means by which the other penalty prescribed by law. respondent may satisfy the penalty, and the penalty is final on receipt of § 160.420 Notice of proposed deter- the notice. The respondent has no right mination. to appeal a penalty under § 160.548 of (a) If a penalty is proposed in accord- this part with respect to which the re- ance with this part, the Secretary spondent has not timely requested a must deliver, or send by certified mail hearing. with return receipt requested, to the § 160.424 Collection of penalty. respondent, written notice of the Sec- retary’s intent to impose a penalty. (a) Once a determination of the Sec- This notice of proposed determination retary to impose a penalty has become must include— final, the penalty will be collected by (1) Reference to the statutory basis the Secretary, subject to the first sen- for the penalty; tence of 42 U.S.C. 1320a–7a(f). (2) A description of the findings of (b) The penalty may be recovered in fact regarding the violations with re- a civil action brought in the United spect to which the penalty is proposed States district court for the district (except that, in any case where the where the respondent resides, is found, Secretary is relying upon a statistical or is located. sampling study in accordance with (c) The amount of a penalty, when fi- § 160.536 of this part, the notice must nally determined, or the amount provide a copy of the study relied upon agreed upon in compromise, may be de- by the Secretary); ducted from any sum then or later

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owing by the United States, or by a (2) The officer(s) or employee(s) of State agency, to the respondent. HHS to whom the enforcement author- (d) Matters that were raised or that ity involved has been delegated. could have been raised in a hearing be- (b) The request for a hearing must be fore an ALJ, or in an appeal under 42 made in writing signed by the respond- U.S.C. 1320a–7a(e), may not be raised as ent or by the respondent’s attorney and a defense in a civil action by the sent by certified mail, return receipt United States to collect a penalty requested, to the address specified in under this part. the notice of proposed determination. The request for a hearing must be § 160.426 Notification of the public and mailed within 90 days after notice of other agencies. the proposed determination is received by the respondent. For purposes of this Whenever a proposed penalty be- section, the respondent’s date of re- comes final, the Secretary will notify, ceipt of the notice of proposed deter- in such manner as the Secretary deems mination is presumed to be 5 days after appropriate, the public and the fol- the date of the notice unless the re- lowing organizations and entities spondent makes a reasonable showing thereof and the reason it was imposed: to the contrary to the ALJ. the appropriate State or local medical (c) The request for a hearing must or professional organization, the appro- clearly and directly admit, deny, or ex- priate State agency or agencies admin- plain each of the findings of fact con- istering or supervising the administra- tained in the notice of proposed deter- tion of State health care programs (as mination with regard to which the re- defined in 42 U.S.C. 1320a–7(h)), the ap- spondent has any knowledge. If the re- propriate utilization and quality con- spondent has no knowledge of a par- trol peer review organization, and the ticular finding of fact and so states, appropriate State or local licensing the finding shall be deemed denied. The agency or organization (including the request for a hearing must also state agency specified in 42 U.S.C. 1395aa(a), the circumstances or arguments that 1396a(a)(33)). the respondent alleges constitute the grounds for any defense and the factual Subpart E—Procedures for and legal basis for opposing the penalty, except that a respondent may Hearings raise an affirmative defense under § 160.410(b)(1) at any time. SOURCE: 71 FR 8428, Feb. 16, 2006, unless (d) The ALJ must dismiss a hearing otherwise noted. request where— (1) On motion of the Secretary, the § 160.500 Applicability. ALJ determines that the respondent’s This subpart applies to hearings con- hearing request is not timely filed as ducted relating to the imposition of a required by paragraphs (b) or does not civil money penalty by the Secretary meet the requirements of paragraph (c) under 42 U.S.C. 1320d–5. of this section; (2) The respondent withdraws the re- § 160.502 Definitions. quest for a hearing; (3) The respondent abandons the re- As used in this subpart, the following quest for a hearing; or term has the following meaning: (4) The respondent’s hearing request Board means the members of the HHS fails to raise any issue that may prop- Departmental Appeals Board, in the Of- erly be addressed in a hearing. fice of the Secretary, who issue decisions in panels of three. § 160.506 Rights of the parties. (a) Except as otherwise limited by § 160.504 Hearing before an ALJ. this subpart, each party may— (a) A respondent may request a hear- (1) Be accompanied, represented, and ing before an ALJ. The parties to the advised by an attorney; hearing proceeding consist of— (2) Participate in any conference held (1) The respondent; and by the ALJ;

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(3) Conduct discovery of documents (10) Receive, rule on, exclude, or as permitted by this subpart; limit evidence; (4) Agree to stipulations of fact or (11) Upon motion of a party, take of- law that will be made part of the ficial notice of facts; record; (12) Conduct any conference, argu- (5) Present evidence relevant to the ment or hearing in person or, upon issues at the hearing; agreement of the parties, by telephone; (6) Present and cross-examine wit- and nesses; (13) Upon motion of a party, decide (7) Present oral arguments at the cases, in whole or in part, by summary hearing as permitted by the ALJ; and judgment where there is no disputed (8) Submit written briefs and pro- issue of material fact. A summary posed findings of fact and conclusions judgment decision constitutes a hear- of law after the hearing. ing on the record for the purposes of (b) A party may appear in person or this subpart. by a representative. Natural persons (c) The ALJ— who appear as an attorney or other (1) May not find invalid or refuse to representative must conform to the follow Federal statutes, regulations, or standards of conduct and ethics re- Secretarial delegations of authority quired of practitioners before the and must give deference to published courts of the United States. guidance to the extent not inconsistent (c) Fees for any services performed with statute or regulation; on behalf of a party by an attorney are (2) May not enter an order in the na- not subject to the provisions of 42 ture of a directed verdict; U.S.C. 406, which authorizes the Sec- (3) May not compel settlement nego- retary to specify or limit their fees. tiations; § 160.508 Authority of the ALJ. (4) May not enjoin any act of the Sec- retary; or (a) The ALJ must conduct a fair and (5) May not review the exercise of impartial hearing, avoid delay, main- discretion by the Secretary with retain order, and ensure that a record of spect to whether to grant an extension the proceeding is made. under § 160.410(b)(3)(ii)(B) of this part or (b) The ALJ may— to provide technical assistance under (1) Set and change the date, time and 42 U.S.C. 1320d–5(b)(3)(B). place of the hearing upon reasonable notice to the parties; § 160.510 Ex parte contacts. (2) Continue or recess the hearing in whole or in part for a reasonable period No party or person (except employees of time; of the ALJ’s office) may communicate (3) Hold conferences to identify or in any way with the ALJ on any mat- simplify the issues, or to consider ter at issue in a case, unless on notice other matters that may aid in the ex- and opportunity for both parties to peditious disposition of the proceeding; participate. This provision does not (4) Administer oaths and affirma- prohibit a party or person from inquir- tions; ing about the status of a case or asking (5) Issue subpoenas requiring the at- routine questions concerning adminis- tendance of witnesses at hearings and trative functions or procedures. the production of documents at or in relation to hearings; § 160.512 Prehearing conferences. (6) Rule on motions and other proce- (a) The ALJ must schedule at least dural matters; one prehearing conference, and may (7) Regulate the scope and timing of schedule additional prehearing con- documentary discovery as permitted by ferences as appropriate, upon reason- this subpart; able notice, which may not be less than (8) Regulate the course of the hearing 14 business days, to the parties. and the conduct of representatives, (b) The ALJ may use prehearing con- parties, and witnesses; ferences to discuss the following— (9) Examine witnesses; (1) Simplification of the issues;

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(2) The necessity or desirability of produced in a form accessible to the re- amendments to the pleadings, includ- questing party. ing the need for a more definite state- (c) Requests for documents, requests ment; for admissions, written interrogatories, (3) Stipulations and admissions of depositions and any forms of discovery, fact or as to the contents and authen- other than those permitted under para- ticity of documents; graph (a) of this section, are not au- (4) Whether the parties can agree to thorized. submission of the case on a stipulated (d) This section may not be construed record; to require the disclosure of interview (5) Whether a party chooses to waive reports or statements obtained by any appearance at an oral hearing and to party, or on behalf of any party, of per- submit only documentary evidence sons who will not be called as witnesses (subject to the objection of the other by that party, or analyses and sum- party) and written argument; maries prepared in conjunction with (6) Limitation of the number of wit- the investigation or litigation of the nesses; case, or any otherwise privileged docu- (7) Scheduling dates for the exchange ments. of witness lists and of proposed exhib- (e)(1) When a request for production its; of documents has been received, within (8) Discovery of documents as per- 30 days the party receiving that remitted by this subpart; quest must either fully respond to the (9) The time and place for the hear- request, or state that the request is ing; being objected to and the reasons for (10) The potential for the settlement that objection. If objection is made to of the case by the parties; and part of an item or category, the part (11) Other matters as may tend to en- must be specified. Upon receiving any courage the fair, just and expeditious objections, the party seeking produc- disposition of the proceedings, includ- tion may then, within 30 days or any ing the protection of privacy of indi- other time frame set by the ALJ, file a vidually identifiable health informa- motion for an order compelling dis- tion that may be submitted into evi- covery. The party receiving a request dence or otherwise used in the pro- for production may also file a motion ceeding, if appropriate. for protective order any time before (c) The ALJ must issue an order con- the date the production is due. taining the matters agreed upon by the (2) The ALJ may grant a motion for parties or ordered by the ALJ at a pre- protective order or deny a motion for hearing conference. an order compelling discovery if the ALJ finds that the discovery sought— § 160.514 Authority to settle. (i) Is irrelevant; The Secretary has exclusive author- (ii) Is unduly costly or burdensome; ity to settle any issue or case without (iii) Will unduly delay the pro- the consent of the ALJ. ceeding; or (iv) Seeks privileged information. § 160.516 Discovery. (3) The ALJ may extend any of the (a) A party may make a request to time frames set forth in paragraph another party for production of docu- (e)(1) of this section. ments for inspection and copying that (4) The burden of showing that dis- are relevant and material to the issues covery should be allowed is on the before the ALJ. party seeking discovery. (b) For the purpose of this section, the term ‘‘documents’’ includes infor- § 160.518 Exchange of witness lists, mation, reports, answers, records, ac- witness statements, and exhibits. counts, papers and other data and doc- (a) The parties must exchange wit- umentary evidence. Nothing contained ness lists, copies of prior written state- in this section may be interpreted to ments of proposed witnesses, and cop- require the creation of a document, ex- ies of proposed hearing exhibits, in- cept that requested data stored in an cluding copies of any written state- electronic data storage system must be ments that the party intends to offer

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in lieu of live testimony in accordance § 160.520 Subpoenas for attendance at with § 160.538, not more than 60, and not hearing. less than 15, days before the scheduled (a) A party wishing to procure the hearing, except that if a respondent in- appearance and testimony of any per- tends to introduce the evidence of a son at the hearing may make a motion statistical expert, the respondent must requesting the ALJ to issue a subpoena provide the Secretarial party with a if the appearance and testimony are copy of the statistical expert’s report reasonably necessary for the presen- not less than 30 days before the sched- tation of a party’s case. uled hearing. (b) A subpoena requiring the attend- (b)(1) If, at any time, a party objects ance of a person in accordance with to the proposed admission of evidence paragraph (a) of this section may also not exchanged in accordance with para- require the person (whether or not the graph (a) of this section, the ALJ must person is a party) to produce relevant determine whether the failure to com- and material evidence at or before the ply with paragraph (a) of this section hearing. should result in the exclusion of that (c) When a subpoena is served by a re- evidence. spondent on a particular employee or (2) Unless the ALJ finds that extraor- official or particular office of HHS, the dinary circumstances justified the fail- Secretary may comply by designating ure timely to exchange the information any knowledgeable HHS representative listed under paragraph (a) of this sec- to appear and testify. tion, the ALJ must exclude from the (d) A party seeking a subpoena must party’s case-in-chief— file a written motion not less than 30 (i) The testimony of any witness days before the date fixed for the hear- whose name does not appear on the ing, unless otherwise allowed by the witness list; and ALJ for good cause shown. That mo- (ii) Any exhibit not provided to the tion must— opposing party as specified in para- (1) Specify any evidence to be pro- graph (a) of this section. duced; (3) If the ALJ finds that extraor- (2) Designate the witnesses; and dinary circumstances existed, the ALJ (3) Describe the address and location must then determine whether the ad- with sufficient particularity to permit mission of that evidence would cause those witnesses to be found. substantial prejudice to the objecting (e) The subpoena must specify the party. time and place at which the witness is (i) If the ALJ finds that there is no to appear and any evidence the witness substantial prejudice, the evidence is to produce. may be admitted. (f) Within 15 days after the written motion requesting issuance of a sub- (ii) If the ALJ finds that there is subpoena is served, any party may file an stantial prejudice, the ALJ may ex- opposition or other response. clude the evidence, or, if he or she does (g) If the motion requesting issuance not exclude the evidence, must post- of a subpoena is granted, the party pone the hearing for such time as is seeking the subpoena must serve it by necessary for the objecting party to delivery to the person named, or by prepare and respond to the evidence, certified mail addressed to that person unless the objecting party waives post- at the person’s last dwelling place or ponement. principal place of business. (c) Unless the other party objects (h) The person to whom the subpoena within a reasonable period of time be- is directed may file with the ALJ a mo- fore the hearing, documents exchanged tion to quash the subpoena within 10 in accordance with paragraph (a) of days after service. this section will be deemed to be au- (i) The exclusive remedy for contu- thentic for the purpose of admissibility macy by, or refusal to obey a subpoena at the hearing. duly served upon, any person is specified in 42 U.S.C. 405(e).

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§ 160.522 Fees. legal holiday observed by the Federal The party requesting a subpoena Government, in which event it includes must pay the cost of the fees and mile- the next business day. age of any witness subpoenaed in the (b) When the period of time allowed amounts that would be payable to a is less than 7 days, intermediate Satur- witness in a proceeding in United days, Sundays, and legal holidays ob- States District Court. A check for wit- served by the Federal Government ness fees and mileage must accompany must be excluded from the computa- the subpoena when served, except that, tion. when a subpoena is issued on behalf of (c) Where a document has been served the Secretary, a check for witness fees or issued by placing it in the mail, an and mileage need not accompany the additional 5 days must be added to the subpoena. time permitted for any response. This paragraph does not apply to requests § 160.524 Form, filing, and service of for hearing under § 160.504. papers. § 160.528 Motions. (a) Forms. (1) Unless the ALJ directs the parties to do otherwise, documents (a) An application to the ALJ for an filed with the ALJ must include an order or ruling must be by motion. Mo- original and two copies. tions must state the relief sought, the (2) Every pleading and paper filed in authority relied upon and the facts al- the proceeding must contain a caption leged, and must be filed with the ALJ setting forth the title of the action, the and served on all other parties. case number, and a designation of the (b) Except for motions made during a paper, such as motion to quash sub- prehearing conference or at the hear- poena. ing, all motions must be in writing. (3) Every pleading and paper must be The ALJ may require that oral mo- signed by and must contain the address tions be reduced to writing. and telephone number of the party or (c) Within 10 days after a written mo- the person on whose behalf the paper tion is served, or such other time as was filed, or his or her representative. may be fixed by the ALJ, any party (4) Papers are considered filed when may file a response to the motion. they are mailed. (d) The ALJ may not grant a written (b) Service. A party filing a document motion before the time for filing re- with the ALJ or the Board must, at the sponses has expired, except upon con- time of filing, serve a copy of the docu- sent of the parties or following a hear- ment on the other party. Service upon ing on the motion, but may overrule or any party of any document must be deny the motion without awaiting a re- made by delivering a copy, or placing a sponse. copy of the document in the United (e) The ALJ must make a reasonable States mail, postage prepaid and ad- effort to dispose of all outstanding mo- dressed, or with a private delivery serv- tions before the beginning of the hear- ice, to the party’s last known address. ing. When a party is represented by an attorney, service must be made upon the § 160.530 Sanctions. attorney in lieu of the party. The ALJ may sanction a person, in- (c) Proof of service. A certificate of cluding any party or attorney, for fail- the natural person serving the docu- ing to comply with an order or proce- ment by personal delivery or by mail, dure, for failing to defend an action or setting forth the manner of service, for other misconduct that interferes constitutes proof of service. with the speedy, orderly or fair conduct of the hearing. The sanctions § 160.526 Computation of time. must reasonably relate to the severity (a) In computing any period of time and nature of the failure or mis- under this subpart or in an order issued conduct. The sanctions may include— thereunder, the time begins with the (a) In the case of refusal to provide or day following the act, event or default, permit discovery under the terms of and includes the last day of the period this part, drawing negative factual in- unless it is a Saturday, Sunday, or ferences or treating the refusal as an

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admission by deeming the matter, or (d)(1) Subject to the 15-day rule under certain facts, to be established; § 160.518(a) and the admissibility of evi- (b) Prohibiting a party from intro- dence under § 160.540, either party may ducing certain evidence or otherwise introduce, during its case in chief, supporting a particular claim or de- items or information that arose or be- fense; came known after the date of the (c) Striking pleadings, in whole or in issuance of the notice of proposed depart; termination or the request for hearing, (d) Staying the proceedings; as applicable. Such items and informa- (e) Dismissal of the action; tion may not be admitted into evi- (f) Entering a decision by default; dence, if introduced— (g) Ordering the party or attorney to (i) By the Secretary, unless they are pay the attorney’s fees and other costs material and relevant to the acts or caused by the failure or misconduct; omissions with respect to which the and penalty is proposed in the notice of (h) Refusing to consider any motion proposed determination pursuant to or other action that is not filed in a § 160.420 of this part, including cir- timely manner. cumstances that may increase penalties; or § 160.532 Collateral estoppel. (ii) By the respondent, unless they When a final determination that the are material and relevant to an admis- respondent violated an administrative sion, denial or explanation of a finding simplification provision has been ren- of fact in the notice of proposed deter- dered in any proceeding in which the mination under § 160.420 of this part, or respondent was a party and had an op- to a specific circumstance or argument portunity to be heard, the respondent expressly stated in the request for is bound by that determination in any hearing under § 160.504, including cir- proceeding under this part. cumstances that may reduce penalties. (2) After both parties have presented § 160.534 The hearing. their cases, evidence may be admitted (a) The ALJ must conduct a hearing in rebuttal even if not previously ex- on the record in order to determine changed in accordance with § 160.518. whether the respondent should be found liable under this part. § 160.536 Statistical sampling. (b) (1) The respondent has the burden (a) In meeting the burden of proof set of going forward and the burden of per- forth in § 160.534, the Secretary may in- suasion with respect to any: troduce the results of a statistical sam- (i) Affirmative defense pursuant to pling study as evidence of the number § 160.410 of this part; of violations under § 160.406 of this part, (ii) Challenge to the amount of a pro- or the factors considered in deter- posed penalty pursuant to §§ 160.404– mining the amount of the civil money 160.408 of this part, including any fac- penalty under § 160.408 of this part. tors raised as mitigating factors; or Such statistical sampling study, if (iii) Claim that a proposed penalty based upon an appropriate sampling should be reduced or waived pursuant and computed by valid statistical to § 160.412 of this part. methods, constitutes prima facie evi- (2) The Secretary has the burden of dence of the number of violations and going forward and the burden of per- the existence of factors material to the suasion with respect to all other issues, proposed civil money penalty as de- including issues of liability and the ex- scribed in §§ 160.406 and 160.408. istence of any factors considered as ag- (b) Once the Secretary has made a gravating factors in determining the prima facie case, as described in para- amount of the proposed penalty. graph (a) of this section, the burden of (3) The burden of persuasion will be going forward shifts to the respondent judged by a preponderance of the evi- to produce evidence reasonably cal- dence. culated to rebut the findings of the sta- (c) The hearing must be open to the tistical sampling study. The Secretary public unless otherwise ordered by the will then be given the opportunity to ALJ for good cause shown. rebut this evidence.

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§ 160.538 Witnesses. (b) Except as provided in this subpart, the ALJ is not bound by the Fed- (a) Except as provided in paragraph eral Rules of Evidence. However, the (b) of this section, testimony at the ALJ may apply the Federal Rules of hearing must be given orally by wit- Evidence where appropriate, for exam- nesses under oath or affirmation. ple, to exclude unreliable evidence. (b) At the discretion of the ALJ, testimony of witnesses other than the tes- (c) The ALJ must exclude irrelevant timony of expert witnesses may be ad- or immaterial evidence. mitted in the form of a written state- (d) Although relevant, evidence may ment. The ALJ may, at his or her dis- be excluded if its probative value is cretion, admit prior sworn testimony substantially outweighed by the danger of experts that has been subject to ad- of unfair prejudice, confusion of the verse examination, such as a deposition issues, or by considerations of undue or trial testimony. Any such written delay or needless presentation of cumu- statement must be provided to the lative evidence. other party, along with the last known (e) Although relevant, evidence must address of the witness, in a manner be excluded if it is privileged under that allows sufficient time for the Federal law. other party to subpoena the witness for (f) Evidence concerning offers of com- cross-examination at the hearing. promise or settlement are inadmissible Prior written statements of witnesses to the extent provided in Rule 408 of proposed to testify at the hearing must the Federal Rules of Evidence. be exchanged as provided in § 160.518. (g) Evidence of crimes, wrongs, or (c) The ALJ must exercise reasonable acts other than those at issue in the in- control over the mode and order of instant case is admissible in order to terrogating witnesses and presenting show motive, opportunity, intent, evidence so as to: knowledge, preparation, identity, lack (1) Make the interrogation and pres- of mistake, or existence of a scheme. entation effective for the ascertain- This evidence is admissible regardless ment of the truth; of whether the crimes, wrongs, or acts (2) Avoid repetition or needless con- occurred during the statute of limita- sumption of time; and tions period applicable to the acts or (3) Protect witnesses from harass- omissions that constitute the basis for ment or undue embarrassment. liability in the case and regardless of (d) The ALJ must permit the parties whether they were referenced in the to conduct cross-examination of wit- Secretary’s notice of proposed deter- nesses as may be required for a full and mination under § 160.420 of this part. true disclosure of the facts. (h) The ALJ must permit the parties (e) The ALJ may order witnesses ex- to introduce rebuttal witnesses and cluded so that they cannot hear the evidence. testimony of other witnesses, except (i) All documents and other evidence that the ALJ may not order to be ex- offered or taken for the record must be cluded— open to examination by both parties, (1) A party who is a natural person; unless otherwise ordered by the ALJ (2) In the case of a party that is not for good cause shown. a natural person, the officer or employee of the party appearing for the § 160.542 The record. entity pro se or designated as the par- (a) The hearing must be recorded and ty’s representative; or transcribed. Transcripts may be ob- (3) A natural person whose presence tained following the hearing from the is shown by a party to be essential to ALJ. A party that requests a transcript the presentation of its case, including a of hearing proceedings must pay the person engaged in assisting the attor- cost of preparing the transcript unless, ney for the Secretary. for good cause shown by the party, the payment is waived by the ALJ or the § 160.540 Evidence. Board, as appropriate. (a) The ALJ must determine the ad- (b) The transcript of the testimony, missibility of evidence. exhibits, and other evidence admitted

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at the hearing, and all papers and re- extension within the initial 30 day pe- quests filed in the proceeding con- riod and shows good cause. stitute the record for decision by the (b) If a party files a timely notice of ALJ and the Secretary. appeal with the Board, the ALJ must (c) The record may be inspected and forward the record of the proceeding to copied (upon payment of a reasonable the Board. fee) by any person, unless otherwise or- (c) A notice of appeal must be accom- dered by the ALJ for good cause shown. panied by a written brief specifying ex- (d) For good cause, the ALJ may ceptions to the initial decision and rea- order appropriate redactions made to sons supporting the exceptions. Any the record. party may file a brief in opposition to § 160.544 Post hearing briefs. the exceptions, which may raise any The ALJ may require the parties to relevant issue not addressed in the ex- file post-hearing briefs. In any event, ceptions, within 30 days of receiving any party may file a post-hearing brief. the notice of appeal and the accom- The ALJ must fix the time for filing panying brief. The Board may permit the briefs. The time for filing may not the parties to file reply briefs. exceed 60 days from the date the par- (d) There is no right to appear per- ties receive the transcript of the hear- sonally before the Board or to appeal ing or, if applicable, the stipulated to the Board any interlocutory ruling record. The briefs may be accompanied by the ALJ. by proposed findings of fact and conclu- (e) Except for an affirmative defense sions of law. The ALJ may permit the under § 160.410(b)(1) of this part, the parties to file reply briefs. Board may not consider any issue not raised in the parties’ briefs, nor any § 160.546 ALJ’s decision. issue in the briefs that could have been (a) The ALJ must issue a decision, raised before the ALJ but was not. based only on the record, which must (f) If any party demonstrates to the contain findings of fact and conclu- satisfaction of the Board that addi- sions of law. tional evidence not presented at such (b) The ALJ may affirm, increase, or hearing is relevant and material and reduce the penalties imposed by the that there were reasonable grounds for Secretary. the failure to adduce such evidence at (c) The ALJ must issue the decision the hearing, the Board may remand the to both parties within 60 days after the matter to the ALJ for consideration of time for submission of post-hearing such additional evidence. briefs and reply briefs, if permitted, (g) The Board may decline to review has expired. If the ALJ fails to meet the case, or may affirm, increase, re- the deadline contained in this para- duce, reverse or remand any penalty graph, he or she must notify the par- determined by the ALJ. ties of the reason for the delay and set a new deadline. (h) The standard of review on a dis- (d) Unless the decision of the ALJ is puted issue of fact is whether the ini- timely appealed as provided for in tial decision of the ALJ is supported by § 160.548, the decision of the ALJ will be substantial evidence on the whole final and binding on the parties 60 days record. The standard of review on a dis- from the date of service of the ALJ’s puted issue of law is whether the deci- decision. sion is erroneous. (i) Within 60 days after the time for § 160.548 Appeal of the ALJ’s decision. submission of briefs and reply briefs, if (a) Any party may appeal the deci- permitted, has expired, the Board must sion of the ALJ to the Board by filing serve on each party to the appeal a a notice of appeal with the Board with- copy of the Board’s decision and a in 30 days of the date of service of the statement describing the right of any ALJ decision. The Board may extend respondent who is penalized to seek ju- the initial 30 day period for a period of dicial review. time not to exceed 30 days if a party (j)(1) The Board’s decision under files with the Board a request for an paragraph (i) of this section, including

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a decision to decline review of the ini- (2) In compliance with 28 U.S.C. tial decision, becomes the final deci- 2112(a), a copy of any petition for judi- sion of the Secretary 60 days after the cial review filed in any U.S. Court of date of service of the Board’s decision, Appeals challenging the final decision except with respect to a decision to re- of the Secretary must be sent by cer- mand to the ALJ or if reconsideration tified mail, return receipt requested, to is requested under this paragraph. the General Counsel of HHS. The peti- (2) The Board will reconsider its deci- tion copy must be a copy showing that sion only if it determines that the deci- it has been time-stamped by the clerk sion contains a clear error of fact or of the court when the original was filed error of law. New evidence will not be with the court. a basis for reconsideration unless the (3) If the General Counsel of HHS re- party demonstrates that the evidence is newly discovered and was not pre- ceived two or more petitions within 10 viously available. days after the final decision of the Sec- (3) A party may file a motion for re- retary, the General Counsel will notify consideration with the Board before the U.S. Judicial Panel on Multidis- the date the decision becomes final trict Litigation of any petitions that under paragraph (j)(1) of this section. A were received within the 10 day period. motion for reconsideration must be accompanied by a written brief speci- § 160.550 Stay of the Secretary’s deci- fying any alleged error of fact or law sion. and, if the party is relying on addi- (a) Pending judicial review, the re- tional evidence, explaining why the spondent may file a request for stay of evidence was not previously available. the effective date of any penalty with Any party may file a brief in opposi- the ALJ. The request must be accom- tion within 15 days of receiving the mo- panied by a copy of the notice of appeal tion for reconsideration and the accom- filed with the Federal court. The filing panying brief unless this time limit is of the request automatically stays the extended by the Board for good cause effective date of the penalty until such shown. Reply briefs are not permitted. time as the ALJ rules upon the re- (4) The Board must rule on the mo- quest. tion for reconsideration not later than (b) The ALJ may not grant a re- 30 days from the date the opposition spondent’s request for stay of any pen- brief is due. If the Board denies the motion, the decision issued under para- alty unless the respondent posts a bond graph (i) of this section becomes the or provides other adequate security. final decision of the Secretary on the (c) The ALJ must rule upon a re- date of service of the ruling. If the spondent’s request for stay within 10 Board grants the motion, the Board days of receipt. will issue a reconsidered decision, after such procedures as the Board deter- § 160.552 Harmless error. mines necessary to address the effect of No error in either the admission or any error. The Board’s decision on re- the exclusion of evidence, and no error consideration becomes the final deci- or defect in any ruling or order or in sion of the Secretary on the date of any act done or omitted by the ALJ or service of the decision, except with re- by any of the parties is ground for spect to a decision to remand to the vacating, modifying or otherwise dis- ALJ. turbing an otherwise appropriate rul- (5) If service of a ruling or decision ing or order or act, unless refusal to issued under this section is by mail, take such action appears to the ALJ or the date of service will be deemed to be the Board inconsistent with substan- 5 days from the date of mailing. tial justice. The ALJ and the Board at (k)(1) A respondent’s petition for judicial review must be filed within 60 every stage of the proceeding must dis- days of the date on which the decision regard any error or defect in the proof the Board becomes the final decision ceeding that does not affect the sub- of the Secretary under paragraph (j) of stantial rights of the parties. this section.

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PART 162—ADMINISTRATIVE Subpart K—Health Care Claims or REQUIREMENTS Equivalent Encounter Information 162.1101 Health care claims or equivalent Subpart A—General Provisions encounter information transaction. 162.1102 Standards for health care claims or Sec. equivalent encounter information trans- 162.100 Applicability. action. 162.103 Definitions. Subpart L—Eligibility for a Health Plan Subparts B–C [Reserved] 162.1201 Eligibility for a health plan trans- Subpart D—Standard Unique Health action. Identifier for Health Care Providers 162.1202 Standards for eligibility for a health plan transaction. 162.402 Definitions. 162.404 Compliance dates of the implemen- Subpart M—Referral Certification and tation of the standard unique health Authorization identifier for health care providers. 162.406 Standard unique health identifier for 162.1301 Referral certification and author- health care providers. ization transaction. 162.408 National Provider System. 162.1302 Standard for referral certification 162.410 Implementation specifications: and authorization transaction. Health care providers. 162.412 Implementation specifications: Subpart N—Health Care Claim Status Health plans. 162.1401 Health care claim status trans- 162.414 Implementation specifications: action. Health care clearinghouses. 162.1402 Standards for health care claim status transaction. Subpart E [Reserved] Subpart O—Enrollment and Disenrollment Subpart F—Standard Unique Employer in a Health Plan Identifier 162.1501 Enrollment and disenrollment in a 162.600 Compliance dates of the implemen- health plan transaction. tation of the standard unique employer 162.1502 Standards for enrollment and identifier. disenrollment in a health plan trans- 162.605 Standard unique employer identifier. action. 162.610 Implementation specifications for covered entities. Subpart P—Health Care Payment and Remittance Advice Subparts G–H [Reserved] 162.1601 Health care payment and remit- Subpart I—General Provisions for tance advice transaction. Transactions 162.1602 Standards for health care payment and remittance advice transaction. 162.900 Compliance dates for transaction standards and code sets. Subpart Q—Health Plan Premium 162.910 Maintenance of standards and adop- Payments tion of modifications and new standards. 162.915 Trading partner agreements. 162.1701 Health plan premium payments 162.920 Availability of implementation spec- transaction. ifications. 162.1702 Standards for health plan premium 162.923 Requirements for covered entities. payments transaction. 162.925 Additional requirements for health plans. Subpart R—Coordination of Benefits 162.930 Additional rules for health care 162.1801 Coordination of benefits trans- clearinghouses. action. 162.940 Exceptions from standards to permit 162.1802 Standards for coordination of bene- testing of proposed modifications. fits information transaction. Subpart J—Code Sets AUTHORITY: Secs. 1171 through 1179 of the Social Security Act (42 U.S.C. 1320d–1320d–8), 162.1000 General requirements. as added by sec. 262 of Pub. L. 104–191, 110 162.1002 Medical data code sets. Stat. 2021–2031, and sec. 264 of Pub. L. 104–191, 162.1011 Valid code sets. 110 Stat. 2033–2034 (42 U.S.C. 1320d–2 (note)).

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SOURCE: 65 FR 50367, Aug. 17, 2000, unless HCPCS stands for the Health [Care otherwise noted. Financing Administration] Common Procedure Coding System. Subpart A—General Provisions Maintain or maintenance refers to activities necessary to support the use of § 162.100 Applicability. a standard adopted by the Secretary, Covered entities (as defined in including technical corrections to an § 160.103 of this subchapter) must com- implementation specification, and en- ply with the applicable requirements of hancements or expansion of a code set. this part. This term excludes the activities related to the adoption of a new standard § 162.103 Definitions. or implementation specification, or For purposes of this part, the fol- modification to an adopted standard or lowing definitions apply: implementation specification. Code set means any set of codes used Maximum defined data set means all to encode data elements, such as tables of the required data elements for a par- of terms, medical concepts, medical di- ticular standard based on a specific im- agnostic codes, or medical procedure plementation specification. codes. A code set includes the codes Segment means a group of related and the descriptors of the codes. data elements in a transaction. Code set maintaining organization Standard transaction means a trans- means an organization that creates and action that complies with the applica- maintains the code sets adopted by the ble standard adopted under this part. Secretary for use in the transactions [65 FR 50367, Aug. 17, 2000, as amended at 68 for which standards are adopted in this FR 8374, Feb. 20, 2003] part. Data condition means the rule that Subparts B–C [Reserved] describes the circumstances under which a covered entity must use a particular data element or segment. Subpart D—Standard Unique Data content means all the data ele- Health Identifier for Health ments and code sets inherent to a Care Providers transaction, and not related to the format of the transaction. Data elements SOURCE: 69 FR 3468, Jan. 23, 2004, unless that are related to the format are not otherwise noted. data content. Data element means the smallest § 162.402 Definitions. named unit of information in a trans- Covered health care provider means a action. health care provider that meets the Data set means a semantically mean- definition at paragraph (3) of the defi- ingful unit of information exchanged nition of ‘‘covered entity’’ at § 160.103 of between two parties to a transaction. this subchapter. Descriptor means the text defining a code. § 162.404 Compliance dates of the im- Designated standard maintenance orga- plementation of the standard nization (DSMO) means an organization unique health identifier for health care providers. designated by the Secretary under § 162.910(a). (a) Health care providers. A covered Direct data entry means the direct health care provider must comply with entry of data (for example, using dumb the implementation specifications in terminals or web browsers) that is im- § 162.410 no later than May 23, 2007. mediately transmitted into a health (b) Health plans. A health plan must plan’s computer. comply with the implementation speci- Format refers to those data elements fications in § 162.412 no later than one that provide or control the enveloping of the following dates: or hierarchical structure, or assist in (1) A health plan that is not a small identifying data content of, a trans- health plan—May 23, 2007. action. (2) A small health plan—May 23, 2008.

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(c) Health care clearinghouses. A § 162.410 Implementation specifica- health care clearinghouse must comply tions: Health care providers. with the implementation specifications (a) A covered entity that is a covered in § 162.414 no later than May 23, 2007. health care provider must: (1) Obtain, by application if nec- § 162.406 Standard unique health identifier for health care providers. essary, an NPI from the National Pro- vider System (NPS) for itself or for any (a) Standard. The standard unique subpart of the covered entity that health identifier for health care pro- would be a covered health care provider viders is the National Provider Identi- if it were a separate legal entity. A fier (NPI). The NPI is a 10-position nu- covered entity may obtain an NPI for meric identifier, with a check digit in any other subpart that qualifies for the the 10th position, and no intelligence assignment of an NPI. about the health care provider in the (2) Use the NPI it obtained from the number. NPS to identify itself on all standard (b) Required and permitted uses for the transactions that it conducts where its NPI. (1) The NPI must be used as stated health care provider identifier is re- in § 162.410, § 162.412, and § 162.414. quired. (2) The NPI may be used for any (3) Disclose its NPI, when requested, other lawful purpose. to any entity that needs the NPI to identify that covered health care pro- § 162.408 National Provider System. vider in a standard transaction. National Provider System. The Na- (4) Communicate to the NPS any tional Provider System (NPS) shall do changes in its required data elements the following: in the NPS within 30 days of the (a) Assign a single, unique NPI to a change. health care provider, provided that— (5) If it uses one or more business as- (1) The NPS may assign an NPI to a sociates to conduct standard trans- subpart of a health care provider in ac- actions on its behalf, require its busi- cordance with paragraph (g); and ness associate(s) to use its NPI and (2) The Secretary has sufficient infor- other NPIs appropriately as required mation to permit the assignment to be by the transactions that the business made. associate(s) conducts on its behalf. (b) Collect and maintain information (6) If it has been assigned NPIs for about each health care provider that one or more subparts, comply with the has been assigned an NPI and perform requirements of paragraphs (a)(2) tasks necessary to update that infor- through (a)(5) of this section with re- mation. spect to each of those NPIs. (c) If appropriate, deactivate an NPI (b) A health care provider that is not upon receipt of appropriate informa- a covered entity may obtain, by appli- tion concerning the dissolution of the cation if necessary, an NPI from the health care provider that is an organi- NPS. zation, the death of the health care provider who is an individual, or other § 162.412 Implementation specifica- circumstances justifying deactivation. tions: Health plans. (d) If appropriate, reactivate a de- (a) A health plan must use the NPI of activated NPI upon receipt of appro- any health care provider (or subpart(s), priate information. if applicable) that has been assigned an (e) Not assign a deactivated NPI to NPI to identify that health care pro- any other health care provider. vider on all standard transactions (f) Disseminate NPS information where that health care provider’s iden- upon approved requests. tifier is required. (g) Assign an NPI to a subpart of a (b) A health plan may not require a health care provider on request if the health care provider that has been as- identifying data for the subpart are signed an NPI to obtain an additional unique. NPI.

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§ 162.414 Implementation specifica- (c) Required and permitted uses for tions: Health care clearinghouses. the Employer Identifier. A health care clearinghouse must use (1) The Employer Identifier must be the NPI of any health care provider (or used as stated in § 162.610(b). subpart(s), if applicable) that has been (2) The Employer Identifier may be assigned an NPI to identify that health used for any other lawful purpose. care provider on all standard trans- [67 FR 38020, May 31, 2002, as amended at 69 actions where that health care pro- FR 3469, Jan. 23, 2004] vider’s identifier is required. Subparts G–H [Reserved] Subpart E [Reserved] Subpart I—General Provisions for Subpart F—Standard Unique Transactions Employer Identifier § 162.900 Compliance dates for transaction standards and code sets. SOURCE: 67 FR 38020, May 31, 2002, unless otherwise noted. (a) Small health plans. All small health plans must comply with applica- § 162.600 Compliance dates of the im- ble requirements of subparts I through plementation of the standard R of this part no later than October 16, unique employer identifier. 2003. (a) Health care providers. Health care (b) Covered entities that timely sub- providers must comply with the remitted a compliance plan. Any covered quirements of this subpart no later entity, other than a small health plan, than July 30, 2004. that timely submitted a compliance (b) Health plans. A health plan must plan with the Secretary under the pro- comply with the requirements of this visions of section 2 of Pub. L. 107–105, subpart no later than one of the fol- 115 Stat. 1003 (ASCA) must comply lowing dates: with the applicable requirements of (1) Health plans other than small health subparts I through R of this part no plans—July 30, 2004. later than October 16, 2003. (2) Small health plans—August 1, 2005. (c) Covered entities that did not timely (c) Health care clearinghouses. Health submit a compliance plan. Any covered care clearinghouses must comply with entity, other than a small health plan, the requirements of this subpart no that did not timely submit a compli- later than July 30, 2004. ance plan under the provisions of section 2 of Pub. L. 107-105, 115 Stat. 1003 § 162.605 Standard unique employer (ASCA) must comply with the applica- identifier. ble requirements of subparts I through The Secretary adopts the EIN as the R of this part— standard unique employer identifier (1) Beginning on October 16, 2002, and provided for by 42 U.S.C. 1320d–2(b). ending on October 15, 2003— (i) For the corresponding time period; § 162.610 Implementation specifica- or tions for covered entities. (ii) For the time period beginning on (a) The standard unique employer October 16, 2003. identifier of an employer of a par- (2) Beginning on and after October 16, ticular employee is the EIN that ap- 2003, for the corresponding time period. pears on that employee’s IRS Form W– [68 FR 8396, Feb. 20, 2003] 2, Wage and Tax Statement, from the employer. § 162.910 Maintenance of standards (b) A covered entity must use the and adoption of modifications and standard unique employer identifier new standards. (EIN) of the appropriate employer in (a) Designation of DSMOs. (1) The Sec- standard transactions that require an retary may designate as a DSMO an or- employer identifier to identify a person ganization that agrees to conduct, to or entity as an employer, including the satisfaction of the Secretary, the where situationally required. following functions:

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(i) Maintain standards adopted under § 162.920 Availability of implementa- this subchapter. tion specifications. (ii) Receive and process requests for A person or an organization may di- adopting a new standard or modifying rectly request copies of the implemen- an adopted standard. tation standards described in subparts (2) The Secretary designates a DSMO I through R of this part from the pub- by notice in the FEDERAL REGISTER. lishers listed in this section. The Direc- (b) Maintenance of standards. Mainte- tor of the Office of the Federal Register nance of a standard by the appropriate approves the implementation specifica- DSMO constitutes maintenance of the tions described in this section for in- standard for purposes of this part, if corporation by reference in subparts I done in accordance with the processes through R of this part in accordance the Secretary may require. with 5 U.S.C. 552(a) and 1 CFR part 51. (c) Process for modification of existing The implementation specifications de- standards and adoption of new standards. scribed in this paragraph are also The Secretary considers a rec- available for inspection by the public ommendation for a proposed modifica- at the Centers for Medicare & Medicaid tion to an existing standard, or a pro- Services, 7500 Security Boulevard, Bal- posed new standard, only if the rec- timore, Maryland 21244 or at the Na- ommendation is developed through a tional Archives and Records Adminis- process that provides for the following: tration (NARA). For information on (1) Open public access. the availability of this material at (2) Coordination with other DSMOs. NARA, call 202–741–6030, or go to: http:// (3) An appeals process for each of the www.archives.gov/federallregister/ following, if dissatisfied with the deci- codeloflfederallregulations/ sion on the request: ibrllocations.html. Copy requests must (i) The requestor of the proposed be accompanied by the name of the modification. standard, number, if applicable, and (ii) A DSMO that participated in the version number. Implementation speci- review and analysis of the request for fications are available for the following the proposed modification, or the pro- transactions: posed new standard. (a) ASC X12N specifications. The im- (4) Expedited process to address con- plementation specifications for ASC tent needs identified within the indus- X12N standards may be obtained from try, if appropriate. the Washington Publishing Company, (5) Submission of the recommenda- PMB 161, 5284 Randolph Road, Rock- tion to the National Committee on ville, MD, 20852–2116; Telephone (301) Vital and Health Statistics (NCVHS). 949–9740; and FAX: (301) 949–9742. They are also available through the Wash- § 162.915 Trading partner agreements. ington Publishing Company on the Internet at http://www.wpc-edi.com/. The A covered entity must not enter into transaction implementation specifica- a trading partner agreement that tions are as follows: would do any of the following: (1) The ASC X12N 837—Health Care (a) Change the definition, data condi- Claim: Dental, Version 4010, May 2000, tion, or use of a data element or seg- Washington Publishing Company, ment in a standard. 004010X097 and Addenda to Health Care (b) Add any data elements or seg- Claim: Dental, Version 4010, October ments to the maximum defined data 2002, Washington Publishing Company, set. 004010X097A1, as referenced in § 162.1102 (c) Use any code or data elements and § 162.1802. that are either marked ‘‘not used’’ in (2) The ASC X12N 837—Health Care the standard’s implementation speci- Claim: Professional, Volumes 1 and 2, fication or are not in the standard’s Version 4010, May 2000, Washington implementation specification(s). Publishing Company, 004010X098 and (d) Change the meaning or intent of Addenda to Health Care Claim: Profes- the standard’s implementation speci- sional, Volumes 1 and 2, Version 4010, fication(s). October 2002, Washington Publishing

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Company, 004010X098A1, as referenced 004010X092 and Addenda to Health Care in § 162.1102 and § 162.1802. Eligibility Benefit Inquiry and Re- (3) The ASC X12N 837—Health Care sponse, Version 4010, October 2002, Claim: Institutional, Volumes 1 and 2, Washington Publishing Company, Version 4010, May 2000, Washington 004010X092A1, as referenced in § 162.1202. Publishing Company, 004010X096 and (b) Retail pharmacy specifications. The Addenda to Health Care Claim: Institu- implementation specifications for re- tional, Volumes 1 and 2, Version 4010, tail pharmacy standards may be ob- October 2002, Washington Publishing tained for a fee from the National Company, 004010X096A1 as referenced in Council for Prescription Drug Pro- § 162.1102 and § 162.1802. grams (NCPDP), 9240 E. Raintree Drive, (4) The ASC X12N 835—Health Care Scottsdale, AZ 85260; Telephone (480) Claim Payment/Advice, Version 4010, 477–1000; and FAX (480) 767–1042. They May 2000, Washington Publishing Com- may also be obtained through the pany, 004010X091, and Addenda to Internet at http://www.ncpdp.org. The Health Care Claim Payment/Advice, transaction implementation specifica- Version 4010, October 2002, Washington tions are as follows: Publishing Company, 004010X091A1 as (1) The Telecommunication Standard referenced in § 162.1602. Implementation Guide Version 5, Re- (5) ASC X12N 834—Benefit Enroll- lease 1 (Version 5.1), September 1999, ment and Maintenance, Version 4010, National Council for Prescription Drug May 2000, Washington Publishing Com- Programs, as referenced in § 162.1102, pany, 004010X095 and Addenda to Ben- § 162.1202, § 162.1302, § 162.1602, and efit Enrollment and Maintenance, § 162.1802. Version 4010, October 2002, Washington (2) The Batch Standard Batch Imple- Publishing Company, 004010X095A1, as mentation Guide, Version 1, Release 1 referenced in § 162.1502. (Version 1.1), January 2000, supporting (6) The ASC X12N 820—Payroll De- Telecommunication Standard Imple- ducted and Other Group Premium Pay- mentation Guide, Version 5, Release 1 ment for Insurance Products, Version (Version 5.1) for the NCPDP Data 4010, May 2000, Washington Publishing Record in the Detail Data Record, Na- Company, 004010X061, and Addenda to tional Council for Prescription Drug Payroll Deducted and Other Group Pre- Programs, as referenced in § 162.1102, mium Payment for Insurance Products, § 162.1202, § 162.1302, and § 162.1802. Version 4010, October 2002, Washington (3) The National Council for Prescrip- Publishing Company, 004010X061A1, as tion Drug Programs (NCPDP) equiva- referenced in § 162.1702. lent NCPDP Batch Standard Batch Im- (7) The ASC X12N 278—Health Care plementation Guide, Version 1, Release Services Review—Request for Review 0, February 1, 1996, as referenced in and Response, Version 4010, May 2000, § 162.1102, § 162.1202, § 162.1602, and Washington Publishing Company, § 162.1802. 004010X094 and Addenda to Health Care [68 FR 8396, Feb. 20, 2003, as amended at 69 Services Review—Request for Review FR 18803, Apr. 9, 2004] and Response, Version 4010, October 2002, Washington Publishing Company, § 162.923 Requirements for covered en- 004010X094A1, as referenced in § 162.1302. tities. (8) The ASC X12N–276/277 Health Care (a) General rule. Except as otherwise Claim Status Request and Response, provided in this part, if a covered enti- Version 4010, May 2000, Washington ty conducts with another covered enti- Publishing Company, 004010X093 and ty (or within the same covered entity), Addenda to Health Care Claim Status using electronic media, a transaction Request and Response, Version 4010, for which the Secretary has adopted a October 2002, Washington Publishing standard under this part, the covered Company, 004010X093A1, as referenced entity must conduct the transaction as in § 162.1402. a standard transaction. (9) The ASC X12N 270/271—Health (b) Exception for direct data entry Care Eligibility Benefit Inquiry and transactions. A health care provider Response, Version 4010, May 2000, electing to use direct data entry of- Washington Publishing Company, fered by a health plan to conduct a

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transaction for which a standard has health plan (or another payer), it must been adopted under this part must use store the coordination of benefits data the applicable data content and data it needs to forward the standard trans- condition requirements of the standard action to the other health plan (or when conducting the transaction. The other payer). health care provider is not required to (c) Code sets. A health plan must use the format requirements of the meet each of the following require- standard. ments: (c) Use of a business associate. A cov- (1) Accept and promptly process any ered entity may use a business asso- standard transaction that contains ciate, including a health care clearing- codes that are valid, as provided in sub- house, to conduct a transaction cov- part J of this part. ered by this part. If a covered entity (2) Keep code sets for the current bill- chooses to use a business associate to ing period and appeals periods still conduct all or part of a transaction on open to processing under the terms of behalf of the covered entity, the cov- the health plan’s coverage. ered entity must require the business associate to do the following: § 162.930 Additional rules for health (1) Comply with all applicable re- care clearinghouses. quirements of this part. When acting as a business associate (2) Require any agent or subcon- for another covered entity, a health tractor to comply with all applicable care clearinghouse may perform the requirements of this part. following functions: (a) Receive a standard transaction on § 162.925 Additional requirements for behalf of the covered entity and trans- health plans. late it into a nonstandard transaction (a) General rules. (1) If an entity re- (for example, nonstandard format and/ quests a health plan to conduct a or nonstandard data content) for trans- transaction as a standard transaction, mission to the covered entity. the health plan must do so. (b) Receive a nonstandard trans- (2) A health plan may not delay or re- action (for example, nonstandard for- ject a transaction, or attempt to ad- mat and/or nonstandard data content) versely affect the other entity or the from the covered entity and translate transaction, because the transaction is it into a standard transaction for a standard transaction. transmission on behalf of the covered (3) A health plan may not reject a entity. standard transaction on the basis that it contains data elements not needed or § 162.940 Exceptions from standards to used by the health plan (for example, permit testing of proposed modi- coordination of benefits information). fications. (4) A health plan may not offer an in- (a) Requests for an exception. An orga- centive for a health care provider to nization may request an exception conduct a transaction covered by this from the use of a standard from the part as a transaction described under Secretary to test a proposed modifica- the exception provided for in tion to that standard. For each pro- § 162.923(b). posed modification, the organization (5) A health plan that operates as a must meet the following requirements: health care clearinghouse, or requires (1) Comparison to a current standard. an entity to use a health care clearing- Provide a detailed explanation, no house to receive, process, or transmit a more than 10 pages in length, of how standard transaction may not charge the proposed modification would be a fees or costs in excess of the fees or significant improvement to the current costs for normal telecommunications standard in terms of the following prin- that the entity incurs when it directly ciples: transmits, or receives, a standard (i) Improve the efficiency and effec- transaction to, or from, a health plan. tiveness of the health care system by (b) Coordination of benefits. If a health leading to cost reductions for, or im- plan receives a standard transaction provements in benefits from, electronic and coordinates benefits with another health care transactions.

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(ii) Meet the needs of the health data nificant improvement to the current standards user community, particu- standard. larly health care providers, health (2) The extent and length of time of plans, and health care clearinghouses. the exception. (iii) Be uniform and consistent with (3) Consultations with DSMOs. the other standards adopted under this (c) Secretary’s decision on exception. part and, as appropriate, with other The Secretary makes a decision and private and public sector health data notifies the organization requesting standards. the exception whether the request is (iv) Have low additional development granted or denied. and implementation costs relative to (1) Exception granted. If the Secretary the benefits of using the standard. grants an exception, the notification (v) Be supported by an ANSI-accred- includes the following information: ited SSO or other private or public or- (i) The length of time for which the ganization that would maintain the exception applies. standard over time. (ii) The trading partners and geo- (vi) Have timely development, test- graphical areas the Secretary approves ing, implementation, and updating pro- for testing. (iii) Any other conditions for approv- cedures to achieve administrative sim- ing the exception. plification benefits faster. (2) Exception denied. If the Secretary (vii) Be technologically independent does not grant an exception, the notifi- of the computer platforms and trans- cation explains the reasons the Sec- mission protocols used in electronic retary considers the proposed modifica- health transactions, unless they are ex- tion would not be a significant im- plicitly part of the standard. provement to the current standard and (viii) Be precise, unambiguous, and as any other rationale for the denial. simple as possible. (d) Organization’s report on test results. (ix) Result in minimum data collec- Within 90 days after the test is com- tion and paperwork burdens on users. pleted, an organization that receives (x) Incorporate flexibility to adapt an exception must submit a report on more easily to changes in the health the results of the test, including a cost- care infrastructure (such as new serv- benefit analysis, to a location specified ices, organizations, and provider types) by the Secretary by notice in the FED- and information technology. ERAL REGISTER. (2) Specifications for the proposed modi- (e) Extension allowed. If the report fication. Provide specifications for the submitted in accordance with para- proposed modification, including any graph (d) of this section recommends a additional system requirements. modification to the standard, the Sec- (3) Testing of the proposed modification. retary, on request, may grant an exten- Provide an explanation, no more than 5 sion to the period granted for the ex- pages in length, of how the organiza- ception. tion intends to test the standard, including the number and types of health Subpart J—Code Sets plans and health care providers expected to be involved in the test, geo- § 162.1000 General requirements. graphical areas, and beginning and end- When conducting a transaction cov- ing dates of the test. ered by this part, a covered entity (4) Trading partner concurrences. Pro- must meet the following requirements: vide written concurrences from trading (a) Medical data code sets. Use the ap- partners who would agree to partici- plicable medical data code sets de- pate in the test. scribed in § 162.1002 as specified in the (b) Basis for granting an exception. The implementation specification adopted Secretary may grant an initial excep- under this part that are valid at the tion, for a period not to exceed 3 years, time the health care is furnished. based on, but not limited to, the fol- (b) Nonmedical data code sets. Use the lowing criteria: nonmedical data code sets as described (1) An assessment of whether the pro- in the implementation specifications posed modification demonstrates a sig- adopted under this part that are valid

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at the time the transaction is initi- (ii) Physical and occupational ther- ated. apy services. (iii) Radiologic procedures. § 162.1002 Medical data code sets. (iv) Clinical laboratory tests. The Secretary adopts the following (v) Other medical diagnostic proce- maintaining organization’s code sets as dures. the standard medical data code sets: (vi) Hearing and vision services. (a) For the period from October 16, (vii) Transportation services includ- 2002 through October 15, 2003: ing ambulance. (1) International Classification of Dis- (6) The Health Care Financing Admin- eases, 9th Edition, Clinical Modification, istration Common Procedure Coding Sys- (ICD–9–CM), Volumes 1 and 2 (including tem (HCPCS), as maintained and dis- The Official ICD–9–CM Guidelines for tributed by HHS, for all other sub- Coding and Reporting), as maintained stances, equipment, supplies, or other and distributed by HHS, for the fol- items used in health care services. lowing conditions: These items include, but are not lim- (i) Diseases. ited to, the following: (ii) Injuries. (i) Medical supplies. (iii) Impairments. (ii) Orthotic and prosthetic devices. (iv) Other health problems and their (iii) Durable medical equipment. manifestations. (b) For the period on and after Octo- (v) Causes of injury, disease, impair- ber 16, 2003: ment, or other health problems. (1) The code sets specified in para- (2) International Classification of Dis- graphs (a)(1), (a)(2),(a)(4), and (a)(5) of eases, 9th Edition, Clinical Modification, this section. Volume 3 Procedures (including The Offi- (2) National Drug Codes (NDC), as cial ICD–9–CM Guidelines for Coding maintained and distributed by HHS, for and Reporting), as maintained and dis- reporting the following by retail phar- tributed by HHS, for the following pro- macies: cedures or other actions taken for dis- (i) Drugs. (ii) Biologics. eases, injuries, and impairments on (3) The Healthcare Common Procedure hospital inpatients reported by hos- Coding System (HCPCS), as maintained pitals: and distributed by HHS, for all other (i) Prevention. substances, equipment, supplies, or (ii) Diagnosis. other items used in health care serv- (iii) Treatment. ices, with the exception of drugs and (iv) Management. biologics. These items include, but are (3) National Drug Codes (NDC), as not limited to, the following: maintained and distributed by HHS, in (i) Medical supplies. collaboration with drug manufacturers, (ii) Orthotic and prosthetic devices. for the following: (iii) Durable medical equipment. (i) Drugs (ii) Biologics. [65 FR 50367, Aug. 17, 2000, as amended at 68 (4) Code on Dental Procedures and No- FR 8397, Feb. 20, 2003] menclature, as maintained and distributed by the American Dental Associa- § 162.1011 Valid code sets. tion, for dental services. Each code set is valid within the (5) The combination of Health Care dates specified by the organization re- Financing Administration Common Proce- sponsible for maintaining that code dure Coding System (HCPCS), as main- set. tained and distributed by HHS, and Current Procedural Terminology, Fourth Subpart K—Health Care Claims or Edition (CPT–4), as maintained and dis- Equivalent Encounter Information tributed by the American Medical As- sociation, for physician services and § 162.1101 Health care claims or equiv- other health care services. These serv- alent encounter information trans- ices include, but are not limited to, the action. following: The health care claims or equivalent (i) Physician services. encounter information transaction is

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the transmission of either of the fol- Guide, Version 1, Release 1, (Version lowing: 1.1), January 2000, supporting (a) A request to obtain payment, and Telecomunication Version 5.1 for the the necessary accompanying informa- NCPDP Data Record in the Detail Data tion from a health care provider to a Record. (Incorporated by reference in health plan, for health care. § 162.920). (b) If there is no direct claim, be- (2) Dental, health care claims. The ASC cause the reimbursement contract is X12N 837—Health Care Claim: Dental, based on a mechanism other than Version 4010, May 2000, Washington charges or reimbursement rates for Publishing Company, 004010X097. and specific services, the transaction is the Addenda to Health Care Claim: Dental, transmission of encounter information Version 4010, October 2002, Washington for the purpose of reporting health Publishing Company, 004010X097A1. (In- care. corporated by reference in § 162.920). (3) Professional health care claims. The § 162.1102 Standards for health care ASC X12N 837—Health Care Claims: claims or equivalent encounter in- Professional, Volumes 1 and 2, Version formation transaction. 4010, may 2000, Washington Publishing The Secretary adopts the following Company, 004010X098 and Addenda to standards for the health care claims or Health Care Claims: Professional, Vol- equivalent encounter information umes 1 and 2, Version 4010, October transaction: 2002, Washington Publishing Company, (a) For the period from October 16, 004010x098A1. (Incorporated by ref- 2002 through October 15, 2003: erence in § 162.920). (1) Retail pharmacy drug claims. The (4) Institutional health care claims. The National Council for Prescription Drug ASC X12N 837—Health Care Claim: In- Programs (NCPDP) Telecommuni- stitutional, Volumes 1 and 2, Version cation Standard Implementation 4010, May 2000, Washington Publishing Guide, Version 5, Release 1, September Company, 004010X096 and Addenda to 1999, and equivalent NCPDP Batch Health Care Claim: Institutional, Vol- Standard Batch Implementation Guide, umes 1 and 2, Version 4010, October Version 1, Release 0 February 1, 1996. 2002, Washington Publishing Company, (Incorporated by reference in § 162.920). 004010X096A1. (Incorporated by ref- (2) Dental health care claims. The ASC erence in § 162.920). X12N 837—Health Care Claim: Dental, [68 FR 8397, Feb. 20, 2003; 68 FR 11445, Mar. 10, Version 4010, May 2000, Washington 2003] Publishing Company, 004010X097. (In- corporated by reference in § 162.920). Subpart L—Eligibility for a Health (3) Professional health care claims. The Plan ASC X12N 837—Health Care Claim: Pro- fessional, Volumes 1 and 2, Version § 162.1201 Eligibility for a health plan 4010, May 2000, Washington Publishing transaction. Company, 004010X098. (Incorporated by The eligibility for a health plan reference in § 162.920). transaction is the transmission of ei- (4) Institutional health care claims. The ther of the following: ASC X12N 837—Health Care Claim: In- (a) An inquiry from a health care stitutional, Volumes 1 and 2, Version provider to a health plan, or from one 4010, May 2000, Washington Publishing health plan to another health plan, to Company, 004010X096. (Incorporated by obtain any of the following informa- reference in § 162.920). tion about a benefit plan for an en- (b) For the period on and after Octo- rollee: ber 16, 2003: (1) Eligibility to receive health care (1) Retail pharmacy drugs claims. The under the health plan. National Council for Prescription Drug (2) Coverage of health care under the Programs (NCPDP) Telecommuni- health plan. cation Standards Implementation (3) Benefits associated with the ben- Guide, Version 5, Release 1, September efit plan. 1999, and equivalent NCPDP Batch (b) A response from a health plan to Standards Batch Implementation a health care provider’s (or another

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health plan’s) inquiry described in Subpart M—Referral Certification paragraph (a) of this section. and Authorization

§ 162.1202 Standards for eligibility for § 162.1301 Referral certification and a health plan transaction. authorization transaction. The Secretary adopts the following The referral certification and author- standards for the eligibility for a ization transaction is any of the fol- health plan transaction: lowing transmissions: (a) For the period from October 16, (a) A request for the review of health 2002 through October 15, 2003: care to obtain an authorization for the (1) Retail pharmacy drugs. The Na- health care. tional Council for Prescription Drug (b) A request to obtain authorization Programs Telecommunications Stand- for referring an individual to another ards Implementation Guide, Version 5, health care provider. Release 1, September 1999, and equiva- (c) A response to a request described lent NCPDP Batch Standards Batch in paragraph (a) or paragraph (b) of Implementation Guide, Version 1, Re- this section. lease 0, February 1, 1996. (Incorporated by reference in § 162.920). § 162.1302 Standards for referral cer- (2) Dental, professional, and institu- tification and authorization trans- tional health care eligibility benefit inaction. quiry and response. The ASC X12N 270/ The Secretary adopts the following 271—Health Care Eligibility Benefit In- standards for the referral certification quiry and Response, Version 4010, May and authorization transaction: 2000, Washington Publishing Com- (a) For the period from October 16, pany,004010X092. (Incorporated by ref- 2002, through October 15, 2003: The ASC erence in § 162.920). X12N 278—Health Care Services Re- (b) For the period on and after Octo- view—Request for Review and Re- ber 16, 2003: sponse, Version 4010, May 2000, Wash- (1) Retail pharmacy drugs. The Na- ington Publishing Company, tional Council for Prescription Drug 004010X094. (Incorporated by reference Programs Telecommunication Stand- in § 162.920). ard Implementation Guide, Version 5, (b) For the period on and after Octo- Release 1 (Version 5.1), September 1999, ber 16, 2003: and equivalent NCPDP Batch Standard (1) Retail pharmacy drug referral cer- Batch Implementation Guide, Version tification and authorization. The NCPDP 1, Release 1 (Version 1.1), January 2000 Telecommunication Standard Imple- supporting Telecommunications Stand- mentation Guide, Version 5, Release 1 ard Implementation Guide, Version 5, (Version 5.1), September 1999, and Release 1 (Version 5.1) for the NCPDP equivalent NCPDP Batch Standard Data Record in the Detail Data Record. Batch Implementation Guide, Version (Incorporated by reference in § 162.920). 1, Release 1 (Version 1.1), January 2000, (2) Dental, professional, and institu- supporting Telecommunications Stand- tional health care eligibility benefit in- ard Implementation Guide, Version 5, Release 1 (Version 5.1) for the NCPDP quiry and response. The ASC X12N 270/ Data Record in the Detail Data Record. 271—Health Care Eligibility Benefit In- (Incorporated by reference in § 162.920). quiry and Response, Version 4010, May 2000, Washington Publishing Company, (2) Dental, professional, and institutional referral certification and authoriza- 004010X092 and Addenda to Health Care tion. The ASC X12N 278—Health Care Eligibility Benefit Inquiry and Re- Services Review—Request for Review sponse, Version 4010, October 2002, and Response, Version 4010, May 2000, Washington Publishing Company, Washington Publishing Company, 004010X092A1. (Incorporated by ref- 004010X094 and Addenda to Health Care erence in § 162.920). Services Review—Request for Review [68 FR 8398, Feb. 20, 2003; 68 FR 11445, Mar. 10, and Response, Version 4010, October 2003] 2002, Washington Publishing Company,

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004010X094A1. (Incorporated by ref- disenrollment in a health plan trans- erence in § 162.920). action. [68 FR 8398, Feb. 20, 2003] (a) For the period from October 16, 2002 through October 15, 2003: ASC X12N 834—Benefit Enrollment and Mainte- Subpart N—Health Care Claim nance, Version 4010, May 2000, Wash- Status ington Publishing Company, 004010X095. (Incorporated by reference § 162.1401 Health care claim status transaction. in § 162.920). (b) For the period on and after Octo- A health care claim status trans- ber 16, 2003: ASC X12N 834—Benefit En- action is the transmission of either of rollment and Maintenance, Version the following: 4010, May 2000, Washington Publishing (a) An inquiry to determine the sta- Company, 004010X095 and Addenda to tus of a health care claim. Benefit Enrollment and Maintenance, (b) A response about the status of a Version 4010, October 2002, Washington health care claim. Publishing Company, 004010X095A1. (In- § 162.1402 Standards for health care corporated by reference in § 162.920). claim status transaction. [68 FR 8398, Feb. 20, 2003] The Secretary adopts the following standards for the health care claim sta- Subpart P—Health Care Payment tus transaction: and Remittance Advice (a) For the period from October 16, 2002 through October 15, 2003: The ASC § 162.1601 Health care payment and re- X12N–276/277 Health Care Claim Status mittance advice transaction. Request and Response, Version 4010, The health care payment and remit- May 2000, Washington Publishing Com- tance advice transaction is the trans- pany, 004010X093. (Incorporated by ref- mission of either of the following for erence in § 162.920). health care: (b) For the period on and after Octo- (a) The transmission of any of the ber 16, 2003: The ASC X12N–276/277 following from a health plan to a Health Care Claim Status Request and health care provider’s financial institu- Response, Version 4010, May 2000, tion: Washington Publishing Company, (1) Payment. 004010X093 and Addenda to Health Care (2) Information about the transfer of Claim Status Request and Response, funds. Version 4010, October 2002, Washington (3) Payment processing information. Publishing Company, 004010X093A1. (In- (b) The transmission of either of the corporated by reference in § 162.920). following from a health plan to a [68 FR 8398, Feb. 20, 2003] health care provider: (1) Explanation of benefits. Subpart O—Enrollment and (2) Remittance advice. Disenrollment in a Health Plan § 162.1602 Standards for health care § 162.1501 Enrollment and payment and remittance advice disenrollment in a health plan transaction. transaction. The Secretary adopts the following The enrollment and disenrollment in standards for the health care payment a health plan transaction is the trans- and remittance advice transaction. mission of subscriber enrollment infor- (a) For the period from October 16, mation to a health plan to establish or 2002 through October 15, 2003: terminate insurance coverage. (1) Retail pharmacy drug claims and remittance advice. The NCPDP Tele- § 162.1502 Standards for enrollment communication Standard Implementa- and disenrollment in a health plan tion Guide, Version 5 Release 1, Sep- transaction. tember 1999, and equivalent NCPDP The Secretary adopts the following Batch Standard Batch Implementation standards for the enrollment and Guide, Version 1 Release 0, February 1,

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1996. (Incorporated by reference in (b) For the period on and after Octo- § 162.920). ber 16, 2003: The ASC X12N 820—Payroll (2) Dental, professional, and institu- Deducted and Other Group Premium tional health care claims and remittance Payment for Insurance Products, advice. The ASC X12N 835—Health Care Version 4010, May 2000, Washington Claim Payment/Advice, Version 4010, Publishing Company, 004010X061, and May 2000, Washington Publishing Com- Addenda to Payroll Deducted and pany, 004010X091. (Incorporated by ref- Other Group Premium Payment for In- erence in § 162.920). surance Products, Version 4010, Octo- (b) For the period on and after Octo- ber 2002, Washington Publishing Com- ber 16, 2003: Health care claims and remit- pany, 004010X061A1. (Incorporated by tance advice. The ASC X12N 835—Health reference in § 162.920). Care Claim Payment/Advice, Version 4010, May 2000, Washington Publishing [68 FR 8399, Feb. 20, 2003] Company, 004010X091, and Addenda to Health Care Claim Payment/Advice, Subpart R—Coordination of Version 4010, October 2002, Washington Benefits Publishing Company, 004010X091A1. (In- corporated by reference in § 162.920). § 162.1801 Coordination of benefits transaction. [68 FR 8398, Feb. 20, 2003] The coordination of benefits transaction is the transmission from any en- Subpart Q—Health Plan Premium tity to a health plan for the purpose of Payments determining the relative payment re- § 162.1701 Health plan premium pay- sponsibilities of the health plan, of ei- ments transaction. ther of the following for health care: (a) Claims. The health plan premium payment (b) Payment information. transaction is the transmission of any of the following from the entity that is § 162.1802 Standards for coordination arranging for the provision of health of benefits information transaction. care or is providing health care coverage payments for an individual to a The Secretary adopts the following health plan: standards for the coordination of bene- (a) Payment. fits information transaction. (b) Information about the transfer of (a) For the period from October 16, funds. 2002 through October 15, 2003: (c) Detailed remittance information (1) Retail pharmacy drug claims. The about individuals for whom premiums National Council for Prescription Drug are being paid. Programs Telecommunication Stand- (d) Payment processing information ard Implementation Guide, Version 5, to transmit health care premium pay- Release 1, September 1999, and equiva- ments including any of the following: lent NCPDP Batch Standard Batch Im- (1) Payroll deductions. plementation Guide, Version 1, Release (2) Other group premium payments. 0, February 1, 1996. (Incorporated by (3) Associated group premium pay- reference in § 162.920). ment information. (2) Dental health care claims. The ASC X12N 837—Health Care Claim: Dental, § 162.1702 Standards for health plan Version 4010, May 2000, Washington premium payments transaction. Publishing Company, 004010X097. (In- The Secretary adopts the following corporated by reference in § 162.920). standards for the health care premium (3) Professional health care claims. The payments transaction. ASC X12N 837—Health Care Claim: Pro- (a) For the period from October 16, fessional, Volumes 1 and 2, Version 2002 through October 15, 2003: The ASC 4010, May 2000, Washington Publishing X12N 820—Payroll Deducted and Other Company, 004010X098. (Incorporated by Group Premium Payment for Insurance reference in § 162.920). Products, Version 4010, May 2000, Wash- (4) Institutional health care claims. The ington Publishing Company, 04010X061. ASC X12N 837—Health Care Claim: In- (Incorporated by reference in § 162.920). stitutional, Volumes 1 and 2, Version

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4010, May 2000, Washington Publishing 164.106 Relationship to other parts. Company, 004010X096. (Incorporated by reference in § 162.920). Subpart B [Reserved] (b) For the period on and after Octo- Subpart C—Security Standards for the Pro- ber 16, 2003: tection of Electronic Protected Health (1) Retail pharmacy drug claims. The Information National Council for Prescription Drug Programs Telecommunication Stand- 164.302 Applicability. ard Implementation Guide, Version 5, 164.304 Definitions. Release 1 (Version 5.1), September 1999, 164.306 Security standards: General rules. 164.308 Administrative safeguards. and equivalent NCPDP Batch Standard 164.310 Physical safeguards. Batch Implementation Guide, Version 164.312 Technical safeguards. 1, Release 1 (Version 1.1), January 2000, 164.314 Organizational requirements. supporting Telecommunications Stand- 164.316 Policies and procedures and docu- ard Implementation Guide, Version 5, mentation requirements. Release 1 (Version 5.1) for the NCPDP 164.318 Compliance dates for the initial im- Data Record in the Detail Data Record. plementation of the security standards. (Incorporated by reference in § 162.920). APPENDIX A TO SUBPART C—SECURITY STAND- (2) Dental health care claims. The ASC ARDS: MATRIX X12N 837—Health Care Claim: Dental, Subpart D [Reserved] Version 4010, May 2000, Washington Publishing Company, 004010X097 and Subpart E—Privacy of Individually Addenda to Health Care Claim: Dental, Identifiable Health Information Version 4010, October 2002, Washington Publishing Company, 004010X097A1. (In- 164.500 Applicability. 164.501 Definitions. corporated by reference in § 162.920). 164.502 Uses and disclosures of protected (3) Professional health care claims. The health information: General rules. ASC X12N 837—Health Care Claim: Pro- 164.504 Uses and disclosures: Organizational fessional, Volumes 1 and 2, Version requirements. 4010, May 2000, Washington Publishing 164.506 Uses and disclosures to carry out Company, 004010X098 and Addenda to treatment, payment, or health care oper- Health Care Claim: Professional, Vol- ations. umes 1 and 2, Version 4010, October 164.508 Uses and disclosures for which an authorization is required. 2002, Washington Publishing Company, 164.510 Uses and disclosures requiring an op- 004010X098A1. (Incorporated by ref- portunity for the individual to agree or erence in § 162.920). to object. (4) Institutional health care claims. The 164.512 Uses and disclosures for which an au- ASC X12N 837—Health Care Claim: In- thorization or opportunity to agree or stitutional, Volumes 1 and 2, Version object is not required. 4010, May 2000, Washington Publishing 164.514 Other requirements relating to uses and disclosures of protected health infor- Company, 004010X096 and Addenda to mation. Health Care Claim: Institutional, Vol- 164.520 Notice of privacy practices for pro- umes 1 and 2, Version 4010, October tected health information. 2002, Washington Publishing Company, 164.522 Rights to request privacy protection 004010X096A1. (Incorporated by ref- for protected health information. erence in § 162.920). 164.524 Access of individuals to protected health information. [68 FR 8399, Feb. 20, 2003] 164.526 Amendment of protected health information. PART 163 [RESERVED] 164.528 Accounting of disclosures of protected health information. 164.530 Administrative requirements. PART 164—SECURITY AND PRIVACY 164.532 Transition provisions. 164.534 Compliance dates for initial imple- Subpart A—General Provisions mentation of the privacy standards. AUTHORITY: 42 U.S.C. 1320d–1320d–8 and sec. Sec. 264, Pub. L. No. 104–191, 110 Stat. 2033–2034 (42 164.102 Statutory basis. U.S.C. 1320d–2 (note)). 164.103 Definitions. 164.104 Applicability. SOURCE: 65 FR 82802, Dec. 28, 2000, unless 164.105 Organizational requirements. otherwise noted.

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Subpart A—General Provisions respect to health care providers participating in the program; and statutes § 164.102 Statutory basis. or regulations that require the produc- The provisions of this part are adopt- tion of information, including statutes ed pursuant to the Secretary’s author- or regulations that require such infor- ity to prescribe standards, require- mation if payment is sought under a ments, and implementation specifica- government program providing public tions under part C of title XI of the Act benefits. and section 264 of Public Law 104–191. [68 FR 8374, Feb. 20, 2003] [65 FR 82802, Dec. 28, 2000, as amended at 67 FR 53266, Aug. 14, 2002] § 164.104 Applicability. (a) Except as otherwise provided, the § 164.103 Definitions. standards, requirements, and imple- As used in this part, the following mentation specifications adopted under terms have the following meanings: this part apply to the following enti- Common control exists if an entity has ties: the power, directly or indirectly, sig- (1) A health plan. nificantly to influence or direct the ac- (2) A health care clearinghouse. tions or policies of another entity. (3) A health care provider who trans- Common ownership exists if an entity mits any health information in elec- or entities possess an ownership or eq- tronic form in connection with a trans- uity interest of 5 percent or more in action covered by this subchapter. another entity. (b) When a health care clearinghouse Covered functions means those func- creates or receives protected health in- tions of a covered entity the perform- formation as a business associate of an- ance of which makes the entity a other covered entity, or other than as a health plan, health care provider, or business associate of a covered entity, health care clearinghouse. the clearinghouse must comply with Health care component means a com- § 164.105 relating to organizational re- ponent or combination of components quirements for covered entities, includ- of a hybrid entity designated by the ing the designation of health care com- hybrid entity in accordance with ponents of a covered entity. § 164.105(a)(2)(iii)(C). Hybrid entity means a single legal en- [68 FR 8375, Feb. 20, 2003] tity: § 164.105 Organizational requirements. (1) That is a covered entity; (2) Whose business activities include (a)(1) Standard: Health care component. both covered and non-covered func- If a covered entity is a hybrid entity, tions; and the requirements of subparts C and E (3) That designates health care com- of this part, other than the require- ponents in accordance with paragraph ments of this section, § 164.314, and § 164.105(a)(2)(iii)(C). § 164.504, apply only to the health care Plan sponsor is defined as defined at component(s) of the entity, as specified section 3(16)(B) of ERISA, 29 U.S.C. in this section. 1002(16)(B). (2) Implementation specifications: Required by law means a mandate (i) Application of other provisions. In contained in law that compels an enti- applying a provision of subparts C and ty to make a use or disclosure of pro- E of this part, other than the require- tected health information and that is ments of this section, § 164.314, and enforceable in a court of law. Required § 164.504, to a hybrid entity: by law includes, but is not limited to, (A) A reference in such provision to a court orders and court-ordered war- ‘‘covered entity’’ refers to a health rants; subpoenas or summons issued by care component of the covered entity; a court, grand jury, a governmental or (B) A reference in such provision to a tribal inspector general, or an adminis- ‘‘health plan,’’ ‘‘covered health care trative body authorized to require the provider,’’ or ‘‘health care clearing- production of information; a civil or an house,’’ refers to a health care compo- authorized investigative demand; Medi- nent of the covered entity if such care conditions of participation with health care component performs the

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functions of a health plan, health care of such component and for another provider, or health care clearinghouse, component of the entity in the same as applicable; capacity with respect to that compo- (C) A reference in such provision to nent, such workforce member must not ‘‘protected health information’’ refers use or disclose protected health infor- to protected health information that is mation created or received in the created or received by or on behalf of course of or incident to the member’s the health care component of the cov- work for the health care component in ered entity; and a way prohibited by subpart E of this (D) A reference in such provision to part. ‘‘electronic protected health informa- (iii) Responsibilities of the covered enti- tion’’ refers to electronic protected ty. A covered entity that is a hybrid health information that is created, re- entity has the following responsibil- ceived, maintained, or transmitted by ities: or on behalf of the health care compo- (A) For purposes of subpart C of part nent of the covered entity. 160 of this subchapter, pertaining to (ii) Safeguard requirements. The cov- compliance and enforcement, the covered entity that is a hybrid entity ered entity has the responsibility of must ensure that a health care compo- complying with subpart E of this part. nent of the entity complies with the (B) The covered entity is responsible applicable requirements of this section for complying with § 164.316(a) and and subparts C and E of this part. In § 164.530(i), pertaining to the implemen- particular, and without limiting this tation of policies and procedures to en- requirement, such covered entity must sure compliance with applicable re- ensure that: quirements of this section and subparts (A) Its health care component does C and E of this part, including the safe- not disclose protected health informa- guard requirements in paragraph tion to another component of the cov- (a)(2)(ii) of this section. ered entity in circumstances in which (C) The covered entity is responsible subpart E of this part would prohibit for designating the components that such disclosure if the health care com- are part of one or more health care ponent and the other component were components of the covered entity and separate and distinct legal entities; documenting the designation in ac- (B) Its health care component pro- cordance with paragraph (c) of this sec- tects electronic protected health infor- tion, provided that, if the covered enti- mation with respect to another compo- ty designates a health care component nent of the covered entity to the same or components, it must include any extent that it would be required under component that would meet the defini- subpart C of this part to protect such tion of covered entity if it were a sepa- information if the health care compo- rate legal entity. Health care component and the other component were nent(s) also may include a component separate and distinct legal entities; only to the extent that it performs: (C) A component that is described by (1) Covered functions; or paragraph (a)(2)(iii)(C)(2) of this sec- (2) Activities that would make such tion does not use or disclose protected component a business associate of a health information that it creates or component that performs covered func- receives from or on behalf of the health tions if the two components were sepa- care component in a way prohibited by rate legal entities. subpart E of this part; (b)(1) Standard: Affiliated covered enti- (D) A component that is described by ties. Legally separate covered entities paragraph (a)(2)(iii)(C)(2) of this sec- that are affiliated may designate them- tion that creates, receives, maintains, selves as a single covered entity for or transmits electronic protected purposes of subparts C and E of this health information on behalf of the part. health care component is in compli- (1) Implementation specifications: ance with subpart C of this part; and (i) Requirements for designation of an (E) If a person performs duties for affiliated covered entity. (A) Legally sep- both the health care component in the arate covered entities may designate capacity of a member of the workforce themselves (including any health care

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component of such covered entity) as a Subpart C—Security Standards for single affiliated covered entity, for the Protection of Electronic purposes of subparts C and E of this Protected Health Information part, if all of the covered entities designated are under common ownership or control. AUTHORITY: 42 U.S.C. 1320d-2 and 1320d-4. (B) The designation of an affiliated SOURCE: 68 FR 8376, Feb. 20, 2003, unless covered entity must be documented otherwise noted. and the documentation maintained as required by paragraph (c) of this sec- § 164.302 Applicability. tion. A covered entity must comply with (ii) Safeguard requirements. An affili- the applicable standards, implementa- ated covered entity must ensure that: tion specifications, and requirements (A) The affiliated covered entity’s of this subpart with respect to elec- creation, receipt, maintenance, or tronic protected health information. transmission of electronic protected health information complies with the § 164.304 Definitions. applicable requirements of subpart C of As used in this subpart, the following this part; terms have the following meanings: (B) The affiliated covered entity’s Access means the ability or the use and disclosure of protected health means necessary to read, write, mod- information comply with the applica- ify, or communicate data/information ble requirements of subpart E of this or otherwise use any system resource. part; and (This definition applies to ‘‘access’’ as (C) If the affiliated covered entity used in this subpart, not as used in sub- combines the functions of a health part E of this part.) plan, health care provider, or health Administrative safeguards are adminis- care clearinghouse, the affiliated cov- trative actions, and policies and proce- ered entity complies with dures, to manage the selection, devel- § 164.308(a)(4)(ii)(A) and § 164.504(g), as opment, implementation, and mainte- applicable. nance of security measures to protect (c)(1) Standard: Documentation. A cov- electronic protected health informa- ered entity must maintain a written or tion and to manage the conduct of the covered entity’s workforce in relation electronic record of a designation as to the protection of that information. required by paragraphs (a) or (b) of this section. Authentication means the corrobora- tion that a person is the one claimed. (2) Implementation specification: Reten- Availability means the property that tion period. A covered entity must re- data or information is accessible and tain the documentation as required by useable upon demand by an authorized paragraph (c)(1) of this section for 6 person. years from the date of its creation or Confidentiality means the property the date when it last was in effect, that data or information is not made whichever is later. available or disclosed to unauthorized [68 FR 8375, Feb. 20, 2003] persons or processes. Encryption means the use of an algo- § 164.106 Relationship to other parts. rithmic process to transform data into In complying with the requirements a form in which there is a low prob- of this part, covered entities are re- ability of assigning meaning without quired to comply with the applicable use of a confidential process or key. provisions of parts 160 and 162 of this Facility means the physical premises subchapter. and the interior and exterior of a building(s). Information system means an inter- Subpart B [Reserved] connected set of information resources under the same direct management control that shares common

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functionality. A system normally in- (3) Protect against any reasonably cludes hardware, software, informa- anticipated uses or disclosures of such tion, data, applications, communica- information that are not permitted or tions, and people. required under subpart E of this part. Integrity means the property that (4) Ensure compliance with this sub- data or information have not been al- part by its workforce. tered or destroyed in an unauthorized (b) Flexibility of approach. (1) Covered manner. entities may use any security measures Malicious software means software, that allow the covered entity to rea- for example, a virus, designed to dam- sonably and appropriately implement age or disrupt a system. the standards and implementation Password means confidential authen- specifications as specified in this sub- tication information composed of a part. string of characters. (2) In deciding which security meas- Physical safeguards are physical ures to use, a covered entity must take measures, policies, and procedures to into account the following factors: protect a covered entity’s electronic (i) The size, complexity, and capabili- information systems and related build- ties of the covered entity. ings and equipment, from natural and (ii) The covered entity’s technical in- environmental hazards, and unauthor- frastructure, hardware, and software ized intrusion. security capabilities. Security or Security measures encom- (iii) The costs of security measures. pass all of the administrative, physical, (iv) The probability and criticality of and technical safeguards in an informa- potential risks to electronic protected tion system. health information. (c) Standards. A covered entity must Security incident means the attempted comply with the standards as provided or successful unauthorized access, use, in this section and in § 164.308, § 164.310, disclosure, modification, or destruction § 164.312, § 164.314, and § 164.316 with re- of information or interference with spect to all electronic protected health system operations in an information information. system. (d) Implementation specifications. In Technical safeguards means the tech- this subpart: nology and the policy and procedures (1) Implementation specifications are for its use that protect electronic pro- required or addressable. If an imple- tected health information and control mentation specification is required, access to it. the word ‘‘Required’’ appears in paren- User means a person or entity with theses after the title of the implemen- authorized access. tation specification. If an implementa- Workstation means an electronic com- tion specification is addressable, the puting device, for example, a laptop or word ‘‘Addressable’’ appears in paren- desktop computer, or any other device theses after the title of the implemen- that performs similar functions, and tation specification. electronic media stored in its imme- (2) When a standard adopted in diate environment. § 164.308, § 164.310, § 164.312, § 164.314, or § 164.316 includes required implementa- § 164.306 Security standards: General tion specifications, a covered entity rules. must implement the implementation (a) General requirements. Covered enti- specifications. ties must do the following: (3) When a standard adopted in (1) Ensure the confidentiality, integ- § 164.308, § 164.310, § 164.312, § 164.314, or rity, and availability of all electronic § 164.316 includes addressable imple- protected health information the cov- mentation specifications, a covered en- ered entity creates, receives, main- tity must— tains, or transmits. (i) Assess whether each implementa- (2) Protect against any reasonably tion specification is a reasonable and anticipated threats or hazards to the appropriate safeguard in its environ- security or integrity of such informa- ment, when analyzed with reference to tion. the likely contribution to protecting

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the entity’s electronic protected health (2) Standard: Assigned security respon- information; and sibility. Identify the security official (ii) As applicable to the entity— who is responsible for the development (A) Implement the implementation and implementation of the policies and specification if reasonable and appro- procedures required by this subpart for priate; or the entity. (B) If implementing the implementa- (3)(i) Standard: Workforce security. Im- tion specification is not reasonable and plement policies and procedures to en- appropriate— sure that all members of its workforce (1) Document why it would not be have appropriate access to electronic reasonable and appropriate to imple- protected health information, as pro- ment the implementation specifica- vided under paragraph (a)(4) of this section; and tion, and to prevent those workforce (2) Implement an equivalent alter- members who do not have access under native measure if reasonable and ap- paragraph (a)(4) of this section from propriate. obtaining access to electronic pro- (e) Maintenance. Security measures tected health information. implemented to comply with standards (ii) Implementation specifications: and implementation specifications (A) Authorization and/or supervision adopted under § 164.105 and this subpart (Addressable). Implement procedures must be reviewed and modified as need- for the authorization and/or super- ed to continue provision of reasonable vision of workforce members who work and appropriate protection of elec- with electronic protected health infor- tronic protected health information as mation or in locations where it might described at § 164.316. be accessed. [68 FR 8376, Feb. 20, 2003; 68 FR 17153, Apr. 8, (B) Workforce clearance procedure (Ad- 2003] dressable). Implement procedures to determine that the access of a work- § 164.308 Administrative safeguards. force member to electronic protected (a) A covered entity must, in accord- health information is appropriate. ance with § 164.306: (C) Termination procedures (Address- (1)(i) Standard: Security management able). Implement procedures for termi- process. Implement policies and proce- nating access to electronic protected dures to prevent, detect, contain, and health information when the employ- correct security violations. ment of a workforce member ends or as (ii) Implementation specifications: required by determinations made as (A) Risk analysis (Required). Conduct specified in paragraph (a)(3)(ii)(B) of an accurate and thorough assessment this section. of the potential risks and (4)(i) Standard: Information access vulnerabilities to the confidentiality, management. Implement policies and integrity, and availability of electronic procedures for authorizing access to protected health information held by electronic protected health informa- the covered entity. tion that are consistent with the appli- (B) Risk management (Required). Im- cable requirements of subpart E of this plement security measures sufficient part. to reduce risks and vulnerabilities to a (ii) Implementation specifications: reasonable and appropriate level to (A) Isolating health care clearinghouse comply with § 164.306(a). functions (Required). If a health care (C) Sanction policy (Required). Apply clearinghouse is part of a larger orga- appropriate sanctions against work- nization, the clearinghouse must im- force members who fail to comply with plement policies and procedures that the security policies and procedures of protect the electronic protected health the covered entity. information of the clearinghouse from (D) Information system activity review unauthorized access by the larger orga- (Required). Implement procedures to nization. regularly review records of information (B) Access authorization (Addressable). system activity, such as audit logs, ac- Implement policies and procedures for cess reports, and security incident granting access to electronic protected tracking reports. health information, for example,

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through access to a workstation, trans- (C) Emergency mode operation plan action, program, process, or other (Required). Establish (and implement mechanism. as needed) procedures to enable con- (C) Access establishment and modifica- tinuation of critical business processes tion (Addressable). Implement policies for protection of the security of elec- and procedures that, based upon the tronic protected health information entity’s access authorization policies, while operating in emergency mode. establish, document, review, and mod- (D) Testing and revision procedures ify a user’s right of access to a (Addressable). Implement procedures workstation, transaction, program, or for periodic testing and revision of con- process. tingency plans. (5)(i) Standard: Security awareness and (E) Applications and data criticality training. Implement a security aware- analysis (Addressable). Assess the rel- ness and training program for all mem- ative criticality of specific applications bers of its workforce (including man- and data in support of other contin- agement). gency plan components. (ii) Implementation specifications. Im- (8) Standard: Evaluation. Perform a plement: periodic technical and nontechnical (A) Security reminders (Addressable). evaluation, based initially upon the Periodic security updates. standards implemented under this rule (B) Protection from malicious software and subsequently, in response to envi- (Addressable). Procedures for guarding ronmental or operational changes af- against, detecting, and reporting mali- fecting the security of electronic pro- cious software. tected health information, that establishes the extent to which an entity’s (C) Log-in monitoring (Addressable). security policies and procedures meet Procedures for monitoring log-in at- the requirements of this subpart. tempts and reporting discrepancies. (b)(1) Standard: Business associate con- (D) Password management (Address- tracts and other arrangements. A covered able). Procedures for creating, chang- entity, in accordance with § 164.306, ing, and safeguarding passwords. may permit a business associate to cre- (6)(i) Standard: Security incident proce- ate, receive, maintain, or transmit dures. Implement policies and proce- electronic protected health informa- dures to address security incidents. tion on the covered entity’s behalf only (ii) Implementation specification: Re- if the covered entity obtains satisfac- sponse and Reporting (Required). Iden- tory assurances, in accordance with tify and respond to suspected or known § 164.314(a) that the business associate security incidents; mitigate, to the ex- will appropriately safeguard the infor- tent practicable, harmful effects of se- mation. curity incidents that are known to the (2) This standard does not apply with covered entity; and document security respect to— incidents and their outcomes. (i) The transmission by a covered en- (7)(i) Standard: Contingency plan. Es- tity of electronic protected health in- tablish (and implement as needed) poli- formation to a health care provider cies and procedures for responding to concerning the treatment of an indian emergency or other occurrence (for vidual. example, fire, vandalism, system fail- (ii) The transmission of electronic ure, and natural disaster) that damages protected health information by a systems that contain electronic pro- group health plan or an HMO or health tected health information. insurance issuer on behalf of a group (ii) Implementation specifications: health plan to a plan sponsor, to the (A) Data backup plan (Required). Es- extent that the requirements of tablish and implement procedures to § 164.314(b) and § 164.504(f) apply and are create and maintain retrievable exact met; or copies of electronic protected health (iii) The transmission of electronic information. protected health information from or (B) Disaster recovery plan (Required). to other agencies providing the serv- Establish (and implement as needed) ices at § 164.502(e)(1)(ii)(C), when the procedures to restore any loss of data. covered entity is a health plan that is

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a government program providing pub- formed, the manner in which those lic benefits, if the requirements of functions are to be performed, and the § 164.502(e)(1)(ii)(C) are met. physical attributes of the surroundings (3) A covered entity that violates the of a specific workstation or class of satisfactory assurances it provided as a workstation that can access electronic business associate of another covered protected health information. entity will be in noncompliance with (c) Standard: Workstation security. Im- the standards, implementation speci- plement physical safeguards for all fications, and requirements of this workstations that access electronic paragraph and § 164.314(a). protected health information, to re- (4) Implementation specifications: Writ- strict access to authorized users. ten contract or other arrangement (Re- (d)(1) Standard: Device and media con- quired). Document the satisfactory as- trols. Implement policies and proce- surances required by paragraph (b)(1) of dures that govern the receipt and re- this section through a written contract moval of hardware and electronic or other arrangement with the business media that contain electronic pro- associate that meets the applicable re- tected health information into and out quirements of § 164.314(a). of a facility, and the movement of these items within the facility. § 164.310 Physical safeguards. (2) Implementation specifications: A covered entity must, in accordance (i) Disposal (Required). Implement with § 164.306: policies and procedures to address the (a)(1) Standard: Facility access con- final disposition of electronic protected trols. Implement policies and proce- health information, and/or the hard- dures to limit physical access to its ware or electronic media on which it is electronic information systems and the stored. facility or facilities in which they are (ii) Media re-use (Required). Imple- housed, while ensuring that properly ment procedures for removal of elec- authorized access is allowed. tronic protected health information (2) Implementation specifications: from electronic media before the media (i) Contingency operations (Address- are made available for re-use. able). Establish (and implement as (iii) Accountability (Addressable). needed) procedures that allow facility Maintain a record of the movements of access in support of restoration of lost hardware and electronic media and any data under the disaster recovery plan person responsible therefore. and emergency mode operations plan in (iv) Data backup and storage (Address- the event of an emergency. able). Create a retrievable, exact copy (ii) Facility security plan (Address- of electronic protected health informa- able). Implement policies and proce- tion, when needed, before movement of dures to safeguard the facility and the equipment. equipment therein from unauthorized physical access, tampering, and theft. § 164.312 Technical safeguards. (iii) Access control and validation pro- A covered entity must, in accordance cedures (Addressable). Implement pro- with § 164.306: cedures to control and validate a per- (a)(1) Standard: Access control. Imple- son’s access to facilities based on their ment technical policies and procedures role or function, including visitor con- for electronic information systems trol, and control of access to software that maintain electronic protected programs for testing and revision. health information to allow access (iv) Maintenance records (Address- only to those persons or software pro- able). Implement policies and proce- grams that have been granted access dures to document repairs and modi- rights as specified in § 164.308(a)(4). fications to the physical components of (2) Implementation specifications: a facility which are related to security (i) Unique user identification (Re- (for example, hardware, walls, doors, quired). Assign a unique name and/or and locks). number for identifying and tracking (b) Standard: Workstation use. Imple- user identity. ment policies and procedures that (ii) Emergency access procedure (Re- specify the proper functions to be per- quired). Establish (and implement as

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needed) procedures for obtaining nec- meet the requirements of paragraph essary electronic protected health in- (a)(2)(i) or (a)(2)(ii) of this section, as formation during an emergency. applicable. (iii) Automatic logoff (Addressable). (ii) A covered entity is not in compli- Implement electronic procedures that ance with the standards in § 164.502(e) terminate an electronic session after a and paragraph (a) of this section if the predetermined time of inactivity. covered entity knew of a pattern of an (iv) Encryption and decryption (Ad- activity or practice of the business as- dressable). Implement a mechanism to sociate that constituted a material encrypt and decrypt electronic pro- breach or violation of the business as- tected health information. sociate’s obligation under the contract (b) Standard: Audit controls. Imple- or other arrangement, unless the cov- ment hardware, software, and/or proce- ered entity took reasonable steps to dural mechanisms that record and ex- cure the breach or end the violation, as amine activity in information systems applicable, and, if such steps were un- that contain or use electronic pro- successful— tected health information. (A) Terminated the contract or ar- (c)(1) Standard: Integrity. Implement rangement, if feasible; or policies and procedures to protect elec- (B) If termination is not feasible, re- tronic protected health information ported the problem to the Secretary. from improper alteration or destruc- (2) Implementation specifications (Re- tion. quired). (2) Implementation specification: Mech- (i) Business associate contracts. The anism to authenticate electronic protected contract between a covered entity and health information (Addressable). Imple- a business associate must provide that ment electronic mechanisms to cor- the business associate will— roborate that electronic protected (A) Implement administrative, phys- health information has not been al- ical, and technical safeguards that rea- tered or destroyed in an unauthorized sonably and appropriately protect the manner. confidentiality, integrity, and avail- (d) Standard: Person or entity authen- ability of the electronic protected tication. Implement procedures to health information that it creates, re- verify that a person or entity seeking ceives, maintains, or transmits on be- access to electronic protected health half of the covered entity as required information is the one claimed. by this subpart; (e)(1) Standard: Transmission security. (B) Ensure that any agent, including Implement technical security measures a subcontractor, to whom it provides to guard against unauthorized access such information agrees to implement to electronic protected health informa- reasonable and appropriate safeguards tion that is being transmitted over an to protect it; electronic communications network. (C) Report to the covered entity any (2) Implementation specifications: security incident of which it becomes (i) Integrity controls (Addressable). aware; Implement security measures to ensure (D) Authorize termination of the con- that electronically transmitted elec- tract by the covered entity, if the cov- tronic protected health information is ered entity determines that the busi- not improperly modified without detec- ness associate has violated a material tion until disposed of. term of the contract. (ii) Encryption (Addressable). Imple- (ii) Other arrangements. (A) When a ment a mechanism to encrypt elec- covered entity and its business asso- tronic protected health information ciate are both governmental entities, whenever deemed appropriate. the covered entity is in compliance with paragraph (a)(1) of this section, § 164.314 Organizational requirements. if— (a)(1) Standard: Business associate con- (1) It enters into a memorandum of tracts or other arrangements. (i) The con- understanding with the business asso- tract or other arrangement between ciate that contains terms that accom- the covered entity and its business as- plish the objectives of paragraph sociate required by § 164.308(b) must (a)(2)(i) of this section; or

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(2) Other law (including regulations ceives, maintains, or transmits on be- adopted by the covered entity or its half of the group health plan; business associate) contains require- (ii) Ensure that the adequate separa- ments applicable to the business asso- tion required by § 164.504(f)(2)(iii) is ciate that accomplish the objectives of supported by reasonable and appro- paragraph (a)(2)(i) of this section. priate security measures; (B) If a business associate is required (iii) Ensure that any agent, including by law to perform a function or activ- a subcontractor, to whom it provides ity on behalf of a covered entity or to this information agrees to implement provide a service described in the defi- reasonable and appropriate security nition of business associate as specified measures to protect the information; in § 160.103 of this subchapter to a cov- and ered entity, the covered entity may (iv) Report to the group health plan permit the business associate to create, any security incident of which it be- receive, maintain, or transmit elec- comes aware. tronic protected health information on its behalf to the extent necessary to § 164.316 Policies and procedures and comply with the legal mandate without documentation requirements. meeting the requirements of paragraph A covered entity must, in accordance (a)(2)(i) of this section, provided that with § 164.306: the covered entity attempts in good (a) Standard: Policies and procedures. faith to obtain satisfactory assurances Implement reasonable and appropriate as required by paragraph (a)(2)(ii)(A) of policies and procedures to comply with this section, and documents the at- the standards, implementation speci- tempt and the reasons that these as- fications, or other requirements of this surances cannot be obtained. subpart, taking into account those fac- (C) The covered entity may omit tors specified in § 164.306(b)(2)(i), (ii), from its other arrangements authoriza- (iii), and (iv). This standard is not to be tion of the termination of the contract construed to permit or excuse an ac- by the covered entity, as required by tion that violates any other standard, paragraph (a)(2)(i)(D) of this section if implementation specification, or other such authorization is inconsistent with requirements of this subpart. A covered the statutory obligations of the cov- entity may change its policies and pro- ered entity or its business associate. cedures at any time, provided that the (b)(1) Standard: Requirements for group changes are documented and are imple- health plans. Except when the only mented in accordance with this sub- electronic protected health informa- part. tion disclosed to a plan sponsor is dis- (b)(1) Standard: Documentation. (i) closed pursuant to § 164.504(f)(1)(ii) or Maintain the policies and procedures (iii), or as authorized under § 164.508, a implemented to comply with this sub- group health plan must ensure that its part in written (which may be elec- plan documents provide that the plan tronic) form; and sponsor will reasonably and appro- (ii) If an action, activity or assess- priately safeguard electronic protected ment is required by this subpart to be health information created, received, documented, maintain a written (which maintained, or transmitted to or by may be electronic) record of the action, the plan sponsor on behalf of the group activity, or assessment. health plan. (2) Implementation specifications: (2) Implementation specifications (Re- (i) Time limit (Required). Retain the quired). The plan documents of the documentation required by paragraph group health plan must be amended to (b)(1) of this section for 6 years from incorporate provisions to require the the date of its creation or the date plan sponsor to— when it last was in effect, whichever is (i) Implement administrative, phys- later. ical, and technical safeguards that rea- (ii) Availability (Required). Make doc- sonably and appropriately protect the umentation available to those persons confidentiality, integrity, and avail- responsible for implementing the pro- ability of the electronic protected cedures to which the documentation health information that it creates, re- pertains.

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(iii) Updates (Required). Review docu- this subpart no later than April 20, mentation periodically, and update as 2005. needed, in response to environmental (2) A small health plan must comply or operational changes affecting the se- with the applicable requirements of curity of the electronic protected this subpart no later than April 20, health information. 2006. (b) Health care clearinghouse. A health § 164.318 Compliance dates for the ini- care clearinghouse must comply with tial implementation of the security the applicable requirements of this standards. subpart no later than April 20, 2005. (a) Health plan. (1) A health plan that (c) Health care provider. A covered is not a small health plan must comply health care provider must comply with the applicable requirements of this with the applicable requirements of subpart no later than April 20, 2005.

APPENDIX A TO SUBPART C OF PART 164—SECURITY STANDARDS: MATRIX

Implementation Specifications (R)=Required, Standards Sections (A)=Addressable

Administrative Safeguards

Security Management Process ...... 164.308(a)(1) Risk Analysis (R) Risk Management (R) Sanction Policy (R) Information System Activity Review (R) Assigned Security Responsibility ...... 164.308(a)(2) (R) Workforce Security ...... 164.308(a)(3) Authorization and/or Supervision (A) Workforce Clearance Procedure Termination Procedures (A) Information Access Management ...... 164.308(a)(4) Isolating Health care Clearinghouse Function (R) Access Authorization (A) Access Establishment and Modification (A) Security Awareness and Training ...... 164.308(a)(5) Security Reminders (A) Protection from Malicious Software (A) Log-in Monitoring (A) Password Management (A) Security Incident Procedures ...... 164.308(a)(6) Response and Reporting (R) Contingency Plan ...... 164.308(a)(7) Data Backup Plan (R) Disaster Recovery Plan (R) Emergency Mode Operation Plan (R) Testing and Revision Procedure (A) Applications and Data Criticality Analysis (A) Evaluation ...... 164.308(a)(8) (R) Business Associate Contracts and 164.308(b)(1) Written Contract or Other Arrangement (R) Other Arrangement.

Physical Safeguards

Facility Access Controls ...... 164.310(a)(1) Contingency Operations (A) Facility Security Plan (A) Access Control and Validation Procedures (A) Maintenance Records (A) Workstation Use ...... 164.310(b) (R) Workstation Security ...... 164.310(c) (R) Device and Media Controls ...... 164.310(d)(1) Disposal (R) Media Re-use (R) Accountability (A) Data Backup and Storage (A)

Technical Safeguards (see § 164.312)

Access Control ...... 164.312(a)(1) Unique User Identification (R) Emergency Access Procedure (R) Automatic Logoff (A) Encryption and Decryption (A) Audit Controls ...... 164.312(b) (R) Integrity ...... 164.312(c)(1) Mechanism to Authenticate Electronic Protected Health In- formation (A) Person or Entity Authentication ...... 164.312(d) (R) Transmission Security ...... 164.312(e)(1) Integrity Controls (A)

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Implementation Specifications (R)=Required, Standards Sections (A)=Addressable

Encryption (A)

Subpart D [Reserved] (vii) Section 164.534 relating to compliance dates for initial implementa- Subpart E—Privacy of Individually tion of the privacy standards. Identifiable Health Information (2) When a health care clearinghouse creates or receives protected health information other than as a business as- AUTHORITY: 42 U.S.C. 1320d–2 and 1320d–4, sociate of a covered entity, the clear- sec. 264 of Pub. L. 104–191, 110 Stat. 2033–2034 (42 U.S.C. 1320d–2(note)). inghouse must comply with all of the standards, requirements, and imple- § 164.500 Applicability. mentation specifications of this sub- (a) Except as otherwise provided part. herein, the standards, requirements, (c) The standards, requirements, and and implementation specifications of implementation specifications of this this subpart apply to covered entities subpart do not apply to the Depart- with respect to protected health infor- ment of Defense or to any other federal mation. agency, or non-governmental organiza- (b) Health care clearinghouses must tion acting on its behalf, when pro- comply with the standards, require- viding health care to overseas foreign ments, and implementation specifica- national beneficiaries. tions as follows: [65 FR 82802, Dec. 28, 2000, as amended at 67 (1) When a health care clearinghouse FR 53266, Aug. 14, 2002; 68 FR 8381, Feb. 20, creates or receives protected health in- 2003] formation as a business associate of another covered entity, the clearinghouse § 164.501 Definitions. must comply with: As used in this subpart, the following (i) Section 164.500 relating to applica- terms have the following meanings: bility; (ii) Section 164.501 relating to defini- Correctional institution means any tions; penal or correctional facility, jail, re- (iii) Section 164.502 relating to uses formatory, detention center, work and disclosures of protected health in- farm, halfway house, or residential formation, except that a clearinghouse community program center operated is prohibited from using or disclosing by, or under contract to, the United protected health information other States, a State, a territory, a political than as permitted in the business asso- subdivision of a State or territory, or ciate contract under which it created an Indian tribe, for the confinement or or received the protected health infor- rehabilitation of persons charged with mation; or convicted of a criminal offense or (iv) Section 164.504 relating to the or- other persons held in lawful custody. ganizational requirements for covered Other persons held in lawful custody in- entities; cludes juvenile offenders adjudicated (v) Section 164.512 relating to uses delinquent, aliens detained awaiting and disclosures for which individual deportation, persons committed to authorization or an opportunity to mental institutions through the crimi- agree or object is not required, except nal justice system, witnesses, or others that a clearinghouse is prohibited from awaiting charges or trial. using or disclosing protected health in- Data aggregation means, with respect formation other than as permitted in to protected health information cre- the business associate contract under ated or received by a business associate which it created or received the pro- in its capacity as the business asso- tected health information; ciate of a covered entity, the com- (vi) Section 164.532 relating to transi- bining of such protected health infor- tion requirements; and mation by the business associate with

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the protected health information re- learn under supervision to practice or ceived by the business associate in its improve their skills as health care pro- capacity as a business associate of an- viders, training of non-health care pro- other covered entity, to permit data fessionals, accreditation, certification, analyses that relate to the health care licensing, or credentialing activities; operations of the respective covered (3) Underwriting, premium rating, entities. and other activities relating to the cre- Designated record set means: ation, renewal or replacement of a con- (1) A group of records maintained by tract of health insurance or health ben- or for a covered entity that is: efits, and ceding, securing, or placing a (i) The medical records and billing contract for reinsurance of risk relat- records about individuals maintained ing to claims for health care (including by or for a covered health care pro- stop-loss insurance and excess of loss vider; insurance), provided that the require- (ii) The enrollment, payment, claims ments of § 164.514(g) are met, if applica- adjudication, and case or medical man- ble; agement record systems maintained by (4) Conducting or arranging for med- or for a health plan; or ical review, legal services, and auditing (iii) Used, in whole or in part, by or functions, including fraud and abuse for the covered entity to make deci- detection and compliance programs; sions about individuals. (5) Business planning and develop- (2) For purposes of this paragraph, ment, such as conducting cost-manage- the term record means any item, col- ment and planning-related analyses re- lection, or grouping of information lated to managing and operating the that includes protected health informa- entity, including formulary develop- tion and is maintained, collected, used, ment and administration, development or disseminated by or for a covered en- or improvement of methods of payment tity. or coverage policies; and Direct treatment relationship means a (6) Business management and general treatment relationship between an in- administrative activities of the entity, dividual and a health care provider including, but not limited to: that is not an indirect treatment rela- (i) Management activities relating to tionship. implementation of and compliance Health care operations means any of with the requirements of this sub- the following activities of the covered chapter; entity to the extent that the activities (ii) Customer service, including the are related to covered functions: provision of data analyses for policy (1) Conducting quality assessment holders, plan sponsors, or other cus- and improvement activities, including tomers, provided that protected health outcomes evaluation and development information is not disclosed to such of clinical guidelines, provided that the policy holder, plan sponsor, or cus- obtaining of generalizable knowledge is tomer. not the primary purpose of any studies (iii) Resolution of internal griev- resulting from such activities; popu- ances; lation-based activities relating to im- (iv) The sale, transfer, merger, or proving health or reducing health care consolidation of all or part of the cov- costs, protocol development, case man- ered entity with another covered enti- agement and care coordination, con- ty, or an entity that following such ac- tacting of health care providers and pa- tivity will become a covered entity and tients with information about treat- due diligence related to such activity; ment alternatives; and related func- and tions that do not include treatment; (v) Consistent with the applicable re- (2) Reviewing the competence or quirements of § 164.514, creating de- qualifications of health care profes- identified health information or a lim- sionals, evaluating practitioner and ited data set, and fundraising for the provider performance, health plan per- benefit of the covered entity. formance, conducting training pro- Health oversight agency means an grams in which students, trainees, or agency or authority of the United practitioners in areas of health care States, a State, a territory, a political

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subdivision of a State or territory, or network; replacement of, or enhance- an Indian tribe, or a person or entity ments to, a health plan; and health-re- acting under a grant of authority from lated products or services available or contract with such public agency, only to a health plan enrollee that add including the employees or agents of value to, but are not part of, a plan of such public agency or its contractors benefits. or persons or entities to whom it has (ii) For treatment of the individual; granted authority, that is authorized or by law to oversee the health care sys- (iii) For case management or care co- tem (whether public or private) or gov- ordination for the individual, or to di- ernment programs in which health in- rect or recommend alternative treat- formation is necessary to determine ments, therapies, health care pro- eligibility or compliance, or to enforce viders, or settings of care to the indi- civil rights laws for which health infor- vidual. mation is relevant. (2) An arrangement between a cov- Indirect treatment relationship means a ered entity and any other entity relationship between an individual and whereby the covered entity discloses a health care provider in which: protected health information to the (1) The health care provider delivers other entity, in exchange for direct or health care to the individual based on indirect remuneration, for the other the orders of another health care pro- entity or its affiliate to make a com- vider; and munication about its own product or (2) The health care provider typically service that encourages recipients of provides services or products, or re- the communication to purchase or use ports the diagnosis or results associ- that product or service. ated with the health care, directly to Payment means: another health care provider, who pro- (1) The activities undertaken by: vides the services or products or re- (i) A health plan to obtain premiums ports to the individual. or to determine or fulfill its responsi- Inmate means a person incarcerated bility for coverage and provision of in or otherwise confined to a correc- benefits under the health plan; or tional institution. (ii) A health care provider or health Law enforcement official means an of- plan to obtain or provide reimburse- ficer or employee of any agency or au- ment for the provision of health care; thority of the United States, a State, a and territory, a political subdivision of a (2) The activities in paragraph (1) of State or territory, or an Indian tribe, this definition relate to the individual who is empowered by law to: to whom health care is provided and in- (1) Investigate or conduct an official clude, but are not limited to: inquiry into a potential violation of (i) Determinations of eligibility or law; or coverage (including coordination of (2) Prosecute or otherwise conduct a benefits or the determination of cost criminal, civil, or administrative pro- sharing amounts), and adjudication or ceeding arising from an alleged viola- subrogation of health benefit claims; tion of law. (ii) Risk adjusting amounts due based Marketing means: on enrollee health status and demo- (1) To make a communication about graphic characteristics; a product or service that encourages (iii) Billing, claims management, col- recipients of the communication to lection activities, obtaining payment purchase or use the product or service, under a contract for reinsurance (in- unless the communication is made: cluding stop-loss insurance and excess (i) To describe a health-related prod- of loss insurance), and related health uct or service (or payment for such care data processing; product or service) that is provided by, (iv) Review of health care services or included in a plan of benefits of, the with respect to medical necessity, cov- covered entity making the communica- erage under a health plan, appropriate- tion, including communications about: ness of care, or justification of charges; the entities participating in a health (v) Utilization review activities, in- care provider network or health plan cluding precertification and

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preauthorization of services, concur- a patient; or the referral of a patient rent and retrospective review of serv- for health care from one health care ices; and provider to another. (vi) Disclosure to consumer reporting agencies of any of the following pro- [65 FR 82802, Dec. 28, 2000, as amended at 67 FR 53266, Aug. 14, 2002; 68 FR 8381, Feb. 20, tected health information relating to 2003] collection of premiums or reimbursement: § 164.502 Uses and disclosures of pro- (A) Name and address; tected health information: general (B) Date of birth; rules. (C) Social security number; (a) Standard. A covered entity may (D) Payment history; not use or disclose protected health in- (E) Account number; and formation, except as permitted or re- (F) Name and address of the health care provider and/or health plan. quired by this subpart or by subpart C Psychotherapy notes means notes re- of part 160 of this subchapter. corded (in any medium) by a health (1) Permitted uses and disclosures. A care provider who is a mental health covered entity is permitted to use or professional documenting or analyzing disclose protected health information the contents of conversation during a as follows: private counseling session or a group, (i) To the individual; joint, or family counseling session and (ii) For treatment, payment, or that are separated from the rest of the health care operations, as permitted by individual’s medical record. Psycho- and in compliance with § 164.506; therapy notes excludes medication pre- (iii) Incident to a use or disclosure scription and monitoring, counseling otherwise permitted or required by this session start and stop times, the mo- subpart, provided that the covered en- dalities and frequencies of treatment tity has complied with the applicable furnished, results of clinical tests, and requirements of § 164.502(b), § 164.514(d), any summary of the following items: and § 164.530(c) with respect to such Diagnosis, functional status, the treat- otherwise permitted or required use or ment plan, symptoms, prognosis, and disclosure; progress to date. (iv) Pursuant to and in compliance Public health authority means an with a valid authorization under agency or authority of the United § 164.508; States, a State, a territory, a political (v) Pursuant to an agreement under, subdivision of a State or territory, or or as otherwise permitted by, § 164.510; an Indian tribe, or a person or entity and acting under a grant of authority from (vi) As permitted by and in compli- or contract with such public agency, ance with this section, § 164.512, or including the employees or agents of § 164.514(e), (f), or (g). such public agency or its contractors or persons or entities to whom it has (2) Required disclosures. A covered en- granted authority, that is responsible tity is required to disclose protected for public health matters as part of its health information: official mandate. (i) To an individual, when requested Research means a systematic inves- under, and required by § 164.524 or tigation, including research develop- § 164.528; and ment, testing, and evaluation, designed (ii) When required by the Secretary to develop or contribute to generaliz- under subpart C of part 160 of this sub- able knowledge. chapter to investigate or determine the Treatment means the provision, co- covered entity’s compliance with this ordination, or management of health subpart. care and related services by one or (b) Standard: Minimum necessary—(1) more health care providers, including Minimum necessary applies. When using the coordination or management of or disclosing protected health informa- health care by a health care provider tion or when requesting protected with a third party; consultation be- health information from another cov- tween health care providers relating to ered entity, a covered entity must

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make reasonable efforts to limit pro- (i) Disclosure of a code or other tected health information to the min- means of record identification designed imum necessary to accomplish the in- to enable coded or otherwise de-identi- tended purpose of the use, disclosure, fied information to be re-identified or request. constitutes disclosure of protected (2) Minimum necessary does not apply. health information; and This requirement does not apply to: (ii) If de-identified information is re- (i) Disclosures to or requests by a identified, a covered entity may use or health care provider for treatment; disclose such re-identified information (ii) Uses or disclosures made to the only as permitted or required by this individual, as permitted under para- subpart. graph (a)(1)(i) of this section or as re- (e)(1) Standard: Disclosures to business quired by paragraph (a)(2)(i) of this sec- associates. (i) A covered entity may dis- tion; close protected health information to a (iii) Uses or disclosures made pursu- business associate and may allow a ant to an authorization under § 164.508; business associate to create or receive (iv) Disclosures made to the Sec- protected health information on its be- retary in accordance with subpart C of half, if the covered entity obtains sat- part 160 of this subchapter; isfactory assurance that the business (v) Uses or disclosures that are re- associate will appropriately safeguard quired by law, as described by the information. § 164.512(a); and (ii) This standard does not apply: (vi) Uses or disclosures that are re- (A) With respect to disclosures by a quired for compliance with applicable covered entity to a health care pro- requirements of this subchapter. vider concerning the treatment of the (c) Standard: Uses and disclosures of individual; protected health information subject to an (B) With respect to disclosures by a agreed upon restriction. A covered entity group health plan or a health insurance that has agreed to a restriction pursu- issuer or HMO with respect to a group ant to § 164.522(a)(1) may not use or dis- health plan to the plan sponsor, to the close the protected health information extent that the requirements of covered by the restriction in violation § 164.504(f) apply and are met; or of such restriction, except as otherwise (C) With respect to uses or disclo- provided in § 164.522(a). sures by a health plan that is a govern- (d) Standard: Uses and disclosures of ment program providing public bene- de-identified protected health informa- fits, if eligibility for, or enrollment in, tion.(1) Uses and disclosures to create de- the health plan is determined by an identified information. A covered entity agency other than the agency admin- may use protected health information istering the health plan, or if the pro- to create information that is not indi- tected health information used to de- vidually identifiable health informa- termine enrollment or eligibility in the tion or disclose protected health infor- health plan is collected by an agency mation only to a business associate for other than the agency administering such purpose, whether or not the de- the health plan, and such activity is identified information is to be used by authorized by law, with respect to the the covered entity. collection and sharing of individually (2) Uses and disclosures of de-identified identifiable health information for the information. Health information that performance of such functions by the meets the standard and implementa- health plan and the agency other than tion specifications for de-identification the agency administering the health under § 164.514(a) and (b) is considered plan. not to be individually identifiable (iii) A covered entity that violates health information, i.e., de-identified. the satisfactory assurances it provided The requirements of this subpart do as a business associate of another cov- not apply to information that has been ered entity will be in noncompliance de-identified in accordance with the with the standards, implementation applicable requirements of § 164.514, specifications, and requirements of this provided that: paragraph and § 164.504(e).

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(2) Implementation specification: docu- (B) The minor may lawfully obtain mentation. A covered entity must docu- such health care service without the ment the satisfactory assurances re- consent of a parent, guardian, or other quired by paragraph (e)(1) of this sec- person acting in loco parentis, and the tion through a written contract or minor, a court, or another person au- other written agreement or arrange- thorized by law consents to such health ment with the business associate that care service; or meets the applicable requirements of (C) A parent, guardian, or other per- § 164.504(e). son acting in loco parentis assents to an (f) Standard: Deceased individuals. A agreement of confidentiality between a covered entity must comply with the covered health care provider and the requirements of this subpart with re- minor with respect to such health care spect to the protected health informa- service. tion of a deceased individual. (ii) Notwithstanding the provisions of (g)(1) Standard: Personal representa- paragraph (g)(3)(i) of this section: tives. As specified in this paragraph, a (A) If, and to the extent, permitted or covered entity must, except as pro- required by an applicable provision of vided in paragraphs (g)(3) and (g)(5) of State or other law, including applica- this section, treat a personal represent- ble case law, a covered entity may dis- ative as the individual for purposes of close, or provide access in accordance this subchapter. with § 164.524 to, protected health information about an unemancipated minor (2) Implementation specification: adults to a parent, guardian, or other person and emancipated minors. If under appli- acting in loco parentis; cable law a person has authority to act (B) If, and to the extent, prohibited on behalf of an individual who is an by an applicable provision of State or adult or an emancipated minor in mak- other law, including applicable case ing decisions related to health care, a law, a covered entity may not disclose, covered entity must treat such person or provide access in accordance with as a personal representative under this § 164.524 to, protected health informa- subchapter, with respect to protected tion about an unemancipated minor to health information relevant to such a parent, guardian, or other person act- personal representation. ing in loco parentis; and (3)(i) Implementation specification: (C) Where the parent, guardian, or unemancipated minors. If under applica- other person acting in loco parentis, is ble law a parent, guardian, or other not the personal representative under person acting in loco parentis has au- paragraphs (g)(3)(i)(A), (B), or (C) of thority to act on behalf of an indi- this section and where there is no ap- vidual who is an unemancipated minor plicable access provision under State in making decisions related to health or other law, including case law, a cov- care, a covered entity must treat such ered entity may provide or deny access person as a personal representative under § 164.524 to a parent, guardian, or under this subchapter, with respect to other person acting in loco parentis, if protected health information relevant such action is consistent with State or to such personal representation, except other applicable law, provided that that such person may not be a personal such decision must be made by a li- representative of an unemancipated censed health care professional, in the minor, and the minor has the authority exercise of professional judgment. to act as an individual, with respect to (4) Implementation specification: De- protected health information per- ceased individuals. If under applicable taining to a health care service, if: law an executor, administrator, or (A) The minor consents to such other person has authority to act on health care service; no other consent to behalf of a deceased individual or of such health care service is required by the individual’s estate, a covered enti- law, regardless of whether the consent ty must treat such person as a personal of another person has also been ob- representative under this subchapter, tained; and the minor has not re- with respect to protected health infor- quested that such person be treated as mation relevant to such personal rep- the personal representative; resentation.

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(5) Implementation specification: Abuse, (A) A health oversight agency or pub- neglect, endangerment situations. Not- lic health authority authorized by law withstanding a State law or any re- to investigate or otherwise oversee the quirement of this paragraph to the con- relevant conduct or conditions of the trary, a covered entity may elect not covered entity or to an appropriate to treat a person as the personal rep- health care accreditation organization resentative of an individual if: for the purpose of reporting the allega- (i) The covered entity has a reason- tion of failure to meet professional able belief that: standards or misconduct by the cov- (A) The individual has been or may ered entity; or be subjected to domestic violence, (B) An attorney retained by or on be- abuse, or neglect by such person; or half of the workforce member or busi- (B) Treating such person as the per- ness associate for the purpose of deter- sonal representative could endanger mining the legal options of the work- the individual; and force member or business associate (ii) The covered entity, in the exer- with regard to the conduct described in cise of professional judgment, decides paragraph (j)(1)(i) of this section. that it is not in the best interest of the (2) Disclosures by workforce members individual to treat the person as the in- who are victims of a crime. A covered en- dividual’s personal representative. tity is not considered to have violated the requirements of this subpart if a (h) Standard: Confidential communica- member of its workforce who is the victions. A covered health care provider or tim of a criminal act discloses pro- health plan must comply with the ap- tected health information to a law en- plicable requirements of § 164.522(b) in forcement official, provided that: communicating protected health information. (i) The protected health information disclosed is about the suspected perpe- (i) Standard: Uses and disclosures con- trator of the criminal act; and sistent with notice. A covered entity (ii) The protected health information that is required by § 164.520 to have a disclosed is limited to the information notice may not use or disclose pro- listed in § 164.512(f)(2)(i). tected health information in a manner inconsistent with such notice. A cov- [65 FR 82802, Dec. 28, 2000, as amended at 67 ered entity that is required by FR 53267, Aug. 14, 2002] § 164.520(b)(1)(iii) to include a specific statement in its notice if it intends to § 164.504 Uses and disclosures: Organi- engage in an activity listed in zational requirements. § 164.520(b)(1)(iii)(A)–(C), may not use or (a) Definitions. As used in this sec- disclose protected health information tion: for such activities, unless the required Plan administration functions means statement is included in the notice. administration functions performed by (j) Standard: Disclosures by whistle- the plan sponsor of a group health plan blowers and workforce member crime vic- on behalf of the group health plan and tims—(1) Disclosures by whistleblowers. A excludes functions performed by the covered entity is not considered to plan sponsor in connection with any have violated the requirements of this other benefit or benefit plan of the plan subpart if a member of its workforce or sponsor. a business associate discloses protected Summary health information means in- health information, provided that: formation, that may be individually (i) The workforce member or business identifiable health information, and: associate believes in good faith that (1) That summarizes the claims his- the covered entity has engaged in con- tory, claims expenses, or type of claims duct that is unlawful or otherwise vio- experienced by individuals for whom a lates professional or clinical standards, plan sponsor has provided health bene- or that the care, services, or conditions fits under a group health plan; and provided by the covered entity poten- (2) From which the information de- tially endangers one or more patients, scribed at § 164.514(b)(2)(i) has been de- workers, or the public; and leted, except that the geographic infor- (ii) The disclosure is to: mation described in § 164.514(b)(2)(i)(B)

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need only be aggregated to the level of (B) Use appropriate safeguards to a five digit zip code. prevent use or disclosure of the infor- (b)–(d) [Reserved] mation other than as provided for by (e)(1) Standard: Business associate con- its contract; tracts. (i) The contract or other ar- (C) Report to the covered entity any rangement between the covered entity use or disclosure of the information and the business associate required by not provided for by its contract of § 164.502(e)(2) must meet the require- which it becomes aware; ments of paragraph (e)(2) or (e)(3) of (D) Ensure that any agents, including this section, as applicable. a subcontractor, to whom it provides (ii) A covered entity is not in compli- protected health information received ance with the standards in § 164.502(e) from, or created or received by the and paragraph (e) of this section, if the business associate on behalf of, the covered entity knew of a pattern of ac- covered entity agrees to the same re- tivity or practice of the business asso- strictions and conditions that apply to ciate that constituted a material the business associate with respect to breach or violation of the business as- such information; sociate’s obligation under the contract (E) Make available protected health or other arrangement, unless the cov- information in accordance with ered entity took reasonable steps to § 164.524; cure the breach or end the violation, as (F) Make available protected health applicable, and, if such steps were un- information for amendment and incor- successful: porate any amendments to protected (A) Terminated the contract or ar- health information in accordance with rangement, if feasible; or § 164.526; (B) If termination is not feasible, re- (G) Make available the information ported the problem to the Secretary. required to provide an accounting of (2) Implementation specifications: Busi- disclosures in accordance with § 164.528; ness associate contracts. A contract be- (H) Make its internal practices, tween the covered entity and a busi- books, and records relating to the use ness associate must: and disclosure of protected health in- (i) Establish the permitted and re- formation received from, or created or quired uses and disclosures of such in- received by the business associate on formation by the business associate. behalf of, the covered entity available The contract may not authorize the to the Secretary for purposes of deter- business associate to use or further dis- mining the covered entity’s compliance close the information in a manner that with this subpart; and would violate the requirements of this (I) At termination of the contract, if subpart, if done by the covered entity, feasible, return or destroy all protected except that: health information received from, or (A) The contract may permit the created or received by the business as- business associate to use and disclose sociate on behalf of, the covered entity protected health information for the that the business associate still main- proper management and administra- tains in any form and retain no copies tion of the business associate, as proof such information or, if such return vided in paragraph (e)(4) of this sec- or destruction is not feasible, extend tion; and the protections of the contract to the (B) The contract may permit the information and limit further uses and business associate to provide data ag- disclosures to those purposes that gregation services relating to the make the return or destruction of the health care operations of the covered information infeasible. entity. (iii) Authorize termination of the (ii) Provide that the business asso- contract by the covered entity, if the ciate will: covered entity determines that the (A) Not use or further disclose the in- business associate has violated a mate- formation other than as permitted or rial term of the contract. required by the contract or as required (3) Implementation specifications: Other by law; arrangements. (i) If a covered entity and

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its business associate are both govern- (ii) The contract or other arrange- mental entities: ment between the covered entity and (A) The covered entity may comply the business associate may permit the with paragraph (e) of this section by business associate to disclose the infor- entering into a memorandum of under- mation received by the business asso- standing with the business associate ciate in its capacity as a business asso- that contains terms that accomplish ciate for the purposes described in the objectives of paragraph (e)(2) of paragraph (e)(4)(i) of this section, if: this section. (A) The disclosure is required by law; (B) The covered entity may comply or with paragraph (e) of this section, if (B)(1) The business associate obtains other law (including regulations adopt- reasonable assurances from the person ed by the covered entity or its business to whom the information is disclosed associate) contains requirements appli- that it will be held confidentially and cable to the business associate that ac- used or further disclosed only as re- complish the objectives of paragraph quired by law or for the purpose for (e)(2) of this section. which it was disclosed to the person; (ii) If a business associate is required and by law to perform a function or activ- (2) The person notifies the business ity on behalf of a covered entity or to associate of any instances of which it provide a service described in the defi- is aware in which the confidentiality of nition of business associate in § 160.103 of the information has been breached. this subchapter to a covered entity, (f)(1) Standard: Requirements for group such covered entity may disclose pro- health plans. (i) Except as provided tected health information to the busi- under paragraph (f)(1)(ii) or (iii) of this ness associate to the extent necessary section or as otherwise authorized to comply with the legal mandate under § 164.508, a group health plan, in without meeting the requirements of order to disclose protected health in- this paragraph (e), provided that the formation to the plan sponsor or to covered entity attempts in good faith provide for or permit the disclosure of to obtain satisfactory assurances as re- protected health information to the quired by paragraph (e)(3)(i) of this sec- plan sponsor by a health insurance tion, and, if such attempt fails, docu- issuer or HMO with respect to the ments the attempt and the reasons group health plan, must ensure that that such assurances cannot be ob- the plan documents restrict uses and tained. disclosures of such information by the (iii) The covered entity may omit plan sponsor consistent with the re- from its other arrangements the termi- quirements of this subpart. nation authorization required by para- (ii) The group health plan, or a graph (e)(2)(iii) of this section, if such health insurance issuer or HMO with authorization is inconsistent with the respect to the group health plan, may statutory obligations of the covered disclose summary health information entity or its business associate. to the plan sponsor, if the plan sponsor (4) Implementation specifications: Other requests the summary health informa- requirements for contracts and other ar- tion for the purpose of : rangements. (i) The contract or other (A) Obtaining premium bids from arrangement between the covered enti- health plans for providing health insur- ty and the business associate may per- ance coverage under the group health mit the business associate to use the plan; or information received by the business (B) Modifying, amending, or termi- associate in its capacity as a business nating the group health plan. associate to the covered entity, if nec- (iii) The group health plan, or a essary: health insurance issuer or HMO with (A) For the proper management and respect to the group health plan, may administration of the business asso- disclose to the plan sponsor informa- ciate; or tion on whether the individual is par- (B) To carry out the legal respon- ticipating in the group health plan, or sibilities of the business associate. is enrolled in or has disenrolled from a

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health insurance issuer or HMO offered by the group health plan with this sub- by the plan. part; (2) Implementation specifications: Re- (I) If feasible, return or destroy all quirements for plan documents. The plan protected health information received documents of the group health plan from the group health plan that the must be amended to incorporate provi- sponsor still maintains in any form and sions to: retain no copies of such information (i) Establish the permitted and re- when no longer needed for the purpose quired uses and disclosures of such infor which disclosure was made, except formation by the plan sponsor, pro- that, if such return or destruction is vided that such permitted and required not feasible, limit further uses and dis- uses and disclosures may not be incon- closures to those purposes that make sistent with this subpart. the return or destruction of the infor- (ii) Provide that the group health mation infeasible; and plan will disclose protected health in- (J) Ensure that the adequate separa- formation to the plan sponsor only tion required in paragraph (f)(2)(iii) of upon receipt of a certification by the this section is established. plan sponsor that the plan documents (iii) Provide for adequate separation have been amended to incorporate the between the group health plan and the following provisions and that the plan plan sponsor. The plan documents sponsor agrees to: must: (A) Not use or further disclose the in- (A) Describe those employees or formation other than as permitted or classes of employees or other persons required by the plan documents or as under the control of the plan sponsor required by law; to be given access to the protected (B) Ensure that any agents, including health information to be disclosed, pro- a subcontractor, to whom it provides vided that any employee or person who protected health information received receives protected health information from the group health plan agree to the relating to payment under, health care same restrictions and conditions that operations of, or other matters per- apply to the plan sponsor with respect taining to the group health plan in the to such information; ordinary course of business must be in- (C) Not use or disclose the informa- cluded in such description; tion for employment-related actions (B) Restrict the access to and use by and decisions or in connection with such employees and other persons de- any other benefit or employee benefit scribed in paragraph (f)(2)(iii)(A) of this plan of the plan sponsor; section to the plan administration (D) Report to the group health plan functions that the plan sponsor per- any use or disclosure of the informa- forms for the group health plan; and tion that is inconsistent with the uses (C) Provide an effective mechanism or disclosures provided for of which it for resolving any issues of noncompli- becomes aware; ance by persons described in paragraph (E) Make available protected health (f)(2)(iii)(A) of this section with the information in accordance with plan document provisions required by § 164.524; this paragraph. (F) Make available protected health (3) Implementation specifications: Uses information for amendment and incor- and disclosures. A group health plan porate any amendments to protected may: health information in accordance with (i) Disclose protected health informa- § 164.526; tion to a plan sponsor to carry out plan (G) Make available the information administration functions that the plan required to provide an accounting of sponsor performs only consistent with disclosures in accordance with § 164.528; the provisions of paragraph (f)(2) of (H) Make its internal practices, this section; books, and records relating to the use (ii) Not permit a health insurance and disclosure of protected health in- issuer or HMO with respect to the formation received from the group group health plan to disclose protected health plan available to the Secretary health information to the plan sponsor for purposes of determining compliance except as permitted by this paragraph;

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(iii) Not disclose and may not permit (2) Consent, under paragraph (b) of a health insurance issuer or HMO to this section, shall not be effective to disclose protected health information permit a use or disclosure of protected to a plan sponsor as otherwise per- health information when an authoriza- mitted by this paragraph unless a tion, under § 164.508, is required or when statement required by another condition must be met for such § 164.520(b)(1)(iii)(C) is included in the use or disclosure to be permissible appropriate notice; and (iv) Not dis- under this subpart. close protected health information to (c) Implementation specifications: the plan sponsor for the purpose of em- Treatment, payment, or health care oper- ployment-related actions or decisions ations. (1) A covered entity may use or or in connection with any other benefit disclose protected health information or employee benefit plan of the plan for its own treatment, payment, or sponsor. health care operations. (g) Standard: Requirements for a cov- (2) A covered entity may disclose pro- ered entity with multiple covered func- tected health information for treat- tions. (1) A covered entity that per- ment activities of a health care pro- forms multiple covered functions that vider. would make the entity any combina- (3) A covered entity may disclose pro- tion of a health plan, a covered health tected health information to another care provider, and a health care clear- covered entity or a health care pro- inghouse, must comply with the stand- vider for the payment activities of the ards, requirements, and implementa- entity that receives the information. tion specifications of this subpart, as (4) A covered entity may disclose pro- applicable to the health plan, health tected health information to another care provider, or health care clearing- covered entity for health care oper- house covered functions performed. ations activities of the entity that re- (2) A covered entity that performs ceives the information, if each entity multiple covered functions may use or either has or had a relationship with disclose the protected health informa- the individual who is the subject of the tion of individuals who receive the cov- protected health information being re- ered entity’s health plan or health care quested, the protected health informa- provider services, but not both, only tion pertains to such relationship, and for purposes related to the appropriate the disclosure is: function being performed. (i) For a purpose listed in paragraph [65 FR 82802, Dec. 28, 2000, as amended at 67 (1) or (2) of the definition of health care FR 53267, Aug. 14, 2002; 68 FR 8381, Feb. 20, operations; or 2003] (ii) For the purpose of health care fraud and abuse detection or compli- § 164.506 Uses and disclosures to carry ance. out treatment, payment, or health care operations. (5) A covered entity that participates in an organized health care arrange- (a) Standard: Permitted uses and disclo- ment may disclose protected health insures. Except with respect to uses or formation about an individual to an- disclosures that require an authoriza- other covered entity that participates tion under § 164.508(a)(2) and (3), a cov- in the organized health care arrange- ered entity may use or disclose pro- ment for any health care operations ac- tected health information for treat- tivities of the organized health care ar- ment, payment, or health care oper- rangement. ations as set forth in paragraph (c) of this section, provided that such use or [67 FR 53268, Aug. 14, 2002] disclosure is consistent with other applicable requirements of this subpart. § 164.508 Uses and disclosures for (b) Standard: Consent for uses and dis- which an authorization is required. closures permitted. (1) A covered entity (a) Standard: authorizations for uses may obtain consent of the individual to and disclosures—(1) Authorization re- use or disclose protected health infor- quired: general rule. Except as otherwise mation to carry out treatment, pay- permitted or required by this sub- ment, or health care operations. chapter, a covered entity may not use

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or disclose protected health informa- paragraphs (a)(3)(ii), (c)(1), and (c)(2) of tion without an authorization that is this section, as applicable. valid under this section. When a cov- (ii) A valid authorization may con- ered entity obtains or receives a valid tain elements or information in addi- authorization for its use or disclosure tion to the elements required by this of protected health information, such section, provided that such additional use or disclosure must be consistent elements or information are not incon- with such authorization. sistent with the elements required by (2) Authorization required: psycho- this section. therapy notes. Notwithstanding any (2) Defective authorizations. An au- provision of this subpart, other than thorization is not valid, if the docu- the transition provisions in § 164.532, a ment submitted has any of the fol- covered entity must obtain an author- lowing defects: ization for any use or disclosure of psy- (i) The expiration date has passed or chotherapy notes, except: the expiration event is known by the (i) To carry out the following treat- covered entity to have occurred; ment, payment, or health care oper- (ii) The authorization has not been ations: filled out completely, with respect to (A) Use by the originator of the psy- an element described by paragraph (c) chotherapy notes for treatment; of this section, if applicable; (B) Use or disclosure by the covered (iii) The authorization is known by entity for its own training programs in the covered entity to have been re- which students, trainees, or practi- voked; tioners in mental health learn under (iv) The authorization violates para- supervision to practice or improve graph (b)(3) or (4) of this section, if ap- their skills in group, joint, family, or plicable; individual counseling; or (v) Any material information in the (C) Use or disclosure by the covered authorization is known by the covered entity to defend itself in a legal action entity to be false. or other proceeding brought by the in- (3) Compound authorizations. An au- dividual; and thorization for use or disclosure of pro- (ii) A use or disclosure that is re- tected health information may not be quired by § 164.502(a)(2)(ii) or permitted combined with any other document to by § 164.512(a); § 164.512(d) with respect create a compound authorization, ex- to the oversight of the originator of cept as follows: the psychotherapy notes; § 164.512(g)(1); (i) An authorization for the use or or § 164.512(j)(1)(i). disclosure of protected health informa- (3) Authorization required: Marketing. tion for a research study may be com- (i) Notwithstanding any provision of bined with any other type of written this subpart, other than the transition permission for the same research provisions in § 164.532, a covered entity study, including another authorization must obtain an authorization for any for the use or disclosure of protected use or disclosure of protected health health information for such research or information for marketing, except if a consent to participate in such re- the communication is in the form of: search; (A) A face-to-face communication (ii) An authorization for a use or dis- made by a covered entity to an indi- closure of psychotherapy notes may vidual; or only be combined with another author- (B) A promotional gift of nominal ization for a use or disclosure of psy- value provided by the covered entity. chotherapy notes; (ii) If the marketing involves direct (iii) An authorization under this sec- or indirect remuneration to the cov- tion, other than an authorization for a ered entity from a third party, the au- use or disclosure of psychotherapy thorization must state that such remu- notes, may be combined with any other neration is involved. such authorization under this section, (b) Implementation specifications: gen- except when a covered entity has con- eral requirements—(1) Valid authoriza- ditioned the provision of treatment, tions. (i) A valid authorization is a doc- payment, enrollment in the health ument that meets the requirements in plan, or eligibility for benefits under

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paragraph (b)(4) of this section on the (i) A description of the information provision of one of the authorizations. to be used or disclosed that identifies (4) Prohibition on conditioning of au- the information in a specific and mean- thorizations. A covered entity may not ingful fashion. condition the provision to an indi- (ii) The name or other specific identi- vidual of treatment, payment, enroll- fication of the person(s), or class of ment in the health plan, or eligibility persons, authorized to make the re- for benefits on the provision of an au- quested use or disclosure. thorization, except: (iii) The name or other specific iden- (i) A covered health care provider tification of the person(s), or class of may condition the provision of re- persons, to whom the covered entity search-related treatment on provision may make the requested use or disclo- of an authorization for the use or dis- sure. closure of protected health information (iv) A description of each purpose of for such research under this section; the requested use or disclosure. The (ii) A health plan may condition en- statement ‘‘at the request of the indi- rollment in the health plan or eligi- vidual’’ is a sufficient description of bility for benefits on provision of an the purpose when an individual initi- authorization requested by the health ates the authorization and does not, or plan prior to an individual’s enroll- elects not to, provide a statement of ment in the health plan, if: the purpose. (A) The authorization sought is for (v) An expiration date or an expira- the health plan’s eligibility or enroll- tion event that relates to the indi- ment determinations relating to the vidual or the purpose of the use or dis- individual or for its underwriting or closure. The statement ‘‘end of the re- risk rating determinations; and search study,’’ ‘‘none,’’ or similar lan- (B) The authorization is not for a use guage is sufficient if the authorization or disclosure of psychotherapy notes is for a use or disclosure of protected under paragraph (a)(2) of this section; health information for research, in- and cluding for the creation and mainte- (iii) A covered entity may condition nance of a research database or re- the provision of health care that is search repository. solely for the purpose of creating pro- (vi) Signature of the individual and tected health information for disclo- date. If the authorization is signed by a sure to a third party on provision of an personal representative of the indi- authorization for the disclosure of the vidual, a description of such represent- protected health information to such ative’s authority to act for the indi- third party. vidual must also be provided. (5) Revocation of authorizations. An in- (2) Required statements. In addition to dividual may revoke an authorization the core elements, the authorization provided under this section at any must contain statements adequate to time, provided that the revocation is in place the individual on notice of all of writing, except to the extent that: the following: (i) The covered entity has taken ac- (i) The individual’s right to revoke tion in reliance thereon; or the authorization in writing, and ei- (ii) If the authorization was obtained ther: as a condition of obtaining insurance (A) The exceptions to the right to re- coverage, other law provides the in- voke and a description of how the indi- surer with the right to contest a claim vidual may revoke the authorization; under the policy or the policy itself. or (6) Documentation. A covered entity (B) To the extent that the informa- must document and retain any signed tion in paragraph (c)(2)(i)(A) of this authorization under this section as re- section is included in the notice required by § 164.530(j). quired by § 164.520, a reference to the (c) Implementation specifications: Core covered entity’s notice. elements and requirements—(1) Core ele- (ii) The ability or inability to condi- ments. A valid authorization under tion treatment, payment, enrollment this section must contain at least the or eligibility for benefits on the au- following elements: thorization, by stating either:

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(A) The covered entity may not con- (C) The individual’s condition de- dition treatment, payment, enrollment scribed in general terms that does not or eligibility for benefits on whether communicate specific medical informa- the individual signs the authorization tion about the individual; and when the prohibition on conditioning (D) The individual’s religious affili- of authorizations in paragraph (b)(4) of ation; and this section applies; or (ii) Disclose for directory purposes (B) The consequences to the indi- such information: vidual of a refusal to sign the author- (A) To members of the clergy; or ization when, in accordance with para- (B) Except for religious affiliation, to graph (b)(4) of this section, the covered other persons who ask for the indi- entity can condition treatment, enroll- vidual by name. ment in the health plan, or eligibility (2) Opportunity to object. A covered for benefits on failure to obtain such health care provider must inform an authorization. individual of the protected health in- (iii) The potential for information formation that it may include in a di- disclosed pursuant to the authorization rectory and the persons to whom it to be subject to redisclosure by the re- may disclose such information (includ- cipient and no longer be protected by ing disclosures to clergy of information this subpart. regarding religious affiliation) and pro- (3) Plain language requirement. The vide the individual with the oppor- authorization must be written in plain tunity to restrict or prohibit some or language. all of the uses or disclosures permitted (4) Copy to the individual. If a covered by paragraph (a)(1) of this section. entity seeks an authorization from an (3) Emergency circumstances. (i) If the individual for a use or disclosure of opportunity to object to uses or disclo- protected health information, the cov- sures required by paragraph (a)(2) of ered entity must provide the individual this section cannot practicably be pro- with a copy of the signed authoriza- vided because of the individual’s inca- tion. pacity or an emergency treatment cir- [67 FR 53268, Aug. 14, 2002] cumstance, a covered health care provider may use or disclose some or all of § 164.510 Uses and disclosures requir- the protected health information per- ing an opportunity for the indi- mitted by paragraph (a)(1) of this sec- vidual to agree or to object. tion for the facility’s directory, if such A covered entity may use or disclose disclosure is: protected health information, provided (A) Consistent with a prior expressed that the individual is informed in ad- preference of the individual, if any, vance of the use or disclosure and has that is known to the covered health the opportunity to agree to or prohibit care provider; and or restrict the use or disclosure, in ac- (B) In the individual’s best interest cordance with the applicable require- as determined by the covered health ments of this section. The covered enti- care provider, in the exercise of profes- ty may orally inform the individual of sional judgment. and obtain the individual’s oral agree- (ii) The covered health care provider ment or objection to a use or disclosure must inform the individual and provide permitted by this section. an opportunity to object to uses or dis- (a) Standard: use and disclosure for fa- closures for directory purposes as re- cility directories—(1) Permitted uses and quired by paragraph (a)(2) of this sec- disclosure. Except when an objection is tion when it becomes practicable to do expressed in accordance with para- so. graphs (a)(2) or (3) of this section, a (b) Standard: uses and disclosures for covered health care provider may: involvement in the individual’s care and (i) Use the following protected health notification purposes—(1) Permitted uses information to maintain a directory of and disclosures. (i) A covered entity individuals in its facility: may, in accordance with paragraphs (A) The individual’s name; (b)(2) or (3) of this section, disclose to (B) The individual’s location in the a family member, other relative, or a covered health care provider’s facility; close personal friend of the individual,

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or any other person identified by the pick up filled prescriptions, medical individual, the protected health infor- supplies, X-rays, or other similar forms mation directly relevant to such per- of protected health information. son’s involvement with the individual’s (4) Use and disclosures for disaster relief care or payment related to the individ- purposes. A covered entity may use or ual’s health care. disclose protected health information (ii) A covered entity may use or dis- to a public or private entity authorized close protected health information to by law or by its charter to assist in dis- notify, or assist in the notification of aster relief efforts, for the purpose of (including identifying or locating), a coordinating with such entities the family member, a personal representa- uses or disclosures permitted by parative of the individual, or another per- graph (b)(1)(ii) of this section. The re- son responsible for the care of the indi- quirements in paragraphs (b)(2) and (3) vidual of the individual’s location, gen- of this section apply to such uses and eral condition, or death. Any such use disclosure to the extent that the cov- or disclosure of protected health infor- ered entity, in the exercise of profes- mation for such notification purposes sional judgment, determines that the must be in accordance with paragraphs requirements do not interfere with the (b)(2), (3), or (4) of this section, as ap- ability to respond to the emergency plicable. circumstances. (2) Uses and disclosures with the individual present. If the individual is [65 FR 82802, Dec. 28, 2000, as amended at 67 present for, or otherwise available FR 53270, Aug. 14, 2002] prior to, a use or disclosure permitted by paragraph (b)(1) of this section and § 164.512 Uses and disclosures for which an authorization or oppor- has the capacity to make health care tunity to agree or object is not re- decisions, the covered entity may use quired. or disclose the protected health information if it: A covered entity may use or disclose (i) Obtains the individual’s agree- protected health information without ment; the written authorization of the indi- (ii) Provides the individual with the vidual, as described in § 164.508, or the opportunity to object to the disclosure, opportunity for the individual to agree and the individual does not express an or object as described in § 164.510, in the objection; or situations covered by this section, sub- (iii) Reasonably infers from the cir- ject to the applicable requirements of cumstances, based the exercise of pro- this section. When the covered entity fessional judgment, that the individual is required by this section to inform does not object to the disclosure. the individual of, or when the indi- (3) Limited uses and disclosures when vidual may agree to, a use or disclosure the individual is not present. If the indi- permitted by this section, the covered vidual is not present, or the oppor- entity’s information and the individ- tunity to agree or object to the use or ual’s agreement may be given orally. disclosure cannot practicably be pro- (a) Standard: Uses and disclosures re- vided because of the individual’s inca- quired by law. (1) A covered entity may pacity or an emergency circumstance, use or disclose protected health infor- the covered entity may, in the exercise mation to the extent that such use or of professional judgment, determine disclosure is required by law and the whether the disclosure is in the best in- use or disclosure complies with and is terests of the individual and, if so, dis- limited to the relevant requirements of close only the protected health infor- such law. mation that is directly relevant to the (2) A covered entity must meet the person’s involvement with the individ- requirements described in paragraph ual’s health care. A covered entity may (c), (e), or (f) of this section for uses or use professional judgment and its expe- disclosures required by law. rience with common practice to make (b) Standard: uses and disclosures for reasonable inferences of the individ- public health activities—(1) Permitted dis- ual’s best interest in allowing a person closures. A covered entity may disclose to act on behalf of the individual to protected health information for the

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public health activities and purposes (A) The covered entity is a covered described in this paragraph to: health care provider who is a member (i) A public health authority that is of the workforce of such employer or authorized by law to collect or receive who provides health care to the indi- such information for the purpose of vidual at the request of the employer: preventing or controlling disease, in- (1) To conduct an evaluation relating jury, or disability, including, but not to medical surveillance of the work- limited to, the reporting of disease, in- place; or jury, vital events such as birth or (2) To evaluate whether the indi- death, and the conduct of public health vidual has a work-related illness or in- surveillance, public health investiga- jury; tions, and public health interventions; (B) The protected health information or, at the direction of a public health that is disclosed consists of findings authority, to an official of a foreign concerning a work-related illness or in- government agency that is acting in jury or a workplace-related medical collaboration with a public health au- surveillance; thority; (C) The employer needs such findings (ii) A public health authority or in order to comply with its obligations, other appropriate government author- under 29 CFR parts 1904 through 1928, 30 ity authorized by law to receive reports CFR parts 50 through 90, or under state of child abuse or neglect; law having a similar purpose, to record such illness or injury or to carry out (iii) A person subject to the jurisdic- responsibilities for workplace medical tion of the Food and Drug Administra- surveillance; and tion (FDA) with respect to an FDA-reg- (D) The covered health care provider ulated product or activity for which provides written notice to the indi- that person has responsibility, for the vidual that protected health informa- purpose of activities related to the tion relating to the medical surveil- quality, safety or effectiveness of such lance of the workplace and work-re- FDA-regulated product or activity. lated illnesses and injuries is disclosed Such purposes include: to the employer: (A) To collect or report adverse (1) By giving a copy of the notice to events (or similar activities with re- the individual at the time the health spect to food or dietary supplements), care is provided; or product defects or problems (including (2) If the health care is provided on problems with the use or labeling of a the work site of the employer, by post- product), or biological product devi- ing the notice in a prominent place at ations; the location where the health care is (B) To track FDA-regulated products; provided. (C) To enable product recalls, repairs, (2) Permitted uses. If the covered enti- or replacement, or lookback (including ty also is a public health authority, the locating and notifying individuals who covered entity is permitted to use pro- have received products that have been tected health information in all cases recalled, withdrawn, or are the subject in which it is permitted to disclose of lookback); or such information for public health ac- (D) To conduct post marketing sur- tivities under paragraph (b)(1) of this veillance; section. (iv) A person who may have been ex- (c) Standard: Disclosures about victims posed to a communicable disease or of abuse, neglect or domestic violence—(1) may otherwise be at risk of con- Permitted disclosures. Except for reports tracting or spreading a disease or con- of child abuse or neglect permitted by dition, if the covered entity or public paragraph (b)(1)(ii) of this section, a health authority is authorized by law covered entity may disclose protected to notify such person as necessary in health information about an individual the conduct of a public health inter- whom the covered entity reasonably vention or investigation; or believes to be a victim of abuse, ne- (v) An employer, about an individual glect, or domestic violence to a govern- who is a member of the workforce of ment authority, including a social the employer, if: service or protective services agency,

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authorized by law to receive reports of ministrative, or criminal proceedings such abuse, neglect, or domestic vio- or actions; or other activities nec- lence: essary for appropriate oversight of: (i) To the extent the disclosure is re- (i) The health care system; quired by law and the disclosure com- (ii) Government benefit programs for plies with and is limited to the rel- which health information is relevant to evant requirements of such law; beneficiary eligibility; (ii) If the individual agrees to the dis- (iii) Entities subject to government closure; or regulatory programs for which health (iii) To the extent the disclosure is information is necessary for deter- expressly authorized by statute or reg- mining compliance with program ulation and: standards; or (A) The covered entity, in the exer- (iv) Entities subject to civil rights cise of professional judgment, believes laws for which health information is the disclosure is necessary to prevent necessary for determining compliance. serious harm to the individual or other (2) Exception to health oversight activi- potential victims; or ties. For the purpose of the disclosures (B) If the individual is unable to permitted by paragraph (d)(1) of this agree because of incapacity, a law en- section, a health oversight activity forcement or other public official au- does not include an investigation or thorized to receive the report rep- other activity in which the individual resents that the protected health infor- is the subject of the investigation or mation for which disclosure is sought activity and such investigation or is not intended to be used against the other activity does not arise out of and individual and that an immediate en- is not directly related to: forcement activity that depends upon (i) The receipt of health care; the disclosure would be materially and adversely affected by waiting until the (ii) A claim for public benefits re- individual is able to agree to the dis- lated to health; or closure. (iii) Qualification for, or receipt of, (2) Informing the individual. A covered public benefits or services when a pa- entity that makes a disclosure per- tient’s health is integral to the claim mitted by paragraph (c)(1) of this sec- for public benefits or services. tion must promptly inform the indi- (3) Joint activities or investigations. vidual that such a report has been or Nothwithstanding paragraph (d)(2) of will be made, except if: this section, if a health oversight ac- (i) The covered entity, in the exercise tivity or investigation is conducted in of professional judgment, believes in- conjunction with an oversight activity forming the individual would place the or investigation relating to a claim for individual at risk of serious harm; or public benefits not related to health, (ii) The covered entity would be in- the joint activity or investigation is forming a personal representative, and considered a health oversight activity the covered entity reasonably believes for purposes of paragraph (d) of this the personal representative is respon- section. sible for the abuse, neglect, or other in- (4) Permitted uses. If a covered entity jury, and that informing such person also is a health oversight agency, the would not be in the best interests of covered entity may use protected the individual as determined by the health information for health oversight covered entity, in the exercise of pro- activities as permitted by paragraph fessional judgment. (d) of this section. (d) Standard: Uses and disclosures for (e) Standard: Disclosures for judicial health oversight activities—(1) Permitted and administrative proceedings—(1) Per- disclosures. A covered entity may dis- mitted disclosures. A covered entity may close protected health information to a disclose protected health information health oversight agency for oversight in the course of any judicial or admin- activities authorized by law, including istrative proceeding: audits; civil, administrative, or crimi- (i) In response to an order of a court nal investigations; inspections; licen- or administrative tribunal, provided sure or disciplinary actions; civil, ad- that the covered entity discloses only

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the protected health information ex- ment and accompanying documenta- pressly authorized by such order; or tion demonstrating that: (ii) In response to a subpoena, dis- (A) The parties to the dispute giving covery request, or other lawful process, rise to the request for information that is not accompanied by an order of have agreed to a qualified protective a court or administrative tribunal, if: order and have presented it to the (A) The covered entity receives satis- court or administrative tribunal with factory assurance, as described in para- jurisdiction over the dispute; or graph (e)(1)(iii) of this section, from (B) The party seeking the protected the party seeking the information that health information has requested a reasonable efforts have been made by qualified protective order from such such party to ensure that the indi- court or administrative tribunal. vidual who is the subject of the pro- (v) For purposes of paragraph (e)(1) of tected health information that has this section, a qualified protective been requested has been given notice of order means, with respect to protected the request; or health information requested under (B) The covered entity receives satis- paragraph (e)(1)(ii) of this section, an factory assurance, as described in para- order of a court or of an administrative graph (e)(1)(iv) of this section, from the tribunal or a stipulation by the parties party seeking the information that to the litigation or administrative pro- reasonable efforts have been made by ceeding that: such party to secure a qualified protec- (A) Prohibits the parties from using tive order that meets the requirements or disclosing the protected health in- of paragraph (e)(1)(v) of this section. formation for any purpose other than (iii) For the purposes of paragraph the litigation or proceeding for which (e)(1)(ii)(A) of this section, a covered such information was requested; and entity receives satisfactory assurances (B) Requires the return to the cov- from a party seeking protecting health ered entity or destruction of the pro- information if the covered entity re- tected health information (including ceives from such party a written state- all copies made) at the end of the liti- ment and accompanying documenta- gation or proceeding. tion demonstrating that: (vi) Nothwithstanding paragraph (A) The party requesting such infor- (e)(1)(ii) of this section, a covered enti- mation has made a good faith attempt ty may disclose protected health infor- to provide written notice to the indi- mation in response to lawful process vidual (or, if the individual’s location described in paragraph (e)(1)(ii) of this is unknown, to mail a notice to the in- section without receiving satisfactory dividual’s last known address); assurance under paragraph (e)(1)(ii)(A) (B) The notice included sufficient in- or (B) of this section, if the covered en- formation about the litigation or pro- tity makes reasonable efforts to proceeding in which the protected health vide notice to the individual sufficient information is requested to permit the to meet the requirements of paragraph individual to raise an objection to the (e)(1)(iii) of this section or to seek a court or administrative tribunal; and qualified protective order sufficient to (C) The time for the individual to meet the requirements of paragraph raise objections to the court or admin- (e)(1)(iv) of this section. istrative tribunal has elapsed, and: (2) Other uses and disclosures under (1) No objections were filed; or this section. The provisions of this para- (2) All objections filed by the indi- graph do not supersede other provi- vidual have been resolved by the court sions of this section that otherwise or the administrative tribunal and the permit or restrict uses or disclosures of disclosures being sought are consistent protected health information. with such resolution. (f) Standard: Disclosures for law en- (iv) For the purposes of paragraph forcement purposes. A covered entity (e)(1)(ii)(B) of this section, a covered may disclose protected health informa- entity receives satisfactory assurances tion for a law enforcement purpose to a from a party seeking protected health law enforcement official if the condi- information, if the covered entity re- tions in paragraphs (f)(1) through (f)(6) ceives from such party a written state- of this section are met, as applicable.

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(1) Permitted disclosures: Pursuant to (ii) Except as permitted by paragraph process and as otherwise required by law. (f)(2)(i) of this section, the covered en- A covered entity may disclose pro- tity may not disclose for the purposes tected health information: of identification or location under (i) As required by law including laws paragraph (f)(2) of this section any pro- that require the reporting of certain tected health information related to types of wounds or other physical inju- the individual’s DNA or DNA analysis, ries, except for laws subject to para- dental records, or typing, samples or graph (b)(1)(ii) or (c)(1)(i) of this sec- analysis of body fluids or tissue. tion; or (3) Permitted disclosure: Victims of a (ii) In compliance with and as limited crime. Except for disclosures required by the relevant requirements of: by law as permitted by paragraph (f)(1) (A) A court order or court-ordered of this section, a covered entity may warrant, or a subpoena or summons disclose protected health information issued by a judicial officer; in response to a law enforcement offi- (B) A grand jury subpoena; or cial’s request for such information (C) An administrative request, in- about an individual who is or is sus- cluding an administrative subpoena or pected to be a victim of a crime, other summons, a civil or an authorized in- than disclosures that are subject to vestigative demand, or similar process paragraph (b) or (c) of this section, if: authorized under law, provided that: (i) The individual agrees to the dis- (1) The information sought is rel- closure; or evant and material to a legitimate law (ii) The covered entity is unable to enforcement inquiry; obtain the individual’s agreement be- (2) The request is specific and limited cause of incapacity or other emergency in scope to the extent reasonably prac- circumstance, provided that: ticable in light of the purpose for (A) The law enforcement official rep- which the information is sought; and resents that such information is needed to determine whether a violation of (3) De-identified information could not reasonably be used. law by a person other than the victim has occurred, and such information is (2) Permitted disclosures: Limited infor- not intended to be used against the vic- mation for identification and location tim; purposes. Except for disclosures re- (B) The law enforcement official rep- quired by law as permitted by para- resents that immediate law enforce- graph (f)(1) of this section, a covered ment activity that depends upon the entity may disclose protected health disclosure would be materially and ad- information in response to a law en- versely affected by waiting until the forcement official’s request for such in- individual is able to agree to the dis- formation for the purpose of identi- closure; and fying or locating a suspect, fugitive, (C) The disclosure is in the best in- material witness, or missing person, terests of the individual as determined provided that: by the covered entity, in the exercise (i) The covered entity may disclose of professional judgment. only the following information: (4) Permitted disclosure: Decedents. A (A) Name and address; covered entity may disclose protected (B) Date and place of birth; health information about an individual (C) Social security number; who has died to a law enforcement offi- (D) ABO blood type and rh factor; cial for the purpose of alerting law en- (E) Type of injury; forcement of the death of the indi- (F) Date and time of treatment; vidual if the covered entity has a sus- (G) Date and time of death, if appli- picion that such death may have re- cable; and sulted from criminal conduct. (H) A description of distinguishing (5) Permitted disclosure: Crime on prem- physical characteristics, including ises. A covered entity may disclose to a height, weight, gender, race, hair and law enforcement official protected eye color, presence or absence of facial health information that the covered hair (beard or moustache), scars, and entity believes in good faith con- tattoos. stitutes evidence of criminal conduct

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that occurred on the premises of the other entities engaged in the procure- covered entity. ment, banking, or transplantation of (6) Permitted disclosure: Reporting cadaveric organs, eyes, or tissue for the crime in emergencies. (i) A covered purpose of facilitating organ, eye or health care provider providing emer- tissue donation and transplantation. gency health care in response to a med- (i) Standard: Uses and disclosures for ical emergency, other than such emer- research purposes—(1) Permitted uses and gency on the premises of the covered disclosures. A covered entity may use or health care provider, may disclose pro- disclose protected health information tected health information to a law en- for research, regardless of the source of forcement official if such disclosure ap- funding of the research, provided that: pears necessary to alert law enforce- (i) Board approval of a waiver of au- ment to: thorization. The covered entity obtains (A) The commission and nature of a documentation that an alteration to or crime; waiver, in whole or in part, of the indi- (B) The location of such crime or of the victim(s) of such crime; and vidual authorization required by (C) The identity, description, and lo- § 164.508 for use or disclosure of pro- cation of the perpetrator of such crime. tected health information has been ap- (ii) If a covered health care provider proved by either: believes that the medical emergency (A) An Institutional Review Board described in paragraph (f)(6)(i) of this (IRB), established in accordance with 7 section is the result of abuse, neglect, CFR lc.107, 10 CFR 745.107, 14 CFR or domestic violence of the individual 1230.107, 15 CFR 27.107, 16 CFR 1028.107, in need of emergency health care, para- 21 CFR 56.107, 22 CFR 225.107, 24 CFR graph (f)(6)(i) of this section does not 60.107, 28 CFR 46.107, 32 CFR 219.107, 34 apply and any disclosure to a law en- CFR 97.107, 38 CFR 16.107, 40 CFR 26.107, forcement official for law enforcement 45 CFR 46.107, 45 CFR 690.107, or 49 CFR purposes is subject to paragraph (c) of 11.107; or this section. (B) A privacy board that: (g) Standard: Uses and disclosures (1) Has members with varying back- about decedents—(1) Coroners and med- grounds and appropriate professional ical examiners. A covered entity may competency as necessary to review the disclose protected health information effect of the research protocol on the to a coroner or medical examiner for individual’s privacy rights and related the purpose of identifying a deceased interests; person, determining a cause of death, (2) Includes at least one member who or other duties as authorized by law. A is not affiliated with the covered enti- covered entity that also performs the ty, not affiliated with any entity con- duties of a coroner or medical exam- ducting or sponsoring the research, and iner may use protected health informa- not related to any person who is affili- tion for the purposes described in this ated with any of such entities; and paragraph. (3) Does not have any member par- (2) Funeral directors. A covered entity ticipating in a review of any project in may disclose protected health informa- which the member has a conflict of in- tion to funeral directors, consistent terest. with applicable law, as necessary to carry out their duties with respect to (ii) Reviews preparatory to research. the decedent. If necessary for funeral The covered entity obtains from the re- directors to carry out their duties, the searcher representations that: covered entity may disclose the pro- (A) Use or disclosure is sought solely tected health information prior to, and to review protected health information in reasonable anticipation of, the indi- as necessary to prepare a research pro- vidual’s death. tocol or for similar purposes pre- (h) Standard: Uses and disclosures for paratory to research; cadaveric organ, eye or tissue donation (B) No protected health information purposes. A covered entity may use or is to be removed from the covered enti- disclose protected health information ty by the researcher in the course of to organ procurement organizations or the review; and

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(C) The protected health information (B) The research could not prac- for which use or access is sought is nec- ticably be conducted without the waiv- essary for the research purposes. er or alteration; and (iii) Research on decedent’s informa- (C) The research could not prac- tion. The covered entity obtains from ticably be conducted without access to the researcher: and use of the protected health infor- (A) Representation that the use or mation. disclosure sought is solely for research (iii) Protected health information need- on the protected health information of ed. A brief description of the protected decedents; health information for which use or ac- (B) Documentation, at the request of cess has been determined to be nec- the covered entity, of the death of such essary by the IRB or privacy board has individuals; and determined, pursuant to paragraph (C) Representation that the protected (i)(2)(ii)(C) of this section; health information for which use or (iv) Review and approval procedures. A disclosure is sought is necessary for statement that the alteration or waiv- the research purposes. er of authorization has been reviewed and approved under either normal or (2) Documentation of waiver approval. expedited review procedures, as fol- For a use or disclosure to be permitted lows: based on documentation of approval of (A) An IRB must follow the require- an alteration or waiver, under para- ments of the Common Rule, including graph (i)(1)(i) of this section, the docu- the normal review procedures (7 CFR mentation must include all of the fol- 1c.108(b), 10 CFR 745.108(b), 14 CFR lowing: 1230.108(b), 15 CFR 27.108(b), 16 CFR (i) A Identification and date of action. 1028.108(b), 21 CFR 56.108(b), 22 CFR statement identifying the IRB or pri- 225.108(b), 24 CFR 60.108(b), 28 CFR vacy board and the date on which the 46.108(b), 32 CFR 219.108(b), 34 CFR alteration or waiver of authorization 97.108(b), 38 CFR 16.108(b), 40 CFR was approved; 26.108(b), 45 CFR 46.108(b), 45 CFR (ii) Waiver criteria. A statement that 690.108(b), or 49 CFR 11.108(b)) or the ex- the IRB or privacy board has deter- pedited review procedures (7 CFR mined that the alteration or waiver, in 1c.110, 10 CFR 745.110, 14 CFR 1230.110, whole or in part, of authorization satis- 15 CFR 27.110, 16 CFR 1028.110, 21 CFR fies the following criteria: 56.110, 22 CFR 225.110, 24 CFR 60.110, 28 (A) The use or disclosure of protected CFR 46.110, 32 CFR 219.110, 34 CFR health information involves no more 97.110, 38 CFR 16.110, 40 CFR 26.110, 45 than a minimal risk to the privacy of CFR 46.110, 45 CFR 690.110, or 49 CFR individuals, based on, at least, the 11.110); presence of the following elements; (B) A privacy board must review the (1) An adequate plan to protect the proposed research at convened meet- identifiers from improper use and dis- ings at which a majority of the privacy closure; board members are present, including (2) An adequate plan to destroy the at least one member who satisfies the identifiers at the earliest opportunity criterion stated in paragraph consistent with conduct of the re- (i)(1)(i)(B)(2) of this section, and the al- search, unless there is a health or re- teration or waiver of authorization search justification for retaining the must be approved by the majority of identifiers or such retention is other- the privacy board members present at wise required by law; and the meeting, unless the privacy board (3) Adequate written assurances that elects to use an expedited review proce- the protected health information will dure in accordance with paragraph not be reused or disclosed to any other (i)(2)(iv)(C) of this section; person or entity, except as required by (C) A privacy board may use an expe- law, for authorized oversight of the re- dited review procedure if the research search study, or for other research for involves no more than minimal risk to which the use or disclosure of pro- the privacy of the individuals who are tected health information would be the subject of the protected health in- permitted by this subpart; formation for which use or disclosure is

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being sought. If the privacy board described in paragraph (j)(2)(i) of this elects to use an expedited review proce- section. dure, the review and approval of the al- (3) Limit on information that may be teration or waiver of authorization disclosed. A disclosure made pursuant may be carried out by the chair of the to paragraph (j)(1)(ii)(A) of this section privacy board, or by one or more mem- shall contain only the statement de- bers of the privacy board as designated scribed in paragraph (j)(1)(ii)(A) of this by the chair; and section and the protected health infor- (v) Required signature. The docu- mation described in paragraph (f)(2)(i) mentation of the alteration or waiver of this section. of authorization must be signed by the (4) Presumption of good faith belief. A chair or other member, as designated by the chair, of the IRB or the privacy covered entity that uses or discloses board, as applicable. protected health information pursuant (j) Standard: Uses and disclosures to to paragraph (j)(1) of this section is avert a serious threat to health or safety— presumed to have acted in good faith (1) Permitted disclosures. A covered enti- with regard to a belief described in ty may, consistent with applicable law paragraph (j)(1)(i) or (ii) of this section, and standards of ethical conduct, use if the belief is based upon the covered or disclose protected health informa- entity’s actual knowledge or in reli- tion, if the covered entity, in good ance on a credible representation by a faith, believes the use or disclosure: person with apparent knowledge or au- (i)(A) Is necessary to prevent or less- thority. en a serious and imminent threat to (k) Standard: Uses and disclosures for the health or safety of a person or the specialized government functions—(1) public; and Military and veterans activities—(i) (B) Is to a person or persons reason- Armed Forces personnel. A covered enti- ably able to prevent or lessen the ty may use and disclose the protected threat, including the target of the health information of individuals who threat; or are Armed Forces personnel for activi- (ii) Is necessary for law enforcement ties deemed necessary by appropriate authorities to identify or apprehend an military command authorities to as- individual: sure the proper execution of the mili- (A) Because of a statement by an in- tary mission, if the appropriate mili- dividual admitting participation in a violent crime that the covered entity tary authority has published by notice reasonably believes may have caused in the FEDERAL REGISTER the following serious physical harm to the victim; or information: (B) Where it appears from all the cir- (A) Appropriate military command cumstances that the individual has es- authorities; and caped from a correctional institution (B) The purposes for which the pro- or from lawful custody, as those terms tected health information may be used are defined in § 164.501. or disclosed. (2) Use or disclosure not permitted. A (ii) Separation or discharge from mili- use or disclosure pursuant to para- tary service. A covered entity that is a graph (j)(1)(ii)(A) of this section may component of the Departments of De- not be made if the information defense or Transportation may disclose scribed in paragraph (j)(1)(ii)(A) of this to the Department of Veterans Affairs section is learned by the covered enti- (DVA) the protected health informa- ty: tion of an individual who is a member (i) In the course of treatment to af- of the Armed Forces upon the separa- fect the propensity to commit the tion or discharge of the individual from criminal conduct that is the basis for military service for the purpose of a the disclosure under paragraph determination by DVA of the individ- (j)(1)(ii)(A) of this section, or counseling or therapy; or ual’s eligibility for or entitlement to (ii) Through a request by the indi- benefits under laws administered by vidual to initiate or to be referred for the Secretary of Veterans Affairs. the treatment, counseling, or therapy

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(iii) Veterans. A covered entity that is (iii) For a family to accompany a a component of the Department of Vet- Foreign Service member abroad, con- erans Affairs may use and disclose pro- sistent with section 101(b)(5) and 904 of tected health information to compo- the Foreign Service Act. nents of the Department that deter- (5) Correctional institutions and other mine eligibility for or entitlement to, law enforcement custodial situations. (i) or that provide, benefits under the laws Permitted disclosures. A covered entity administered by the Secretary of Vet- may disclose to a correctional institu- erans Affairs. tion or a law enforcement official hav- (iv) Foreign military personnel. A cov- ing lawful custody of an inmate or ered entity may use and disclose the other individual protected health infor- protected health information of indi- mation about such inmate or individuals who are foreign military per- vidual, if the correctional institution sonnel to their appropriate foreign or such law enforcement official rep- military authority for the same pur- resents that such protected health in- poses for which uses and disclosures formation is necessary for: are permitted for Armed Forces per- (A) The provision of health care to sonnel under the notice published in such individuals; the FEDERAL REGISTER pursuant to (B) The health and safety of such in- paragraph (k)(1)(i) of this section. dividual or other inmates; (2) National security and intelligence (C) The health and safety of the offi- activities. A covered entity may disclose cers or employees of or others at the protected health information to au- correctional institution; thorized federal officials for the con- (D) The health and safety of such in- duct of lawful intelligence, counter-individuals and officers or other persons telligence, and other national security responsible for the transporting of in- activities authorized by the National mates or their transfer from one insti- Security Act (50 U.S.C. 401, et seq.) and tution, facility, or setting to another; implementing authority (e.g., Execu- (E) Law enforcement on the premises tive Order 12333). of the correctional institution; and (3) Protective services for the President (F) The administration and mainte- and others. A covered entity may dis- nance of the safety, security, and good close protected health information to order of the correctional institution. authorized federal officials for the pro- (ii) Permitted uses. A covered entity vision of protective services to the that is a correctional institution may President or other persons authorized use protected health information of in- by 18 U.S.C. 3056, or to foreign heads of dividuals who are inmates for any pur- state or other persons authorized by 22 pose for which such protected health U.S.C. 2709(a)(3), or to for the conduct information may be disclosed. of investigations authorized by 18 (iii) No application after release. For U.S.C. 871 and 879. the purposes of this provision, an indi- (4) Medical suitability determinations. vidual is no longer an inmate when re- A covered entity that is a component leased on parole, probation, supervised of the Department of State may use release, or otherwise is no longer in protected health information to make lawful custody. medical suitability determinations and (6) Covered entities that are government may disclose whether or not the indi- programs providing public benefits. (i) A vidual was determined to be medically health plan that is a government pro- suitable to the officials in the Depart- gram providing public benefits may ment of State who need access to such disclose protected health information information for the following purposes: relating to eligibility for or enrollment (i) For the purpose of a required secu- in the health plan to another agency rity clearance conducted pursuant to administering a government program Executive Orders 10450 and 12698; providing public benefits if the sharing (ii) As necessary to determine world- of eligibility or enrollment informa- wide availability or availability for tion among such government agencies mandatory service abroad under sec- or the maintenance of such informa- tions 101(a)(4) and 504 of the Foreign tion in a single or combined data sys- Service Act; or tem accessible to all such government

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agencies is required or expressly au- identify an individual who is a subject thorized by statute or regulation. of the information; and (ii) A covered entity that is a govern- (ii) Documents the methods and re- ment agency administering a govern- sults of the analysis that justify such ment program providing public bene- determination; or fits may disclose protected health in- (2)(i) The following identifiers of the formation relating to the program to individual or of relatives, employers, another covered entity that is a gov- or household members of the indi- ernment agency administering a gov- vidual, are removed: ernment program providing public ben- (A) Names; efits if the programs serve the same or (B) All geographic subdivisions similar populations and the disclosure smaller than a State, including street of protected health information is nec- address, city, county, precinct, zip essary to coordinate the covered func- code, and their equivalent geocodes, tions of such programs or to improve except for the initial three digits of a administration and management relat- zip code if, according to the current ing to the covered functions of such publicly available data from the Bu- programs. reau of the Census: (l) Standard: Disclosures for workers’ (1) The geographic unit formed by compensation. A covered entity may combining all zip codes with the same disclose protected health information three initial digits contains more than as authorized by and to the extent nec- 20,000 people; and essary to comply with laws relating to (2) The initial three digits of a zip workers’ compensation or other similar code for all such geographic units con- programs, established by law, that pro- taining 20,000 or fewer people is vide benefits for work-related injuries changed to 000. or illness without regard to fault. (C) All elements of dates (except year) for dates directly related to an [65 FR 82802, Dec. 28, 2000, as amended at 67 FR 53270, Aug. 14, 2002] individual, including birth date, admission date, discharge date, date of § 164.514 Other requirements relating death; and all ages over 89 and all ele- to uses and disclosures of protected ments of dates (including year) indic- health information. ative of such age, except that such ages (a) Standard: de-identification of pro- and elements may be aggregated into a tected health information. Health infor- single category of age 90 or older; mation that does not identify an indi- (D) Telephone numbers; vidual and with respect to which there (E) Fax numbers; is no reasonable basis to believe that (F) Electronic mail addresses; the information can be used to identify (G) Social security numbers; an individual is not individually identi- (H) Medical record numbers; fiable health information. (I) Health plan beneficiary numbers; (b) Implementation specifications: re- (J) Account numbers; quirements for de-identification of pro- (K) Certificate/license numbers; tected health information. A covered en- (L) Vehicle identifiers and serial tity may determine that health infor- numbers, including license plate num- mation is not individually identifiable bers; health information only if: (M) Device identifiers and serial (1) A person with appropriate knowl- numbers; edge of and experience with generally (N) Web Universal Resource Locators accepted statistical and scientific prin- (URLs); ciples and methods for rendering infor- (O) Internet Protocol (IP) address mation not individually identifiable: numbers; (i) Applying such principles and (P) Biometric identifiers, including methods, determines that the risk is finger and voice prints; very small that the information could (Q) Full face photographic images be used, alone or in combination with and any comparable images; and other reasonably available informa- (R) Any other unique identifying tion, by an anticipated recipient to number, characteristic, or code, except

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as permitted by paragraph (c) of this and recurring basis, a covered entity section; and must implement policies and proce- (ii) The covered entity does not have dures (which may be standard proto- actual knowledge that the information cols) that limit the protected health could be used alone or in combination information disclosed to the amount with other information to identify an reasonably necessary to achieve the individual who is a subject of the infor- purpose of the disclosure. mation. (ii) For all other disclosures, a cov- (c) Implementation specifications: re- ered entity must: identification. A covered entity may as- (A) Develop criteria designed to limit sign a code or other means of record the protected health information dis- identification to allow information de- closed to the information reasonably identified under this section to be re- necessary to accomplish the purpose identified by the covered entity, pro- for which disclosure is sought; and vided that: (B) Review requests for disclosure on (1) Derivation. The code or other an individual basis in accordance with means of record identification is not such criteria. derived from or related to information (iii) A covered entity may rely, if about the individual and is not other- such reliance is reasonable under the wise capable of being translated so as circumstances, on a requested disclo- to identify the individual; and sure as the minimum necessary for the (2) Security. The covered entity does stated purpose when: not use or disclose the code or other (A) Making disclosures to public offi- means of record identification for any cials that are permitted under § 164.512, other purpose, and does not disclose if the public official represents that the mechanism for re-identification. the information requested is the min- (d)(1) Standard: minimum necessary re- imum necessary for the stated pur- quirements. In order to comply with pose(s); § 164.502(b) and this section, a covered (B) The information is requested by entity must meet the requirements of another covered entity; paragraphs (d)(2) through (d)(5) of this (C) The information is requested by a section with respect to a request for, or professional who is a member of its the use and disclosure of, protected workforce or is a business associate of health information. the covered entity for the purpose of (2) Implementation specifications: min- providing professional services to the imum necessary uses of protected health covered entity, if the professional rep- information. (i) A covered entity must resents that the information requested identify: is the minimum necessary for the stat- (A) Those persons or classes of per- ed purpose(s); or sons, as appropriate, in its workforce (D) Documentation or representa- who need access to protected health in- tions that comply with the applicable formation to carry out their duties; requirements of § 164.512(i) have been and provided by a person requesting the in- (B) For each such person or class of formation for research purposes. persons, the category or categories of (4) Implementation specifications: Min- protected health information to which imum necessary requests for protected access is needed and any conditions ap- health information. (i) A covered entity propriate to such access. must limit any request for protected (ii) A covered entity must make rea- health information to that which is sonable efforts to limit the access of reasonably necessary to accomplish the such persons or classes identified in purpose for which the request is made, paragraph (d)(2)(i)(A) of this section to when requesting such information from protected health information con- other covered entities. sistent with paragraph (d)(2)(i)(B) of (ii) For a request that is made on a this section. routine and recurring basis, a covered (3) Implementation specification: Min- entity must implement policies and imum necessary disclosures of protected procedures (which may be standard health information. (i) For any type of protocols) that limit the protected disclosure that it makes on a routine health information requested to the

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amount reasonably necessary to ac- (xiv) Internet Protocol (IP) address complish the purpose for which the re- numbers; quest is made. (xv) Biometric identifiers, including (iii) For all other requests, a covered finger and voice prints; and entity must: (xvi) Full face photographic images (A) Develop criteria designed to limit and any comparable images. the request for protected health infor- (3) Implementation specification: Per- mation to the information reasonably mitted purposes for uses and disclosures. necessary to accomplish the purpose (i) A covered entity may use or disclose for which the request is made; and a limited data set under paragraph (B) Review requests for disclosure on (e)(1) of this section only for the pur- an individual basis in accordance with poses of research, public health, or such criteria. health care operations. (5) Implementation specification: Other (ii) A covered entity may use pro- content requirement. For all uses, disclo- tected health information to create a sures, or requests to which the require- limited data set that meets the re- ments in paragraph (d) of this section quirements of paragraph (e)(2) of this apply, a covered entity may not use, section, or disclose protected health in- disclose or request an entire medical formation only to a business associate record, except when the entire medical for such purpose, whether or not the record is specifically justified as the limited data set is to be used by the amount that is reasonably necessary to covered entity. accomplish the purpose of the use, dis- (4) Implementation specifications: Data closure, or request. use agreement.—(i) Agreement required. A (e)(1) Standard: Limited data set. A covered entity may use or disclose a covered entity may use or disclose a limited data set under paragraph (e)(1) limited data set that meets the re- of this section only if the covered enti- quirements of paragraphs (e)(2) and ty obtains satisfactory assurance, in (e)(3) of this section, if the covered en- the form of a data use agreement that tity enters into a data use agreement meets the requirements of this section, with the limited data set recipient, in that the limited data set recipient will accordance with paragraph (e)(4) of this only use or disclose the protected section. health information for limited pur- (2) Implementation specification: Lim- poses. ited data set: A limited data set is pro- (ii) Contents. A data use agreement tected health information that ex- between the covered entity and the cludes the following direct identifiers limited data set recipient must: of the individual or of relatives, em- (A) Establish the permitted uses and ployers, or household members of the disclosures of such information by the individual: limited data set recipient, consistent (i) Names; with paragraph (e)(3) of this section. (ii) Postal address information, other The data use agreement may not au- than town or city, State, and zip code; thorize the limited data set recipient (iii) Telephone numbers; to use or further disclose the informa- (iv) Fax numbers; tion in a manner that would violate (v) Electronic mail addresses; the requirements of this subpart, if (vi) Social security numbers; done by the covered entity; (vii) Medical record numbers; (B) Establish who is permitted to use (viii) Health plan beneficiary num- or receive the limited data set; and bers; (C) Provide that the limited data set (ix) Account numbers; recipient will: (x) Certificate/license numbers; (1) Not use or further disclose the in- (xi) Vehicle identifiers and serial formation other than as permitted by numbers, including license plate num- the data use agreement or as otherwise bers; required by law; (xii) Device identifiers and serial (2) Use appropriate safeguards to pre- numbers; vent use or disclosure of the informa- (xiii) Web Universal Resource Loca- tion other than as provided for by the tors (URLs); data use agreement;

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(3) Report to the covered entity any an individual under this paragraph a use or disclosure of the information description of how the individual may not provided for by its data use agree- opt out of receiving any further fund- ment of which it becomes aware; raising communications. (4) Ensure that any agents, including (iii) The covered entity must make a subcontractor, to whom it provides reasonable efforts to ensure that indi- the limited data set agrees to the same viduals who decide to opt out of receiv- restrictions and conditions that apply ing future fundraising communications to the limited data set recipient with are not sent such communications. respect to such information; and (g) Standard: Uses and disclosures for (5) Not identify the information or underwriting and related purposes. If a contact the individuals. health plan receives protected heath (iii) Compliance. (A) A covered entity information for the purpose of under- is not in compliance with the standards writing, premium rating, or other ac- in paragraph (e) of this section if the tivities relating to the creation, recovered entity knew of a pattern of ac- newal, or replacement of a contract of tivity or practice of the limited data health insurance or health benefits, set recipient that constituted a mate- and if such health insurance or health rial breach or violation of the data use benefits are not placed with the health agreement, unless the covered entity plan, such health plan may not use or took reasonable steps to cure the disclose such protected health informa- breach or end the violation, as application for any other purpose, except as ble, and, if such steps were unsuccess- may be required by law. ful: (h)(1) Standard: Verification require- (1) Discontinued disclosure of pro- ments. Prior to any disclosure per- tected health information to the remitted by this subpart, a covered enti- cipient; and ty must: (2) Reported the problem to the Sec- retary. (i) Except with respect to disclosures (B) A covered entity that is a limited under § 164.510, verify the identity of a data set recipient and violates a data person requesting protected health in- use agreement will be in noncompli- formation and the authority of any ance with the standards, implementa- such person to have access to protected tion specifications, and requirements health information under this subpart, of paragraph (e) of this section. if the identity or any such authority of (f)(1) Standard: Uses and disclosures for such person is not known to the cov- fundraising. A covered entity may use, ered entity; and or disclose to a business associate or to (ii) Obtain any documentation, state- an institutionally related foundation, ments, or representations, whether the following protected health infor- oral or written, from the person re- mation for the purpose of raising funds questing the protected health informa- for its own benefit, without an author- tion when such documentation, state- ization meeting the requirements of ment, or representation is a condition § 164.508: of the disclosure under this subpart. (i) Demographic information relating (2) Implementation specifications: to an individual; and Verification. (i) Conditions on disclosures. (ii) Dates of health care provided to If a disclosure is conditioned by this an individual. subpart on particular documentation, (2) Implementation specifications: statements, or representations from Fundraising requirements. (i) The cov- the person requesting the protected ered entity may not use or disclose health information, a covered entity protected health information for fund- may rely, if such reliance is reasonable raising purposes as otherwise per- under the circumstances, on docu- mitted by paragraph (f)(1) of this sec- mentation, statements, or representation unless a statement required by tions that, on their face, meet the ap- § 164.520(b)(1)(iii)(B) is included in the plicable requirements. covered entity’s notice; (A) The conditions in (ii) The covered entity must include § 164.512(f)(1)(ii)(C) may be satisfied by in any fundraising materials it sends to the administrative subpoena or similar

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process or by a separate written state- judgment in making a use or disclosure ment that, on its face, demonstrates in accordance with § 164.510 or acts on a that the applicable requirements have good faith belief in making a disclosure been met. in accordance with § 164.512(j). (B) The documentation required by § 164.512(i)(2) may be satisfied by one or [65 FR 82802, Dec. 28, 2000, as amended at 67 more written statements, provided FR 53270, Aug. 14, 2002] that each is appropriately dated and § 164.520 Notice of privacy practices signed in accordance with for protected health information. § 164.512(i)(2)(i) and (v). (ii) Identity of public officials. A cov- (a) Standard: notice of privacy prac- ered entity may rely, if such reliance is tices—(1) Right to notice. Except as pro- reasonable under the circumstances, on vided by paragraph (a)(2) or (3) of this any of the following to verify identity section, an individual has a right to when the disclosure of protected health adequate notice of the uses and disclo- information is to a public official or a sures of protected health information person acting on behalf of the public that may be made by the covered enti- official: ty, and of the individual’s rights and (A) If the request is made in person, the covered entity’s legal duties with presentation of an agency identifica- respect to protected health information badge, other official credentials, tion. or other proof of government status; (2) Exception for group health plans. (i) (B) If the request is in writing, the An individual enrolled in a group request is on the appropriate govern- health plan has a right to notice: ment letterhead; or (A) From the group health plan, if, (C) If the disclosure is to a person acting on behalf of a public official, a and to the extent that, such an indi- written statement on appropriate gov- vidual does not receive health benefits ernment letterhead that the person is under the group health plan through an acting under the government’s author- insurance contract with a health insur- ity or other evidence or documentation ance issuer or HMO; or of agency, such as a contract for serv- (B) From the health insurance issuer ices, memorandum of understanding, or or HMO with respect to the group purchase order, that establishes that health plan through which such indi- the person is acting on behalf of the viduals receive their health benefits public official. under the group health plan. (iii) Authority of public officials. A (ii) A group health plan that provides covered entity may rely, if such reli- health benefits solely through an in- ance is reasonable under the cir- surance contract with a health insur- cumstances, on any of the following to ance issuer or HMO, and that creates verify authority when the disclosure of or receives protected health informa- protected health information is to a tion in addition to summary health in- public official or a person acting on be- formation as defined in § 164.504(a) or half of the public official: information on whether the individual (A) A written statement of the legal is participating in the group health authority under which the information plan, or is enrolled in or has is requested, or, if a written statement disenrolled from a health insurance would be impracticable, an oral statement of such legal authority; issuer or HMO offered by the plan, (B) If a request is made pursuant to must: legal process, warrant, subpoena, order, (A) Maintain a notice under this sec- or other legal process issued by a grand tion; and jury or a judicial or administrative tri- (B) Provide such notice upon request bunal is presumed to constitute legal to any person. The provisions of para- authority. graph (c)(1) of this section do not apply (iv) Exercise of professional judgment. to such group health plan. The verification requirements of this (iii) A group health plan that pro- paragraph are met if the covered entity vides health benefits solely through an relies on the exercise of professional

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insurance contract with a health insur- sufficient detail to place the individual ance issuer or HMO, and does not cre- on notice of the uses and disclosures ate or receive protected health infor- that are permitted or required by this mation other than summary health in- subpart and other applicable law. formation as defined in § 164.504(a) or (E) A statement that other uses and information on whether an individual disclosures will be made only with the is participating in the group health individual’s written authorization and plan, or is enrolled in or has that the individual may revoke such disenrolled from a health insurance authorization as provided by issuer or HMO offered by the plan, is § 164.508(b)(5). not required to maintain or provide a (iii) Separate statements for certain notice under this section. uses or disclosures. If the covered entity (3) Exception for inmates. An inmate intends to engage in any of the fol- does not have a right to notice under lowing activities, the description re- this section, and the requirements of quired by paragraph (b)(1)(ii)(A) of this this section do not apply to a correc- section must include a separate state- tional institution that is a covered en- ment, as applicable, that: tity. (b) Implementation specifications: con- (A) The covered entity may contact tent of notice—(1) Required elements. The the individual to provide appointment covered entity must provide a notice reminders or information about treat- that is written in plain language and ment alternatives or other health-re- that contains the elements required by lated benefits and services that may be this paragraph. of interest to the individual; (i) Header. The notice must contain (B) The covered entity may contact the following statement as a header or the individual to raise funds for the otherwise prominently displayed: covered entity; or ‘‘THIS NOTICE DESCRIBES HOW (C) A group health plan, or a health MEDICAL INFORMATION ABOUT insurance issuer or HMO with respect YOU MAY BE USED AND DISCLOSED to a group health plan, may disclose AND HOW YOU CAN GET ACCESS TO protected health information to the THIS INFORMATION. PLEASE RE- sponsor of the plan. VIEW IT CAREFULLY.’’ (iv) Individual rights. The notice must (ii) Uses and disclosures. The notice contain a statement of the individual’s must contain: rights with respect to protected health (A) A description, including at least information and a brief description of one example, of the types of uses and how the individual may exercise these disclosures that the covered entity is rights, as follows: permitted by this subpart to make for (A) The right to request restrictions each of the following purposes: treat- on certain uses and disclosures of pro- ment, payment, and health care oper- tected health information as provided ations. by § 164.522(a), including a statement (B) A description of each of the other that the covered entity is not required purposes for which the covered entity to agree to a requested restriction; is permitted or required by this sub- (B) The right to receive confidential part to use or disclose protected health communications of protected health information without the individual’s information as provided by § 164.522(b), written authorization. (C) If a use or disclosure for any pur- as applicable; pose described in paragraphs (C) The right to inspect and copy pro- (b)(1)(ii)(A) or (B) of this section is protected health information as provided hibited or materially limited by other by § 164.524; applicable law, the description of such (D) The right to amend protected use or disclosure must reflect the more health information as provided by stringent law as defined in § 160.202 of § 164.526; this subchapter. (E) The right to receive an account- (D) For each purpose described in ing of disclosures of protected health paragraph (b)(1)(ii)(A) or (B) of this information as provided by § 164.528; section, the description must include and

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(F) The right of an individual, includ- scribe its more limited uses or disclo- ing an individual who has agreed to re- sures in its notice, provided that the ceive the notice electronically in ac- covered entity may not include in its cordance with paragraph (c)(3) of this notice a limitation affecting its right section, to obtain a paper copy of the to make a use or disclosure that is re- notice from the covered entity upon required by law or permitted by quest. § 164.512(j)(1)(i). (v) Covered entity’s duties. The notice (ii) For the covered entity to apply a must contain: change in its more limited uses and (A) A statement that the covered en- disclosures to protected health infor- tity is required by law to maintain the mation created or received prior to privacy of protected health informa- issuing a revised notice, in accordance tion and to provide individuals with with § 164.530(i)(2)(ii), the notice must notice of its legal duties and privacy include the statements required by practices with respect to protected paragraph (b)(1)(v)(C) of this section. health information; (B) A statement that the covered en- (3) Revisions to the notice. The covered tity is required to abide by the terms entity must promptly revise and dis- of the notice currently in effect; and tribute its notice whenever there is a (C) For the covered entity to apply a material change to the uses or disclo- change in a privacy practice that is de- sures, the individual’s rights, the cov- scribed in the notice to protected ered entity’s legal duties, or other pri- health information that the covered vacy practices stated in the notice. Ex- entity created or received prior to cept when required by law, a material issuing a revised notice, in accordance change to any term of the notice may with § 164.530(i)(2)(ii), a statement that not be implemented prior to the effec- it reserves the right to change the tive date of the notice in which such terms of its notice and to make the material change is reflected. new notice provisions effective for all (c) Implementation specifications: Pro- protected health information that it vision of notice. A covered entity must maintains. The statement must also make the notice required by this sec- describe how it will provide individuals tion available on request to any person with a revised notice. and to individuals as specified in para- (vi) Complaints. The notice must con- graphs (c)(1) through (c)(3) of this sec- tain a statement that individuals may tion, as applicable. complain to the covered entity and to (1) Specific requirements for health the Secretary if they believe their pri- plans. (i) A health plan must provide vacy rights have been violated, a brief notice: description of how the individual may (A) No later than the compliance file a complaint with the covered enti- date for the health plan, to individuals ty, and a statement that the individual then covered by the plan; will not be retaliated against for filing (B) Thereafter, at the time of enroll- a complaint. ment, to individuals who are new en- (vii) Contact. The notice must con- rollees; and tain the name, or title, and telephone number of a person or office to contact (C) Within 60 days of a material revi- for further information as required by sion to the notice, to individuals then § 164.530(a)(1)(ii). covered by the plan. (viii) Effective date. The notice must (ii) No less frequently than once contain the date on which the notice is every three years, the health plan must first in effect, which may not be earlier notify individuals then covered by the than the date on which the notice is plan of the availability of the notice printed or otherwise published. and how to obtain the notice. (2) Optional elements. (i) In addition to (iii) The health plan satisfies the re- the information required by paragraph quirements of paragraph (c)(1) of this (b)(1) of this section, if a covered entity section if notice is provided to the elects to limit the uses or disclosures named insured of a policy under which that it is permitted to make under this coverage is provided to the named in- subpart, the covered entity may de- sured and one or more dependents.

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(iv) If a health plan has more than agrees to electronic notice and such one notice, it satisfies the require- agreement has not been withdrawn. If ments of paragraph (c)(1) of this sec- the covered entity knows that the e- tion by providing the notice that is rel- mail transmission has failed, a paper evant to the individual or other person copy of the notice must be provided to requesting the notice. the individual. Provision of electronic (2) Specific requirements for certain cov- notice by the covered entity will sat- ered health care providers. A covered isfy the provision requirements of health care provider that has a direct paragraph (c) of this section when treatment relationship with an indi- timely made in accordance with para- vidual must: graph (c)(1) or (2) of this section. (i) Provide the notice: (iii) For purposes of paragraph (A) No later than the date of the first (c)(2)(i) of this section, if the first serv- service delivery, including service de- ice delivery to an individual is deliv- livered electronically, to such indi- ered electronically, the covered health vidual after the compliance date for care provider must provide electronic the covered health care provider; or notice automatically and contempora- (B) In an emergency treatment situa- neously in response to the individual’s tion, as soon as reasonably practicable first request for service. The require- after the emergency treatment situa- ments in paragraph (c)(2)(ii) of this section. tion apply to electronic notice. (ii) Except in an emergency treat- (iv) The individual who is the recipi- ment situation, make a good faith ef- ent of electronic notice retains the fort to obtain a written acknowledg- right to obtain a paper copy of the no- ment of receipt of the notice provided tice from a covered entity upon re- in accordance with paragraph (c)(2)(i) quest. of this section, and if not obtained, (d) Implementation specifications: Joint document its good faith efforts to ob- notice by separate covered entities. Cov- tain such acknowledgment and the rea- ered entities that participate in orga- son why the acknowledgment was not nized health care arrangements may obtained; comply with this section by a joint no- (iii) If the covered health care pro- tice, provided that: vider maintains a physical service de- (1) The covered entities participating livery site: in the organized health care arrange- (A) Have the notice available at the ment agree to abide by the terms of the service delivery site for individuals to notice with respect to protected health request to take with them; and information created or received by the (B) Post the notice in a clear and covered entity as part of its participa- prominent location where it is reason- tion in the organized health care ar- able to expect individuals seeking serv- rangement; ice from the covered health care pro- (2) The joint notice meets the imple- vider to be able to read the notice; and mentation specifications in paragraph (iv) Whenever the notice is revised, (b) of this section, except that the make the notice available upon request statements required by this section on or after the effective date of the re- may be altered to reflect the fact that vision and promptly comply with the the notice covers more than one cov- requirements of paragraph (c)(2)(iii) of ered entity; and this section, if applicable. (i) Describes with reasonable speci- (3) Specific requirements for electronic ficity the covered entities, or class of notice. (i) A covered entity that main- entities, to which the joint notice ap- tains a web site that provides informa- plies; tion about the covered entity’s cus- (ii) Describes with reasonable speci- tomer services or benefits must promi- ficity the service delivery sites, or nently post its notice on the web site classes of service delivery sites, to and make the notice available elec- which the joint notice applies; and tronically through the web site. (iii) If applicable, states that the cov- (ii) A covered entity may provide the ered entities participating in the orga- notice required by this section to an nized health care arrangement will individual by e-mail, if the individual share protected health information

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with each other, as necessary to carry such information to a health care pro- out treatment, payment, or health care vider, to provide such treatment to the operations relating to the organized individual. health care arrangement. (iv) If restricted protected health in- (3) The covered entities included in formation is disclosed to a health care the joint notice must provide the no- provider for emergency treatment tice to individuals in accordance with under paragraph (a)(1)(iii) of this sec- the applicable implementation speci- tion, the covered entity must request fications of paragraph (c) of this sec- that such health care provider not fur- tion. Provision of the joint notice to an ther use or disclose the information. individual by any one of the covered entities included in the joint notice (v) A restriction agreed to by a cov- will satisfy the provision requirement ered entity under paragraph (a) of this of paragraph (c) of this section with re- section, is not effective under this sub- spect to all others covered by the joint part to prevent uses or disclosures per- notice. mitted or required under (e) Implementation specifications: Docu- §§ 164.502(a)(2)(ii), 164.510(a) or 164.512. mentation. A covered entity must docu- (2) Implementation specifications: Ter- ment compliance with the notice re- minating a restriction. A covered entity quirements, as required by § 164.530(j), may terminate its agreement to a re- by retaining copies of the notices striction, if : issued by the covered entity and, if ap- (i) The individual agrees to or re- plicable, any written acknowledgments quests the termination in writing; of receipt of the notice or documenta- (ii) The individual orally agrees to tion of good faith efforts to obtain such the termination and the oral agree- written acknowledgment, in accord- ment is documented; or ance with paragraph (c)(2)(ii) of this (iii) The covered entity informs the section. individual that it is terminating its [65 FR 82802, Dec. 28, 2000, as amended at 67 agreement to a restriction, except that FR 53271, Aug. 14, 2002] such termination is only effective with respect to protected health informa- § 164.522 Rights to request privacy protection for protected health in- tion created or received after it has so formation. informed the individual. (a)(1) Standard: Right of an individual (3) Implementation specification: Docu- to request restriction of uses and disclo- mentation. A covered entity that agrees sures. (i) A covered entity must permit to a restriction must document the re- an individual to request that the cov- striction in accordance with § 164.530(j). ered entity restrict: (b)(1) Standard: Confidential commu- (A) Uses or disclosures of protected nications requirements. (i) A covered health information about the indi- health care provider must permit individual to carry out treatment, pay- viduals to request and must accommo- ment, or health care operations; and date reasonable requests by individuals (B) Disclosures permitted under to receive communications of pro- § 164.510(b). tected health information from the (ii) A covered entity is not required covered health care provider by alter- to agree to a restriction. native means or at alternative loca- (iii) A covered entity that agrees to a tions. restriction under paragraph (a)(1)(i) of (ii) A health plan must permit indi- this section may not use or disclose viduals to request and must accommo- protected health information in viola- date reasonable requests by individuals tion of such restriction, except that, if the individual who requested the re- to receive communications of pro- striction is in need of emergency treat- tected health information from the ment and the restricted protected health plan by alternative means or at health information is needed to provide alternative locations, if the individual the emergency treatment, the covered clearly states that the disclosure of all entity may use the restricted protected or part of that information could en- health information, or may disclose danger the individual.

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(2) Implementation specifications: Con- access without providing the individual ditions on providing confidential commu- an opportunity for review, in the fol- nications. (i) A covered entity may re- lowing circumstances. quire the individual to make a request (i) The protected health information for a confidential communication de- is excepted from the right of access by scribed in paragraph (b)(1) of this sec- paragraph (a)(1) of this section. tion in writing. (ii) A covered entity that is a correc- (ii) A covered entity may condition tional institution or a covered health the provision of a reasonable accommo- care provider acting under the direc- dation on: tion of the correctional institution (A) When appropriate, information as to how payment, if any, will be han- may deny, in whole or in part, an in- dled; and mate’s request to obtain a copy of pro- (B) Specification of an alternative tected health information, if obtaining address or other method of contact. such copy would jeopardize the health, (iii) A covered health care provider safety, security, custody, or rehabilita- may not require an explanation from tion of the individual or of other in- the individual as to the basis for the mates, or the safety of any officer, em- request as a condition of providing ployee, or other person at the correc- communications on a confidential tional institution or responsible for the basis. transporting of the inmate. (iv) A health plan may require that a (iii) An individual’s access to pro- request contain a statement that dis- tected health information created or closure of all or part of the information obtained by a covered health care pro- to which the request pertains could en- vider in the course of research that in- danger the individual. cludes treatment may be temporarily [65 FR 82802, Dec. 28, 2000, as amended at 67 suspended for as long as the research is FR 53271, Aug. 14, 2002] in progress, provided that the individual has agreed to the denial of ac- § 164.524 Access of individuals to process when consenting to participate in tected health information. the research that includes treatment, (a) Standard: Access to protected health and the covered health care provider information—(1) Right of access. Except has informed the individual that the as otherwise provided in paragraph right of access will be reinstated upon (a)(2) or (a)(3) of this section, an indi- completion of the research. vidual has a right of access to inspect (iv) An individual’s access to pro- and obtain a copy of protected health information about the individual in a tected health information that is con- designated record set, for as long as the tained in records that are subject to protected health information is main- the Privacy Act, 5 U.S.C. 552a, may be tained in the designated record set, ex- denied, if the denial of access under the cept for: Privacy Act would meet the require- (i) Psychotherapy notes; ments of that law. (ii) Information compiled in reason- (v) An individual’s access may be de- able anticipation of, or for use in, a nied if the protected health informa- civil, criminal, or administrative action was obtained from someone other tion or proceeding; and than a health care provider under a (iii) Protected health information promise of confidentiality and the ac- maintained by a covered entity that is: cess requested would be reasonably (A) Subject to the Clinical Labora- likely to reveal the source of the infor- tory Improvements Amendments of mation. 1988, 42 U.S.C. 263a, to the extent the (3) Reviewable grounds for denial. A provision of access to the individual covered entity may deny an individual would be prohibited by law; or access, provided that the individual is (B) Exempt from the Clinical Labora- given a right to have such denials re- tory Improvements Amendments of 1988, pursuant to 42 CFR 493.3(a)(2). viewed, as required by paragraph (a)(4) (2) Unreviewable grounds for denial. A of this section, in the following cir- covered entity may deny an individual cumstances:

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(i) A licensed health care professional requested, in accordance with para- has determined, in the exercise of pro- graph (c) of this section. fessional judgment, that the access re- (B) If the covered entity denies the quested is reasonably likely to endan- request, in whole or in part, it must ger the life or physical safety of the in- provide the individual with a written dividual or another person; denial, in accordance with paragraph (ii) The protected health information (d) of this section. makes reference to another person (un- (ii) If the request for access is for less such other person is a health care protected health information that is provider) and a licensed health care not maintained or accessible to the professional has determined, in the ex- covered entity on-site, the covered en- ercise of professional judgment, that tity must take an action required by the access requested is reasonably like- paragraph (b)(2)(i) of this section by no ly to cause substantial harm to such later than 60 days from the receipt of other person; or such a request. (iii) The request for access is made by (iii) If the covered entity is unable to the individual’s personal representa- take an action required by paragraph tive and a licensed health care profes- (b)(2)(i)(A) or (B) of this section within sional has determined, in the exercise the time required by paragraph (b)(2)(i) of professional judgment, that the pro- or (ii) of this section, as applicable, the vision of access to such personal rep- covered entity may extend the time for resentative is reasonably likely to such actions by no more than 30 days, cause substantial harm to the indi- provided that: vidual or another person. (4) Review of a denial of access. If ac- (A) The covered entity, within the cess is denied on a ground permitted time limit set by paragraph (b)(2)(i) or under paragraph (a)(3) of this section, (ii) of this section, as applicable, pro- the individual has the right to have the vides the individual with a written denial reviewed by a licensed health statement of the reasons for the delay care professional who is designated by and the date by which the covered enti- the covered entity to act as a review- ty will complete its action on the re- ing official and who did not participate quest; and in the original decision to deny. The (B) The covered entity may have only covered entity must provide or deny one such extension of time for action access in accordance with the deter- on a request for access. mination of the reviewing official (c) Implementation specifications: Pro- under paragraph (d)(4) of this section. vision of access. If the covered entity (b) Implementation specifications: re- provides an individual with access, in quests for access and timely action—(1) whole or in part, to protected health Individual’s request for access. The cov- information, the covered entity must ered entity must permit an individual comply with the following require- to request access to inspect or to ob- ments. tain a copy of the protected health in- (1) Providing the access requested. The formation about the individual that is covered entity must provide the access maintained in a designated record set. requested by individuals, including in- The covered entity may require indi- spection or obtaining a copy, or both, viduals to make requests for access in of the protected health information writing, provided that it informs indi- about them in designated record sets. viduals of such a requirement. If the same protected health informa- (2) Timely action by the covered entity. tion that is the subject of a request for (i) Except as provided in paragraph access is maintained in more than one (b)(2)(ii) of this section, the covered en- designated record set or at more than tity must act on a request for access no one location, the covered entity need later than 30 days after receipt of the only produce the protected health in- request as follows. formation once in response to a request (A) If the covered entity grants the for access. request, in whole or in part, it must in- (2) Form of access requested. (i) The form the individual of the acceptance covered entity must provide the indi- of the request and provide the access vidual with access to the protected

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health information in the form or for- entity must comply with the following mat requested by the individual, if it is requirements. readily producible in such form or for- (1) Making other information accessible. mat; or, if not, in a readable hard copy The covered entity must, to the extent form or such other form or format as possible, give the individual access to agreed to by the covered entity and the any other protected health information individual. requested, after excluding the pro- (ii) The covered entity may provide tected health information as to which the individual with a summary of the the covered entity has a ground to protected health information re- deny access. quested, in lieu of providing access to (2) Denial. The covered entity must the protected health information or provide a timely, written denial to the may provide an explanation of the pro- individual, in accordance with para- tected health information to which ac- graph (b)(2) of this section. The denial cess has been provided, if: must be in plain language and contain: (A) The individual agrees in advance (i) The basis for the denial; to such a summary or explanation; and (ii) If applicable, a statement of the (B) The individual agrees in advance individual’s review rights under para- to the fees imposed, if any, by the cov- graph (a)(4) of this section, including a ered entity for such summary or expla- description of how the individual may nation. exercise such review rights; and (3) Time and manner of access. The (iii) A description of how the indi- covered entity must provide the access vidual may complain to the covered en- as requested by the individual in a tity pursuant to the complaint proce- timely manner as required by para- dures in § 164.530(d) or to the Secretary graph (b)(2) of this section, including pursuant to the procedures in § 160.306. arranging with the individual for a The description must include the convenient time and place to inspect or name, or title, and telephone number obtain a copy of the protected health of the contact person or office des- information, or mailing the copy of the ignated in § 164.530(a)(1)(ii). protected health information at the in- (3) Other responsibility. If the covered dividual’s request. The covered entity entity does not maintain the protected may discuss the scope, format, and health information that is the subject other aspects of the request for access of the individual’s request for access, with the individual as necessary to fa- and the covered entity knows where cilitate the timely provision of access. the requested information is main- (4) Fees. If the individual requests a tained, the covered entity must inform copy of the protected health informa- the individual where to direct the re- tion or agrees to a summary or expla- quest for access. nation of such information, the covered (4) Review of denial requested. If the entity may impose a reasonable, cost- individual has requested a review of a based fee, provided that the fee in- denial under paragraph (a)(4) of this cludes only the cost of: section, the covered entity must des- (i) Copying, including the cost of sup- ignate a licensed health care profes- plies for and labor of copying, the pro- sional, who was not directly involved tected health information requested by in the denial to review the decision to the individual; deny access. The covered entity must (ii) Postage, when the individual has promptly refer a request for review to requested the copy, or the summary or such designated reviewing official. The explanation, be mailed; and designated reviewing official must de- (iii) Preparing an explanation or termine, within a reasonable period of summary of the protected health infor- time, whether or not to deny the access mation, if agreed to by the individual requested based on the standards in as required by paragraph (c)(2)(ii) of paragraph (a)(3) of this section. The this section. covered entity must promptly provide (d) Implementation specifications: De- written notice to the individual of the nial of access. If the covered entity de- determination of the designated re- nies access, in whole or in part, to pro- viewing official and take other action tected health information, the covered as required by this section to carry out

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the designated reviewing official’s de- (A) If the covered entity grants the termination. requested amendment, in whole or in (e) Implementation specification: Docu- part, it must take the actions required mentation. A covered entity must docu- by paragraphs (c)(1) and (2) of this sec- ment the following and retain the doc- tion. umentation as required by § 164.530(j): (B) If the covered entity denies the (1) The designated record sets that requested amendment, in whole or in are subject to access by individuals; part, it must provide the individual and with a written denial, in accordance (2) The titles of the persons or offices with paragraph (d)(1) of this section. responsible for receiving and proc- (ii) If the covered entity is unable to essing requests for access by individ- act on the amendment within the time uals. required by paragraph (b)(2)(i) of this section, the covered entity may extend § 164.526 Amendment of protected health information. the time for such action by no more than 30 days, provided that: (a) Standard: Right to amend. (1) Right (A) The covered entity, within the to amend. An individual has the right time limit set by paragraph (b)(2)(i) of to have a covered entity amend pro- this section, provides the individual tected health information or a record with a written statement of the rea- about the individual in a designated sons for the delay and the date by record set for as long as the protected which the covered entity will complete health information is maintained in its action on the request; and the designated record set. (B) The covered entity may have only (2) Denial of amendment. A covered entity may deny an individual’s request one such extension of time for action for amendment, if it determines that on a request for an amendment. the protected health information or (c) Implementation specifications: Ac- record that is the subject of the re- cepting the amendment. If the covered quest: entity accepts the requested amend- (i) Was not created by the covered en- ment, in whole or in part, the covered tity, unless the individual provides a entity must comply with the following reasonable basis to believe that the requirements. originator of protected health informa- (1) Making the amendment. The cov- tion is no longer available to act on the ered entity must make the appropriate requested amendment; amendment to the protected health in- (ii) Is not part of the designated formation or record that is the subject record set; of the request for amendment by, at a (iii) Would not be available for in- minimum, identifying the records in spection under § 164.524; or the designated record set that are af- (iv) Is accurate and complete. fected by the amendment and append- (b) Implementation specifications: re- ing or otherwise providing a link to the quests for amendment and timely action. location of the amendment. (1) Individual’s request for amendment. (2) Informing the individual. In accord- The covered entity must permit an in- ance with paragraph (b) of this section, dividual to request that the covered en- the covered entity must timely inform tity amend the protected health infor- the individual that the amendment is mation maintained in the designated accepted and obtain the individual’s record set. The covered entity may re- identification of and agreement to quire individuals to make requests for have the covered entity notify the rel- amendment in writing and to provide a evant persons with which the amend- reason to support a requested amendment needs to be shared in accordance ment, provided that it informs individ- with paragraph (c)(3) of this section. uals in advance of such requirements. (3) Informing others. The covered enti- (2) Timely action by the covered entity. ty must make reasonable efforts to in- (i) The covered entity must act on the form and provide the amendment with- individual’s request for an amendment in a reasonable time to: no later than 60 days after receipt of (i) Persons identified by the indi- such a request, as follows. vidual as having received protected

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health information about the indi- the individual’s statement of disagree- vidual and needing the amendment; ment. Whenever such a rebuttal is pre- and pared, the covered entity must provide (ii) Persons, including business asso- a copy to the individual who submitted ciates, that the covered entity knows the statement of disagreement. have the protected health information (4) Recordkeeping. The covered entity that is the subject of the amendment must, as appropriate, identify the and that may have relied, or could record or protected health information foreseeably rely, on such information in the designated record set that is the to the detriment of the individual. subject of the disputed amendment and (d) Implementation specifications: De- append or otherwise link the individ- nying the amendment. If the covered en- ual’s request for an amendment, the tity denies the requested amendment, covered entity’s denial of the request, in whole or in part, the covered entity the individual’s statement of disagree- must comply with the following re- ment, if any, and the covered entity’s quirements. rebuttal, if any, to the designated (1) Denial. The covered entity must provide the individual with a timely, record set. written denial, in accordance with (5) Future disclosures. (i) If a state- paragraph (b)(2) of this section. The de- ment of disagreement has been sub- nial must use plain language and con- mitted by the individual, the covered tain: entity must include the material ap- (i) The basis for the denial, in accord- pended in accordance with paragraph ance with paragraph (a)(2) of this sec- (d)(4) of this section, or, at the election tion; of the covered entity, an accurate sum- (ii) The individual’s right to submit a mary of any such information, with written statement disagreeing with the any subsequent disclosure of the pro- denial and how the individual may file tected health information to which the such a statement; disagreement relates. (iii) A statement that, if the indi- (ii) If the individual has not sub- vidual does not submit a statement of mitted a written statement of disagree- disagreement, the individual may re- ment, the covered entity must include quest that the covered entity provide the individual’s request for amendment the individual’s request for amendment and its denial, or an accurate summary and the denial with any future disclo- of such information, with any subse- sures of the protected health informa- quent disclosure of the protected tion that is the subject of the amend- health information only if the indi- ment; and vidual has requested such action in ac- (iv) A description of how the indi- cordance with paragraph (d)(1)(iii) of vidual may complain to the covered en- this section. tity pursuant to the complaint proce- (iii) When a subsequent disclosure de- dures established in § 164.530(d) or to the Secretary pursuant to the proce- scribed in paragraph (d)(5)(i) or (ii) of dures established in § 160.306. The de- this section is made using a standard scription must include the name, or transaction under part 162 of this subtitle, and telephone number of the con- chapter that does not permit the addi- tact person or office designated in tional material to be included with the § 164.530(a)(1)(ii). disclosure, the covered entity may sep- (2) Statement of disagreement. The cov- arately transmit the material required ered entity must permit the individual by paragraph (d)(5)(i) or (ii) of this sec- to submit to the covered entity a writ- tion, as applicable, to the recipient of ten statement disagreeing with the de- the standard transaction. nial of all or part of a requested (e) Implementation specification: Ac- amendment and the basis of such dis- tions on notices of amendment. A covered agreement. The covered entity may entity that is informed by another cov- reasonably limit the length of a state- ered entity of an amendment to an in- ment of disagreement. dividual’s protected health informa- (3) Rebuttal statement. The covered en- tion, in accordance with paragraph tity may prepare a written rebuttal to (c)(3) of this section, must amend the

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protected health information in des- and specifying the time for which such ignated record sets as provided by a suspension is required. paragraph (c)(1) of this section. (ii) If the agency or official state- (f) Implementation specification: Docu- ment in paragraph (a)(2)(i) of this sec- mentation. A covered entity must docu- tion is made orally, the covered entity ment the titles of the persons or offices must: responsible for receiving and proc- (A) Document the statement, includ- essing requests for amendments by in- ing the identity of the agency or offi- dividuals and retain the documentation cial making the statement; as required by § 164.530(j). (B) Temporarily suspend the individual’s right to an accounting of disclo- § 164.528 Accounting of disclosures of sures subject to the statement; and protected health information. (C) Limit the temporary suspension (a) Standard: Right to an accounting of to no longer than 30 days from the date disclosures of protected health informa- of the oral statement, unless a written tion. (1) An individual has a right to re- statement pursuant to paragraph ceive an accounting of disclosures of (a)(2)(i) of this section is submitted protected health information made by during that time. a covered entity in the six years prior (3) An individual may request an ac- to the date on which the accounting is counting of disclosures for a period of requested, except for disclosures: time less than six years from the date (i) To carry out treatment, payment of the request. and health care operations as provided (b) Implementation specifications: Con- in § 164.506; tent of the accounting. The covered enti- (ii) To individuals of protected health ty must provide the individual with a information about them as provided in written accounting that meets the fol- § 164.502; lowing requirements. (1) Except as otherwise provided by (iii) Incident to a use or disclosure paragraph (a) of this section, the ac- otherwise permitted or required by this counting must include disclosures of subpart, as provided in § 164.502; protected health information that oc- (iv) Pursuant to an authorization as curred during the six years (or such provided in § 164.508; shorter time period at the request of (v) For the facility’s directory or to the individual as provided in paragraph persons involved in the individual’s (a)(3) of this section) prior to the date care or other notification purposes as of the request for an accounting, in- provided in § 164.510; cluding disclosures to or by business (vi) For national security or intel- associates of the covered entity. ligence purposes as provided in (2) Except as otherwise provided by § 164.512(k)(2); paragraphs (b)(3) or (b)(4) of this sec- (vii) To correctional institutions or tion, the accounting must include for law enforcement officials as provided each disclosure: in § 164.512(k)(5); (i) The date of the disclosure; (viii) As part of a limited data set in (ii) The name of the entity or person accordance with § 164.514(e); or who received the protected health in- (ix) That occurred prior to the com- formation and, if known, the address of pliance date for the covered entity. such entity or person; (2)(i) The covered entity must tempo- (iii) A brief description of the pro- rarily suspend an individual’s right to tected health information disclosed; receive an accounting of disclosures to and a health oversight agency or law en- (iv) A brief statement of the purpose forcement official, as provided in of the disclosure that reasonably in- § 164.512(d) or (f), respectively, for the forms the individual of the basis for time specified by such agency or offi- the disclosure or, in lieu of such state- cial, if such agency or official provides ment, a copy of a written request for a the covered entity with a written disclosure under §§ 164.502(a)(2)(ii) or statement that such an accounting to 164.512, if any. the individual would be reasonably (3) If, during the period covered by likely to impede the agency’s activities the accounting, the covered entity has

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made multiple disclosures of protected the entity that sponsored the research health information to the same person and the researcher. or entity for a single purpose under (c) Implementation specifications: Pro- §§ 164.502(a)(2)(ii) or 164.512, the ac- vision of the accounting. (1) The covered counting may, with respect to such entity must act on the individual’s re- multiple disclosures, provide: quest for an accounting, no later than (i) The information required by para- 60 days after receipt of such a request, graph (b)(2) of this section for the first as follows. disclosure during the accounting pe- (i) The covered entity must provide riod; the individual with the accounting re- (ii) The frequency, periodicity, or quested; or number of the disclosures made during the accounting period; and (ii) If the covered entity is unable to (iii) The date of the last such disclo- provide the accounting within the time sure during the accounting period. required by paragraph (c)(1) of this sec- (4)(i) If, during the period covered by tion, the covered entity may extend the accounting, the covered entity has the time to provide the accounting by made disclosures of protected health no more than 30 days, provided that: information for a particular research (A) The covered entity, within the purpose in accordance with § 164.512(i) time limit set by paragraph (c)(1) of for 50 or more individuals, the account- this section, provides the individual ing may, with respect to such disclo- with a written statement of the rea- sures for which the protected health in- sons for the delay and the date by formation about the individual may which the covered entity will provide have been included, provide: the accounting; and (A) The name of the protocol or other (B) The covered entity may have only research activity; one such extension of time for action (B) A description, in plain language, on a request for an accounting. of the research protocol or other re- (2) The covered entity must provide search activity, including the purpose the first accounting to an individual in of the research and the criteria for se- any 12 month period without charge. lecting particular records; (C) A brief description of the type of The covered entity may impose a rea- protected health information that was sonable, cost-based fee for each subse- disclosed; quent request for an accounting by the (D) The date or period of time during same individual within the 12 month which such disclosures occurred, or period, provided that the covered enti- may have occurred, including the date ty informs the individual in advance of of the last such disclosure during the the fee and provides the individual accounting period; with an opportunity to withdraw or (E) The name, address, and telephone modify the request for a subsequent ac- number of the entity that sponsored counting in order to avoid or reduce the research and of the researcher to the fee. whom the information was disclosed; (d) Implementation specification: Docu- and mentation. A covered entity must docu- (F) A statement that the protected ment the following and retain the doc- health information of the individual umentation as required by § 164.530(j): may or may not have been disclosed for (1) The information required to be in- a particular protocol or other research cluded in an accounting under para- activity. graph (b) of this section for disclosures (ii) If the covered entity provides an of protected health information that accounting for research disclosures, in are subject to an accounting under accordance with paragraph (b)(4) of this section, and if it is reasonably paragraph (a) of this section; likely that the protected health infor- (2) The written accounting that is mation of the individual was disclosed provided to the individual under this for such research protocol or activity, section; and the covered entity shall, at the request of the individual, assist in contacting

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(3) The titles of the persons or offices provided, as required by paragraph (j) responsible for receiving and proc- of this section. essing requests for an accounting by (c)(1) Standard: Safeguards. A covered individuals. entity must have in place appropriate [65 FR 82802, Dec. 28, 2000, as amended at 67 administrative, technical, and physical FR 53271, Aug. 14, 2002] safeguards to protect the privacy of protected health information. § 164.530 Administrative requirements. (2)(i) Implementation specification: (a)(1) Standard: Personnel designations. Safeguards. A covered entity must rea- (i) A covered entity must designate a sonably safeguard protected health in- privacy official who is responsible for formation from any intentional or un- the development and implementation intentional use or disclosure that is in of the policies and procedures of the violation of the standards, implemen- entity. tation specifications or other require- (ii) A covered entity must designate ments of this subpart. a contact person or office who is re- (ii) A covered entity must reasonably sponsible for receiving complaints safeguard protected health information under this section and who is able to to limit incidental uses or disclosures provide further information about mat- made pursuant to an otherwise per- ters covered by the notice required by mitted or required use or disclosure. § 164.520. (d)(1) Standard: Complaints to the cov- (2) Implementation specification: Per- ered entity. A covered entity must pro- sonnel designations. A covered entity vide a process for individuals to make must document the personnel designa- complaints concerning the covered en- tions in paragraph (a)(1) of this section tity’s policies and procedures required as required by paragraph (j) of this sec- by this subpart or its compliance with tion. such policies and procedures or the re- (b)(1) Standard: Training. A covered quirements of this subpart. entity must train all members of its (2) Implementation specification: Docu- workforce on the policies and proce- mentation of complaints. As required by dures with respect to protected health paragraph (j) of this section, a covered information required by this subpart, entity must document all complaints as necessary and appropriate for the received, and their disposition, if any. members of the workforce to carry out (e)(1) Standard: Sanctions. A covered their function within the covered enti- entity must have and apply appro- ty. priate sanctions against members of its (2) Implementation specifications: workforce who fail to comply with the Training. (i) A covered entity must pro- privacy policies and procedures of the vide training that meets the require- covered entity or the requirements of ments of paragraph (b)(1) of this sec- this subpart. This standard does not tion, as follows: apply to a member of the covered enti- (A) To each member of the covered ty’s workforce with respect to actions entity’s workforce by no later than the that are covered by and that meet the compliance date for the covered entity; conditions of § 164.502(j) or paragraph (B) Thereafter, to each new member (g)(2) of this section. of the workforce within a reasonable (2) Implementation specification: Docu- period of time after the person joins mentation. As required by paragraph (j) the covered entity’s workforce; and of this section, a covered entity must (C) To each member of the covered document the sanctions that are ap- entity’s workforce whose functions are plied, if any. affected by a material change in the (f) Standard: Mitigation. A covered en- policies or procedures required by this tity must mitigate, to the extent prac- subpart, within a reasonable period of ticable, any harmful effect that is time after the material change be- known to the covered entity of a use or comes effective in accordance with disclosure of protected health informa- paragraph (i) of this section. tion in violation of its policies and pro- (ii) A covered entity must document cedures or the requirements of this that the training as described in para- subpart by the covered entity or its graph (b)(2)(i) of this section has been business associate.

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(g) Standard: refraining from intimi- serving its right to make such a change dating or retaliatory acts. A covered en- in its privacy practices; or tity— (iii) A covered entity may make any (1) May not intimidate, threaten, co- other changes to policies and proce- erce, discriminate against, or take dures at any time, provided that the other retaliatory action against any changes are documented and imple- individual for the exercise by the indi- mented in accordance with paragraph vidual of any right established, or for (i)(5) of this section. participation in any process provided (3) Implementation specification: for by this subpart, including the filing Changes in law. Whenever there is a of a complaint under this section; and change in law that necessitates a (2) Must refrain from intimidation change to the covered entity’s policies and retaliation as provided in § 160.316 or procedures, the covered entity must of this subchapter. promptly document and implement the (h) Standard: Waiver of rights. A cov- revised policy or procedure. If the ered entity may not require individuals change in law materially affects the to waive their rights under § 160.306 of content of the notice required by this subchapter or this subpart as a § 164.520, the covered entity must condition of the provision of treat- promptly make the appropriate revi- ment, payment, enrollment in a health sions to the notice in accordance with plan, or eligibility for benefits. § 164.520(b)(3). Nothing in this para- (i)(1) Standard: Policies and procedures. graph may be used by a covered entity A covered entity must implement poli- to excuse a failure to comply with the cies and procedures with respect to law. protected health information that are (4) Implementation specifications: designed to comply with the standards, Changes to privacy practices stated in the implementation specifications, or notice. (i) To implement a change as other requirements of this subpart. The provided by paragraph (i)(2)(ii) of this policies and procedures must be reason- section, a covered entity must: ably designed, taking into account the (A) Ensure that the policy or proce- size of and the type of activities that dure, as revised to reflect a change in relate to protected health information the covered entity’s privacy practice as undertaken by the covered entity, to stated in its notice, complies with the ensure such compliance. This standard standards, requirements, and imple- is not to be construed to permit or ex- mentation specifications of this sub- cuse an action that violates any other part; standard, implementation specifica- (B) Document the policy or proce- tion, or other requirement of this sub- dure, as revised, as required by para- part. graph (j) of this section; and (2) Standard: Changes to policies or pro- (C) Revise the notice as required by cedures. (i) A covered entity must § 164.520(b)(3) to state the changed prac- change its policies and procedures as tice and make the revised notice avail- necessary and appropriate to comply able as required by § 164.520(c). The cov- with changes in the law, including the ered entity may not implement a standards, requirements, and imple- change to a policy or procedure prior mentation specifications of this sub- to the effective date of the revised no- part; tice. (ii) When a covered entity changes a (ii) If a covered entity has not re- privacy practice that is stated in the served its right under notice described in § 164.520, and makes § 164.520(b)(1)(v)(C) to change a privacy corresponding changes to its policies practice that is stated in the notice, and procedures, it may make the the covered entity is bound by the pri- changes effective for protected health vacy practices as stated in the notice information that it created or received with respect to protected health infor- prior to the effective date of the notice mation created or received while such revision, if the covered entity has, in notice is in effect. A covered entity accordance with § 164.520(b)(1)(v)(C), in- may change a privacy practice that is cluded in the notice a statement re- stated in the notice, and the related

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policies and procedures, without hav- (A) Summary health information as ing reserved the right to do so, pro- defined in § 164.504(a); or vided that: (B) Information on whether the indi- (A) Such change meets the imple- vidual is participating in the group mentation specifications in paragraphs health plan, or is enrolled in or has (i)(4)(i)(A)–(C) of this section; and disenrolled from a health insurance (B) Such change is effective only issuer or HMO offered by the plan. with respect to protected health infor- (2) A group health plan described in mation created or received after the ef- paragraph (k)(1) of this section is sub- fective date of the notice. ject to the standard and implementa- (5) Implementation specification: tion specification in paragraph (j) of Changes to other policies or procedures. A this section only with respect to plan covered entity may change, at any documents amended in accordance time, a policy or procedure that does with § 164.504(f). not materially affect the content of the notice required by § 164.520, provided [65 FR 82802, Dec. 28, 2000, as amended at 67 that: FR 53272, Aug. 14, 2002; 71 FR 8433, Feb. 16, (i) The policy or procedure, as re- 2006] vised, complies with the standards, re- § 164.532 Transition provisions. quirements, and implementation specifications of this subpart; and (a) Standard: Effect of prior authoriza- (ii) Prior to the effective date of the tions. Notwithstanding §§ 164.508 and change, the policy or procedure, as re- 164.512(i), a covered entity may use or vised, is documented as required by disclose protected health information, paragraph (j) of this section. consistent with paragraphs (b) and (c) (j)(1) Standard: Documentation. A cov- of this section, pursuant to an author- ered entity must: ization or other express legal permis- (i) Maintain the policies and proce- sion obtained from an individual per- dures provided for in paragraph (i) of mitting the use or disclosure of pro- this section in written or electronic tected health information, informed form; consent of the individual to participate (ii) If a communication is required by in research, or a waiver of informed this subpart to be in writing, maintain consent by an IRB. such writing, or an electronic copy, as (b) Implementation specification: Effect documentation; and of prior authorization for purposes other (iii) If an action, activity, or designa- than research. Notwithstanding any tion is required by this subpart to be provisions in § 164.508, a covered entity documented, maintain a written or may use or disclose protected health electronic record of such action, activ- information that it created or received ity, or designation. prior to the applicable compliance date (2) Implementation specification: Reten- of this subpart pursuant to an author- tion period. A covered entity must re- ization or other express legal permis- tain the documentation required by sion obtained from an individual prior paragraph (j)(1) of this section for six to the applicable compliance date of years from the date of its creation or this subpart, provided that the author- the date when it last was in effect, ization or other express legal permis- whichever is later. sion specifically permits such use or (k) Standard: Group health plans. (1) A disclosure and there is no agreed-to re- group health plan is not subject to the striction in accordance with § 164.522(a). standards or implementation specifica- (c) Implementation specification: Effect tions in paragraphs (a) through (f) and of prior permission for research. Notwith- (i) of this section, to the extent that: standing any provisions in §§ 164.508 and (i) The group health plan provides 164.512(i), a covered entity may, to the health benefits solely through an in- extent allowed by one of the following surance contract with a health insur- permissions, use or disclose, for re- ance issuer or an HMO; and search, protected health information (ii) The group health plan does not that it created or received either be- create or receive protected health in- fore or after the applicable compliance formation, except for: date of this subpart, provided that

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there is no agreed-to restriction in ac- erating pursuant to a written contract cordance with § 164.522(a), and the cov- or other written arrangement with a ered entity has obtained, prior to the business associate for such business as- applicable compliance date, either: sociate to perform functions or activi- (1) An authorization or other express ties or provide services that make the legal permission from an individual to entity a business associate; and use or disclose protected health infor- (ii) The contract or other arrange- mation for the research; ment is not renewed or modified from (2) The informed consent of the indi- October 15, 2002, until the compliance vidual to participate in the research; or date set forth in § 164.534. (3) A waiver, by an IRB, of informed (2) Limited deemed compliance period. A consent for the research, in accordance prior contract or other arrangement with 7 CFR 1c.116(d), 10 CFR 745.116(d), that meets the qualification require- 14 CFR 1230.116(d), 15 CFR 27.116(d), 16 ments in paragraph (e) of this section, CFR 1028.116(d), 21 CFR 50.24, 22 CFR shall be deemed compliant until the 225.116(d), 24 CFR 60.116(d), 28 CFR earlier of: 46.116(d), 32 CFR 219.116(d), 34 CFR (i) The date such contract or other 97.116(d), 38 CFR 16.116(d), 40 CFR arrangement is renewed or modified on 26.116(d), 45 CFR 46.116(d), 45 CFR or after the compliance date set forth 690.116(d), or 49 CFR 11.116(d), provided in § 164.534; or that a covered entity must obtain au- (ii) April 14, 2004. thorization in accordance with § 164.508 (3) Covered entity responsibilities. if, after the compliance date, informed Nothing in this section shall alter the consent is sought from an individual requirements of a covered entity to participating in the research. comply with part 160, subpart C of this (d) Standard: Effect of prior contracts subchapter and §§ 164.524, 164.526, or other arrangements with business asso- 164.528, and 164.530(f) with respect to ciates. Notwithstanding any other pro- protected health information held by a visions of this subpart, a covered enti- business associate. ty, other than a small health plan, may disclose protected health information [65 FR 82802, Dec. 28, 2000, as amended at 67 FR 53272, Aug. 14, 2002] to a business associate and may allow a business associate to create, receive, § 164.534 Compliance dates for initial or use protected health information on implementation of the privacy its behalf pursuant to a written con- standards. tract or other written arrangement (a) Health care providers. A covered with such business associate that does health care provider must comply with not comply with §§ 164.502(e) and the applicable requirements of this 164.504(e) consistent with the require- subpart no later than April 14, 2003. ments, and only for such time, set (b) Health plans. A health plan must forth in paragraph (e) of this section. comply with the applicable require- (e) Implementation specification: ments of this subpart no later than the Deemed compliance—(1) Qualification. following as applicable: Notwithstanding other sections of this (1) Health plans other han small health subpart, a covered entity, other than a plans. April 14, 2003. small health plan, is deemed to be in (2) Small health plans. April 14, 2004. compliance with the documentation (c) Health clearinghouses. A health and contract requirements of care clearinghouse must comply with §§ 164.502(e) and 164.504(e), with respect the applicable requirements of this to a particular business associate rela- subpart no later than April 14, 2003. tionship, for the time period set forth in paragraph (e)(2) of this section, if: [66 FR 12434, Feb. 26, 2001] (i) Prior to October 15, 2002, such covered entity has entered into and is op- PARTS 165–199 [RESERVED]

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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. Material Approved for Incorporation By Reference Table of CFR Titles and Chapters Alphabetical List of Agencies Appearing in the CFR List of CFR Sections Affected

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The Director of the Federal Register has approved under 5 U.S.C. 552(a) and 1 CFR part 51 the incorporation by reference of the following publications. This list contains only those incorporations by reference effective as of the revision date of this volume. Incorporations by reference found within a regulation are effective upon the effective date of that regulation. For more information on incorporation by reference, see the preliminary pages of this volume.

45 CFR (PARTS 1–199) DEPARTMENT OF HEALTH AND HUMAN SERVICES 45 CFR National Council for Prescription Drug Programs 4201 North 24th Street, Suite 365, Phoenix, Arizona 85016 Telecommunication Standard Implementation Guide, Version 5, Re- 162.920; 162.1102; lease 1, September 1999 Edition. 162.1202; 162.1302; 162.1602; 162.1802 Batch Standard Batch Implementation Guide, Version 1, Release 0, 162.920; 162.1102; February 1, 1996 edition. 162.1202; 162.1602; 162.1802 Batch Standard Batch Implementation Guide, Version 1, Release 1 162.920; 162.1102; (Version 1.1), January 2000 edition. 162.1202; 162.1302; 162.1802 Washington Publishing Company PMB 161, 5284 Randolph Road, Rockville, Maryland 20852–2116 ASC X12N 270/271—Health Care Eligibility Benefit Inquiry and Re- 162.920; 162.1202 sponse, May 2000, (004010X092), Version 4010, and Addenda dated October 2002 (004010X092A1). ASC X12N 276/277—Health Care Claim Status Request and Response, 162.920; 162.1402 May 2000, (004010X093), Version 4010, and Addenda dated Octo- ber 2002 (004010X093A1). ASC X12N 278—Health Care Services Review—Request for Review 162.920; 162.1302 and Response, May 2000, (004010X094), Version 4010 and Addenda dated October 2002 (004010X094A1). ASC X12N 820—Payroll Deducted and Other Group Premium Pay- 162.920; 162.1702 ment of Insurance Products, May 2000 (004010X061), Version 4010, and Addenda dated October 2002 (004010X061A1). ASC X12N 834—Benefit Enrollment and Maintenance, May 2000 162.920; 162.1502 (004010X095) and Addenda dated October 2002 (004010X095A1). ASC X12N 835—Health Care Claim Payment/Advice, May 2000 162.920; 162.1602 (004010X091), Version 4010, including Addenda dated October 2002 (004010X091A1). ASC X12N 837—Health Care Claim: Dental, May 2000 (004010X097) 162.920; 162.1102; Version 4010, and Addenda dated October 2002 (004010X097A1). 162.1802 789

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Title 1—General Provisions

I Administrative Committee of the Federal Register (Parts 1—49) II Office of the Federal Register (Parts 50—299) IV Miscellaneous Agencies (Parts 400—500)

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 100—199) II Office of Management and Budget Circulars and Guidance (200— 299) SUBTITLE B—FEDERAL AGENCY REGULATIONS FOR GRANTS AND AGREEMENTS III Department of Health and Human Services (Parts 300—399) VI Department of State (Parts 600—699) VIII Department of Veterans Affairs (Parts 800—899) IX Department of Energy (Parts 900—999) XI Department of Defense (Parts 1100—1199) XIV Department of the Interior (Parts 1400—1499) XV Environmental Protection Agency (Parts 1500—1599) XVIII National Aeronautics and Space Administration (Parts 1880— 1899) XXII Corporation for National and Community Service (Parts 2200— 2299) XXV National Science Foundation (Parts 2500—2599) XXVI National Archives and Records Administration (Parts 2600—2699) XXVII Small Business Administration (Parts 2700—2799) XXVIII Department of Justice (Parts 2800—2899) XXXII National Endowment for the Arts (Parts 3200—3299) XXXIII National Endowment for the Humanities (Parts 3300—3399) XXXV Export-Import Bank of the United States (Parts 3500—3599) XXXVII Peace Corps (Parts 3700—3799)

Title 3—The President

I Executive Office of the President (Parts 100—199)

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I Government Accountability Office (Parts 1—99)

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) 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 Fed- eral Labor Relations Authority and Federal Service Impasses Panel (Parts 2400—2499) XV Office of Administration, Executive Office of the President (Parts 2500—2599) 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) 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 Overseas Private Investment Corporation (Parts 4300—4399) XXXV Office of Personnel Management (Parts 4500—4599) 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) 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)

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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) LXIX Tennessee Valley Authority (Parts 7900—7999) LXXI Consumer Product Safety Commission (Parts 8100—8199) LXXIII Department of Agriculture (Parts 8300—8399) 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) XCVII Department of Homeland Security Human Resources Manage- ment System (Department of Homeland Security--Office of Personnel Management) (Parts 9700—9799) XCIX Department of Defense Human Resources Management and Labor Relations Systems (Department of Defense--Office of Personnel Management) (Parts 9900—9999)

Title 6—Domestic Security

I Department of Homeland Security, Office of the Secretary (Parts 0—99) 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, Mar- keting 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 Ag- riculture (Parts 300—399) IV Federal Crop Insurance Corporation, Department of Agriculture (Parts 400—499) V Agricultural Research Service, Department of Agriculture (Parts 500—599)

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VI Natural Resources Conservation Service, Department of Agri- culture (Parts 600—699) VII Farm Service Agency, Department of Agriculture (Parts 700— 799) VIII Grain Inspection, Packers and Stockyards Administration (Fed- eral Grain Inspection Service), Department of Agriculture (Parts 800—899) IX Agricultural Marketing Service (Marketing Agreements and Or- ders; Fruits, Vegetables, Nuts), Department of Agriculture (Parts 900—999) X Agricultural Marketing Service (Marketing Agreements and Or- ders; Milk), Department of Agriculture (Parts 1000—1199) XI Agricultural Marketing Service (Marketing Agreements and Or- ders; 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 Rural Telephone Bank, Department of Agriculture (Parts 1600— 1699) 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, Depart- ment of Agriculture (Parts 1800—2099) XX Local Television Loan Guarantee Board (Parts 2200—2299) 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 Agri- culture (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 Cooperative State Research, Education, and Extension Service, Department of Agriculture (Parts 3400—3499) XXXV Rural Housing Service, Department of Agriculture (Parts 3500— 3599) XXXVI National Agricultural Statistics Service, Department of Agri- culture (Parts 3600—3699) XXXVII Economic Research Service, Department of Agriculture (Parts 3700—3799)

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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)

Title 8—Aliens and Nationality

I Department of Homeland Security (Immigration and Naturaliza- tion) (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 Ag- riculture (Parts 1—199) II Grain Inspection, Packers and Stockyards Administration (Packers and Stockyards Programs), Department of Agri- culture (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 1303—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)

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 Office of Thrift Supervision, Department of the Treasury (Parts 500—599) VI Farm Credit Administration (Parts 600—699)

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VII National Credit Union Administration (Parts 700—799) VIII Federal Financing Bank (Parts 800—899) IX Federal Housing Finance Board (Parts 900—999) XI Federal Financial Institutions Examination Council (Parts 1100—1199) XIV Farm Credit System Insurance Corporation (Parts 1400—1499) XV Department of the Treasury (Parts 1500—1599) XVII Office of Federal Housing Enterprise Oversight, Department of Housing and Urban Development (Parts 1700—1799) XVIII Community Development Financial Institutions Fund, Depart- ment 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 Com- merce (Parts 300—399) IV Emergency Steel Guarantee Loan Board, Department of Com- merce (Parts 400—499) V Emergency Oil and Gas Guaranteed Loan Board, Department of Commerce (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 Adminis- tration, Department of Transportation (Parts 400—499) 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)

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VIII Bureau of Economic Analysis, Department of Commerce (Parts 800—899) IX National Oceanic and Atmospheric Administration, Department of Commerce (Parts 900—999) XI Technology Administration, Department of Commerce (Parts 1100—1199) XIII East-West Foreign Trade Board (Parts 1300—1399) XIV Minority Business Development Agency (Parts 1400—1499) SUBTITLE C—REGULATIONS RELATING TO FOREIGN TRADE AGREE- MENTS 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)

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 Bureau of Customs and Border Protection, Department of Home- land 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 Bureau of Immigration and Customs Enforcement, Department of Homeland Security (Parts 400—599)

797

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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 Employment Standards Administration, 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, 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 Broadcasting Board of Governors (Parts 500—599) VII Overseas Private Investment 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 Millenium 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)

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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 DE- VELOPMENT 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 Com- missioner, 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 Develop- ment (Parts 400—499) V Office of Assistant Secretary for Community Planning and De- velopment, Department of Housing and Urban Development (Parts 500—599) VI Office of Assistant Secretary for Community Planning and De- velopment, Department of Housing and Urban Development (Parts 600—699) [Reserved] VII Office of the Secretary, Department of Housing and Urban Devel- opment (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 Develop- ment (Section 8 Housing Assistance Programs, Section 202 Di- rect Loan Program, Section 202 Supportive Housing for the El- derly Program and Section 811 Supportive Housing for Persons With Disabilities Program) (Parts 800—899) IX Office of Assistant Secretary for Public and Indian Housing, De- partment of Housing and Urban Development (Parts 900—1699) X Office of Assistant Secretary for Housing—Federal Housing Commissioner, Department of Housing and Urban Develop- ment (Interstate Land Sales Registration Program) (Parts 1700—1799) XII Office of Inspector General, Department of Housing and Urban Development (Parts 2000—2099) XX Office of Assistant Secretary for Housing—Federal Housing Commissioner, Department of Housing and Urban Develop- ment (Parts 3200—3899) XXV Neighborhood Reinvestment Corporation (Parts 4100—4199)

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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 Inte- rior (Parts 500—599) IV Office of Navajo and Hopi Indian Relocation (Parts 700—799) V Bureau of Indian Affairs, Department of the Interior, and Indian Health Service, Department of Health and Human Services (Part 900) 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— 899)

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, Depart- ment of Justice (Parts 400—699)

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) 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)

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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 Minerals Management Service, Department of the Interior (Parts 200—299) III Board of Surface Mining and Reclamation Appeals, Department of the Interior (Parts 300—399) IV Geological Survey, Department of the Interior (Parts 400—499) VII Office of Surface Mining Reclamation and Enforcement, Depart- ment of the Interior (Parts 700—999)

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 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 International Investment, Department of the Treasury (Parts 800—899)

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IX Federal Claims Collection Standards (Department of the Treas- ury—Department of Justice) (Parts 900—999)

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 DE- FENSE XII 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 (Parts 200—399) IV Saint Lawrence Seaway Development Corporation, Department of Transportation (Parts 400—499)

Title 34—Education

SUBTITLE A—OFFICE OF THE SECRETARY, DEPARTMENT OF EDU- CATION (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, Depart- ment of Education (Parts 300—399) IV Office of Vocational and Adult Education, Department of Edu- cation (Parts 400—499) V Office of Bilingual Education and Minority Languages Affairs, Department of Education (Parts 500—599)

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VI Office of Postsecondary Education, Department of Education (Parts 600—699) XI National Institute for Literacy (Parts 1100—1199) SUBTITLE C—REGULATIONS RELATING TO EDUCATION 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) 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 Environ- mental 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 Copyright Office, Library of Congress (Parts 200—299) III Copyright Royalty Board, Library of Congress (Parts 301—399) IV Assistant Secretary for Technology Policy, Department of Com- merce (Parts 400—499) V Under Secretary for Technology, Department of Commerce (Parts 500—599)

Title 38—Pensions, Bonuses, and Veterans’ Relief

I Department of Veterans Affairs (Parts 0—99)

Title 39—Postal Service

I United States Postal Service (Parts 1—999) III Postal Rate Commission (Parts 3000—3099)

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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)

Title 41—Public Contracts and Property Management

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 Employ- ment 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) 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) 105 General Services Administration (Parts 105–1—105–999) 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) SUBTITLE D—OTHER PROVISIONS RELATING TO PROPERTY MANAGE- MENT [RESERVED] SUBTITLE E—FEDERAL INFORMATION RESOURCES MANAGEMENT REGULATIONS SYSTEM 201 Federal Information Resources Management Regulation (Parts 201–1—201–99) [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 Em- ployees (Part 303–1—303–99) 304 Payment of Travel Expenses from a Non-Federal Source (Parts 304–1—304–99)

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I Public Health Service, Department of Health and Human Serv- ices (Parts 1—199) IV Centers for Medicare & Medicaid Services, Department of Health and Human Services (Parts 400—499) V Office of Inspector General-Health Care, Department of Health and Human Services (Parts 1000—1999)

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 200— 499) II Bureau of Land Management, Department of the Interior (Parts 1000—9999) III Utah Reclamation Mitigation and Conservation Commission (Parts 10000—10010)

Title 44—Emergency Management and Assistance

I Federal Emergency Management Agency, Department of Home- land Security (Parts 0—399) IV Department of Commerce and Department of Transportation (Parts 400—499)

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), Administra- tion for Children and Families, Department of Health and Human Services (Parts 200—299) III Office of Child Support Enforcement (Child Support Enforce- ment 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) 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)

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XII Corporation for National and Community Service (Parts 1200— 1299) XIII Office of Human Development Services, 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 on Fine Arts (Parts 2100—2199) XXIII Arctic Research Commission (Part 2301) 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)

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)

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 United States 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)

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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 Acquisi- tion Regulation (HSAR) (Parts 3000—3099) 34 Department of Education Acquisition Regulation (Parts 3400— 3499) 35 [Reserved] 44 Federal Emergency Management Agency (Parts 4400—4499) 51 Department of the Army Acquisition Regulations (Parts 5100— 5199) 52 Department of the Navy Acquisition Regulations (Parts 5200— 5299) 53 Department of the Air Force Federal Acquisition Regulation Supplement (Parts 5300—5399) 54 Defense Logistics Agency, Department of Defense (Parts 5400— 5499) 57 African Development Foundation (Parts 5700—5799) 61 General Services Administration Board of Contract Appeals (Parts 6100—6199) 63 Department of Transportation Board of Contract Appeals (Parts 6300—6399) 99 Cost Accounting Standards Board, Office of Federal Procure- ment 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, De- partment of Transportation (Parts 100—199) II Federal Railroad Administration, Department of Transportation (Parts 200—299)

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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, Department of Transportation (Parts 1000—1399) XI Research and Innovative Technology Administration, Depart- ment of Transportation [Reserved] XII Transportation Security Administration, Department of Home- land Security (Parts 1500—1699)

Title 50—Wildlife and Fisheries

I United States Fish and Wildlife Service, Department of the Inte- rior (Parts 1—199) II National Marine Fisheries Service, National Oceanic and Atmos- pheric Administration, Department of Commerce (Parts 200— 299) III International Fishing and Related Activities (Parts 300—399) IV Joint Regulations (United States Fish and Wildlife Service, De- partment of the Interior and National Marine Fisheries Serv- ice, National Oceanic and Atmospheric Administration, De- partment of Commerce); Endangered Species Committee Reg- ulations (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)

CFR Index and Finding Aids

Subject/Agency Index List of Agency Prepared Indexes Parallel Tables of Statutory Authorities and Rules List of CFR Titles, Chapters, Subchapters, and Parts Alphabetical List of Agencies Appearing in the CFR

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CFR Title, Subtitle or Agency Chapter Administrative Committee of the Federal Register 1, I Advanced Research Projects Agency 32, I Advisory Council on Historic Preservation 36, VIII African Development Foundation 22, XV Federal Acquisition Regulation 48, 57 Agency for International Development, United States 22, II Federal Acquisition Regulation 48, 7 Agricultural Marketing Service 7, I, IX, X, XI Agricultural Research Service 7, V Agriculture Department 5, LXXIII Agricultural Marketing Service 7, I, IX, X, XI 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 Cooperative State Research, Education, and Extension 7, XXXIV Service Economic Research Service 7, XXXVII Energy, 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 Grain Inspection, Packers and Stockyards Administration 7, VIII; 9, 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 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 Telephone Bank 7, XVI 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 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, Bureau of 27, II 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

809

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810

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813

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VerDate Aug<31>2005 15:32 Oct 23, 2007 Jkt 211184 PO 00000 Frm 00825 Fmt 8092 Sfmt 8092 Y:\SGML\211184.XXX 211184 ycherry on PRODPC75 with CFR CFR Title, Subtitle or Agency Chapter National Transportation Safety Board 49, VIII National Weather Service 15, IX Natural Resources Conservation Service 7, VI Navajo and Hopi Indian Relocation, Office of 25, IV Navy Department 32, VI Federal Acquisition Regulation 48, 52 Neighborhood Reinvestment Corporation 24, XXV Northeast Interstate Low-Level Radioactive Waste 10, XVIII Commission Nuclear Regulatory Commission 5, XLVIII; 10, I Federal Acquisition Regulation 48, 20 Occupational Safety and Health Administration 29, XVII Occupational Safety and Health Review Commission 29, XX Offices of Independent Counsel 28, VI Oklahoma City National Memorial Trust 36, XV Operations Office 7, XXVIII Overseas Private Investment Corporation 5, XXXIII; 22, VII Patent and Trademark Office, United States 37, I Payment From a Non-Federal Source for Travel Expenses 41, 304 Payment of Expenses Connected With the Death of Certain 41, 303 Employees Peace Corps 22, III Pennsylvania Avenue Development Corporation 36, IX Pension Benefit Guaranty Corporation 29, XL Personnel Management, Office of 5, I, XXXV; 45, VIII Federal Acquisition Regulation 48, 17 Federal Employees Group Life Insurance Federal 48, 21 Acquisition Regulation Federal Employees Health Benefits Acquisition Regulation 48, 16 Pipeline and Hazardous Materials Safety Administration 49, I 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 Fellowships 1, IV 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 Productivity, Technology and Innovation, Assistant 37, IV Secretary Public Contracts, Department of Labor 41, 50 Public and Indian Housing, Office of Assistant Secretary for 24, IX Public Health Service 42, I Railroad Retirement Board 20, II Reclamation, Bureau of 43, I Refugee Resettlement, Office of 45, IV Regional Action Planning Commissions 13, V Relocation Allowances 41, 302 Research and Innovative Technology Administration 49, XI Rural Business-Cooperative Service 7, XVIII, XLII Rural Development Administration 7, XLII Rural Housing Service 7, XVIII, XXXV Rural Telephone Bank 7, XVI Rural Utilities Service 7, XVII, XVIII, XLII Saint Lawrence Seaway Development Corporation 33, IV Science and Technology Policy, Office of 32, XXIV Science and Technology Policy, Office of, and National 47, II Security Council Secret Service 31, IV Securities and Exchange Commission 17, II Selective Service System 32, XVI Small Business Administration 2, XXVII; 13, I Smithsonian Institution 36, V Social Security Administration 20, III; 48, 23 Soldiers’ and Airmen’s Home, United States 5, XI Special Counsel, Office of 5, VIII

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2001 2002 45 CFR 66 FR 45 CFR 67 FR Page Page Subtitle A Subtitle A Subtitle A Nomenclature 4.6 Revised ...... 78990 change...... 39452 50.1 Revised; interim ...... 77695 46 Authority citation revised ...... 3882, 50.2 (b) and (c) revised; (d) re- 56778 moved; interim...... 77695 46.201—46.207 (Subpart B) Re- 50.3 Revised; interim ...... 77696 vised ...... 3882 50.4 Revised; interim ...... 77696 Regulation at 66 FR 3882 eff. date 50.5 Redesignated as 50.7; new 50.5 delayed ...... 15352 added; interim ...... 77696 Regulation at 66 FR 3882 delayed 50.6 Revised; interim ...... 77697 to 11–14–01 ...... 27599 50.7 Redesignated from 50.5; interim...... 77696 Revised...... 56778 50.8 Added; interim...... 77697 96.122 (d) and (f)(6) revised; (g)(21) 146 Authority citation cor- removed; (g)(22) and (23) redes- rected...... 48811 ignated as new (g)(21) and (22); 146.150 (d)(2) revised; interim ...... 48811 interim...... 46226 146.180 Revised; interim...... 48811 96.123 (a)(5) revised; interim...... 46227 160.102 (b) amended; eff. 10–15– 96.130 (e) introductory text re- 02...... 53266 vised; interim ...... 46227 160.103 Amended ...... 38019 146 Authority citation revised...... 1412 Amended; eff. 10–15–02 ...... 53266 146.121 Revised; interim ...... 1412 160.202 Amended; eff. 10–15–02 ...... 53266 (i)(1), (3)(ii)(A) introductory text 160.203 (b) added; eff. 10–15–02...... 53266 and (C) Example 2 amended; in- 162.600—162.610 (Subpart F) terim ...... 14078 Added ...... 38020 146.125 Heading and (a)(1) revised; 164.102 Amended; eff. 10–15–02 ...... 53266 (a)(2) amended; interim ...... 1420 164.500 (b)(1)(v) amended; eff. 10– 160 Regulation at 65 FR 82798 eff. 15–02 ...... 53266 date delayed ...... 12434 164.501 Amended; eff. 10–15–02 ...... 53266 Comment request...... 12738 164.502 (a)(1)(ii), (iii), (vi) and 164 Regulation at 65 FR 82802 eff. (b)(2)(ii) revised; (b)(2)(iii), date delayed ...... 12434 (iv), (v), (g)(3), (i), (ii), (iii) re- Comment request...... 12738 designated as (b)(2)(iv), (v), 164.500—164.534 (Subpart E) Au- (vi), (g)(3)(i), (A), (B) and (C); thority citation revised ...... 12434 new (b)(2)(iii) and (g)(3)(ii) 164.534 Revised ...... 12434 added; eff. 10–15–02...... 53267

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45 CFR—Continued 67 FR 45 CFR—Continued 68 FR Page Page Subtitle A—Continued Subtitle A—Continued 164.504 (a) amended; (c)(1)(ii), 74 Heading and authority cita- (2)(ii), (3)(iii) and (f)(1)(i) re- tion revised ...... 52844 vised; (f)(1)(iii) added; eff. 10– 74.1 (a)(3) removed ...... 52844 15–02 ...... 53267 76 Revised ...... 66544, 66630 164.506 Revised; eff. 10–15–02 ...... 53268 76.220 (c) added...... 66632 164.508 Revised; eff. 10–15–02 ...... 53268 76.230 Added ...... 66632 164.510 introductory text and 76.440 Added ...... 66632 (b)(3) amended; eff. 10–15–02 ...... 53270 76.460 Added ...... 66632 164.512 Heading, (b)(1)(iii) and 76.940 (d) added ...... 66632 (i)(2)(ii) revised; introductory 76.995 (c) added...... 66632 text, (b)(1)(v)(A), C, (g)(2), 82 Added ...... 66557, 66632 (i)(1)(iii)(A) and (2)(ii) amend- 82.510 (c) amended...... 66633 ed; (f)(3)(ii) and (iii) redesig- 82.605 (a)(2) amended...... 66633 nated as (f)(3)(i) and (ii); eff. 10– 92 Heading revised ...... 52844 15–02 ...... 53270 92.4 (a)(3) through (8), (b) re- 164.514 (b)(2)(i)(R), (d)(1), (4)(iii) moved; (a)(9) and (10) redesig- and (e) revised; (d)(5) amended; nated as (a)(3) and (4)...... 52844 eff. 10–15–02 ...... 53270 96.122 (f)(5)(v) added; eff. 10–30– 164.520 (c)(2)(ii) and (iii) redesig- 03...... 56448 nated as (c)(2)(iii) and (iv); 96.123 (a)(18) added; eff. 10–30– (b)(1)(ii)(B), (c) introductory 03...... 56448 text, new (c)(2)(iv) and (3)(iii) 146 Authority citation amend- amended; (c)(2)(i) and (e) re- ed ...... 38208 vised; eff. 10–15–02...... 53271 146.136 (f)(1) and (g)(2) amended; 164.522 (a)(1)(v) amended; eff. 10– (i) revised ...... 38208 15–02 ...... 53271 148.306—148.320 (Subpart E) 164.528 (a)(1)(i), (v) and (b)(3) in- Added ...... 23414 troductory text amended; 160 Authority citation revised ...... 18901 (a)(1)(iii), (iv), (v), and (vi) re- 160.103 Amended...... 8374 designated as (a)(1)(v), (vi), 160.500—160.572 (Subpart E) (vii) and (ix); (a)(1)(iii), (iv), Added; interim ...... 18902 (viii) and (b)(4) added; (b)(2) and Regulation at 68 FR 18902 eff. (iv) revised; eff. 10–15–15–02 ...... 53271 date corrected as 9–16–04...... 22453 164.530 (c)(2) redesignated as 162 Authority citation revised...... 8374 (c)(2)(i); (c)(2)(ii) added; 162.103 Amended...... 8374 (i)(4)(ii)(A) amended; eff. 10–15– 162.900 Revised ...... 8396 05...... 53272 162.920 Revised ...... 8396 164.532 Revised; eff. 10–15–02 ...... 53272 162.1002 Introductory text revised; (a) through (f), new 2003 (a)(1)(1) through (5), (a)(2)(1) 45 CFR 68 FR through (4), (a)(3)(1), (2), Page (a)(5)(1) through (7), (a)(6)(1), Subtitle A (2) and (3) redesignated as (a)(1) 2.1 (a), (b), (c), (d)(4) and (6) re- through (6), new (a)(1)(i) vised; (d)(7) Examples 1 through through (v), (a)(2)(i) through 5 added...... 25838 (iv), (a)(3)(1), (ii), (a)(5)(i) 2.2 Revised ...... 25839 through (vii), (a)(6)(i), (ii) and 2.3 Revised ...... 25839 (iii); new (a) introductory text 2.4 Revised ...... 25840 and (b) added ...... 8397 2.5 Revised ...... 25840 Revised ...... 8397 2.6 Revised ...... 25840 (b) introductory text, (3) heading 5b.11 (b)(2)(ii)(G) added ...... 62751 and (4) corrected...... 11445 31 Revised ...... 70445 162.1202 Revised ...... 8398 32 Added ...... 15093 (b)(1) and (2) corrected ...... 11445 32.8 (c)(1) Correctly designated .....24052 162.1302 Revised ...... 8398 46 Waiver...... 36929 162.1402 Revised ...... 8398

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45 CFR—Continued 68 FR 45 CFR—Continued 69 FR Page Page Subtitle A—Continued Subtitle A—Continued 162.1502 Revised ...... 8398 74.17 (a) added ...... 42592 162.1602 Revised ...... 8398 74.18 Added ...... 42592 162.1702 Revised ...... 8399 87 Added ...... 42593 162.1802 Revised ...... 8399 92.13 Added ...... 42592 164 Authority citation revised...... 8374 92.14 Added ...... 42592 164.103 Added ...... 8374 96 Authority citation revised...... 42592 164.104 Revised ...... 8375 96.18 Added ...... 42592 164.105 Added ...... 8375 144 Authority citation revised ...... 78780 164.302—164.318 (Subpart C) 144.103 Revised ...... 78780 Added ...... 8376 146 Authority citation revised .....43926, 164.306 (d)(3) correctly des- 78783 ignated...... 17153 146.111 Revised ...... 78783 164.500 (b)(1)(iv) amended ...... 8381 146.113 Revised ...... 78788 164.501 Amended...... 8381 146.115 Revised ...... 78788 164.504 Amended; (b), (c) and (d) 146.117 Revised ...... 78794 removed...... 8381 146.119 Revised ...... 78797 146.125 Revised ...... 78797 2004 146.136 (f)(1) and (g)(2) amended; (i) revised; interim...... 43926 45 CFR 69 FR 146.143 Revised ...... 78797 Page 146.145 Revised ...... 78798 Title 45 Nomenclature change ...... 18803 146.150 Regulation at 67 FR 48811 Subtitle A confirmed...... 43928 13 Authority citation revised ...... 2845 146.180 Regulation at 67 FR 48811 13.1 Amended ...... 2845 confirmed...... 43928 13.2 Revised ...... 2845 148.308 Amended ...... 15700 13.3 (a) amended; (b) redesignated 148.312 (b)(1) revised...... 15700 as (c); new (b) added ...... 2845 148.314 (a), (d)(1), (2), (4) and (e) re- 13.4 (b) revised...... 2846 vised...... 15701 13.5 (a) through (d) redesignated 148.316 (a) introductory text and as (b)(1) through (4); new (a), (b) (1)(v) revised...... 15701 heading and (c) added; new 160.500—160.572 (Subpart E) Regu- (b)(1) revised ...... 2846 lation at 98 FR 18902 expiration 13.6 (a) and (b) amended ...... 2846 date extended ...... 55515 13.10 (a)(2) and (3) revised; (a)(5) 162.402—162.414 (Subpart D) introductory text, (i) and (ii) Added; eff. 5-23-05...... 3468 amended; (a)(5)(iii) added ...... 2846 162.610 (c) added...... 3469 13.11 (a) amended...... 2846 13.12 (d) revised ...... 2847 13.22 (b) and (d) revised ...... 2847 2005 13.23 (a) amended...... 2847 45 CFR 70 FR 13.25 (a) amended...... 2847 Page 13.27 Revised ...... 2847 Subtitle A 13 Appendix A revised...... 2847 46.101 (i) and Footnote 1 amend- 34 Added ...... 13257 ed ...... 36328 61.7 (b)(1)(ii), (3)(iii) and (c)(3)(iii) 46.103 (a) and (b)(3) amended; revised; interim...... 33868 OMB number ...... 36328 Regulation at 69 FR 33868 con- 46.109 OMB number ...... 36328 firmed...... 56367 46.110 (a) amended; OMB num- 61.8 (b)(1)(ii), (3)(iii) and (c)(3)(iii) ber...... 36328 revised; interim...... 33868 46.113 OMB number ...... 36328 Regulation at 69 FR 33868 con- 46.115 OMB number ...... 36328 firmed...... 56367 46.116 OMB number ...... 36328 61.10 (b)(1)(ii), (3)(iii) and 46.117 OMB number ...... 36328 (c)(3)(iii) revised; interim ...... 33869 61.3 Correctly amended...... 53954 Regulation at 69 FR 33869 con- 80.2 Amended...... 24318 firmed...... 56367 80.3 (d) amended...... 24318

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45 CFR—Continued 70 FR 45 CFR—Continued 70 FR Page Page Subtitle A—Continued Subtitle A—Continued 80.4 (a)(1) and (b) amended; (d)(2) 86.11 Amended ...... 24321 revised ...... 24318 86.31—86.50 (Subpart D) Heading 80.5 (a) and (e) amended; (c) re- amended...... 24321 vised...... 24318 86.31 Heading, (a) and (d) amend- 80.6 (b) amended...... 24318 ed ...... 24321 80.9 (e) amended...... 24318 86.40 (b)(2) and (3) amended...... 24321 80.13 (g) and authority citation 86.51—86.70 (Subpart E) Heading revised; (i) and (j) amended...... 24318 amended...... 24321 80 Appendix A amended ...... 24319 86.51 (a)(1) and (b)(9) amended ...... 24321 84 Heading revised ...... 24319 90 Authority citation revised...... 24321 84.2 Amended...... 24319 90.1 Amended...... 24321 84.3 (k) and (l) redesignated as (l) 90.3 Amended...... 24321 and (m); new (k) and authority 90.4 Amended...... 24321 citation added ...... 24319 90.34 Amended ...... 24321 84.4 (a), (b)(3), (5)(i), (6) and (c) 90.42 (a) amended ...... 24322 amended...... 24319 90.43 (c)(4) amended ...... 24322 (b)(1)(v) and (4)(ii) amended ...... 24319 90.47 (c)(2) amended ...... 24322 84.5 (a) amended...... 24319 90.48 Amended ...... 24322 84.6 (a)(3) amended...... 24319 90.49 (c) amended ...... 24322 84.8 (a) amended...... 24319 91 Heading revised ...... 24322 84.11 (a)(2), (4) and (b)(8) amend- 91.1 Amended...... 24322 ed ...... 24319 91.2 Amended...... 24322 84.12 (a), (c) introductory text, 91.3 (a) amended...... 24322 and (1) amended ...... 24319 91.4 Amended; authority citation 84.21—84.30 (Subpart C) Heading added...... 24322 revised ...... 24319 91.17 Amended ...... 24322 84.22 (a), (b) and (e)(3) amend- 91.18 Amended ...... 24322 ed ...... 34319 91.31 Amended ...... 24322 84.31 Amended ...... 24320 91.32 (b) amended ...... 24322 84.32 Introductory text amend- 91.44 (a)(2) amended ...... 24322 ed ...... 24319 91.46 (b) and (c)(2) amended ...... 24322 84.33 (a) amended ...... 24319 91.49 (b)(2) amended ...... 24322 (b)(2), (3) and (c)(1) through (4) 146 Authority citation revised ...... 42278 amended ...... 24320 146.125 Correctly amended ...... 21147 84.35 (a) amended ...... 24320 146.136 (f)(1) and (g)(2) amended; 84.36 Amended ...... 24319 (i) revised; interim...... 42278 84.37 (c)(1) amended ...... 24320 146.143 (b), (c)(2)(i), (ii) and (iii) 84.38 Heading revised; amend- correctly amended...... 21147 ed ...... 24320 150 Regulation at 64 FR 45795 con- 84.39 Heading revised; (a) and (c) firmed ...... 71023 amended...... 24320 150.307 (a) amended ...... 71023 84.41 Amended ...... 24320 150.311 (e) amended ...... 71023 84.43 (a) and (d) amended ...... 24320 150.301—150.347 (Subpart C) Ap- 84.44 (a), (c) and (d)(1) amend- pendix A removed ...... 71023 ed ...... 24320 160.500—160.572 (Subpart E) Regu- 84.47 (a)(1) amended ...... 24320 lation at 68 FR 18902 expiration 84.51 Amended ...... 24320 date extended to 3-16-06 ...... 54293 84.54 Amended ...... 24320 84.55 (a) amended ...... 24320 86 Heading revised ...... 24320 2006 86.2 (h) through (r) redesignated 45 CFR 71 FR as (i) through (s); new (h) Page added; new (i) and (k) amended; Subtitle A authority citation revised ...... 24320 146 Authority citation revised ...... 25093 86.4 (a) amended...... 24321 146.101 (b)(1)(vi) added...... 75046 86.6 (c) amended...... 24321 146.121 Revised ...... 75046

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45 CFR—Continued 71 FR 45 CFR—Continued 72 FR Page Page Subtitle A—Continued Subtitle A—Continued 146.136 (f)(1) and (g)(2) amended; Regulation at 72 FR 9235 con- (i) revised; interim...... 25093 firmed...... 35349 160 Authority citation revised...... 8424 98.16 (c)(2) revised ...... 27979 160.103 Amended...... 8424 98.53 (e)(2), (f), (h)(3) and (4) re- 160.300—160.316 (Subpart C) Re- vised...... 27979 vised ...... 8424 98.100—98.102 (Subpart K) 160.400—160.426 (Subpart D) Added ...... 50898 Added ...... 8426 146 Authority citation amend- 160.500—160.552 (Subpart E) Re- ed ...... 41231 vised ...... 8428 146.136 (f)(1) and (g)(2) amended; 164 Authority citation revised...... 8433 (i) revised; interim...... 41231 164.530 (g) revised ...... 8433 148.306 Revised; interim...... 41236 148.308 Amended; interim ...... 41236 2007 148.310 (b) and (d) revised; (f), (g) and (h) added; interim ...... 41236 (Regulations published from January 1, 148.312 (a) and (b) revised; (d) 2007, through October 1, 2007) added; interim ...... 41237 45 CFR 72 FR 148.314 Revised; interim...... 41237 Page 148.316 (a) introductory text Subtitle A amended; (a)(3) redesignated as 30 Revised ...... 10409 (a)(4); introductory text and 33 Added ...... 10421 new (a)(3) added; (b) through (e) 74.13 Amended; interim ...... 9235 revised; interim...... 41237 Regulation at 72 FR 9235 con- 148.318 (d)(2) revised; interim ...... 41238 firmed...... 35349 148.320 (a)(2)(iii) revised; in- 76 Removed; interim ...... 9235 terim...... 41238 Æ

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