Supplemental Standards of Ethical Conduct and Financial Disclosure Requirements for Employees of the Department of Health and Human Services, 5543-5565 [05-2029]

Agencies

• DEPARTMENT OF HEALTH AND HUMAN SERVICES

[Federal Register Volume 70, Number 22 (Thursday, February 3, 2005)]
[Rules and Regulations]
[Pages 5543-5565]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 05-2029]



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Federal Register / Vol. 70, No. 22 / Thursday, February 3, 2005 / 
Rules and Regulations

[[Page 5543]]



DEPARTMENT OF HEALTH AND HUMAN SERVICES

5 CFR Parts 5501 and 5502

RIN 3209-AA15


Supplemental Standards of Ethical Conduct and Financial 
Disclosure Requirements for Employees of the Department of Health and 
Human Services

AGENCY: Department of Health and Human Services (HHS).

ACTION: Interim final rule with request for comments.

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

SUMMARY: The Department of Health and Human Services, with the 
concurrence of the Office of Government Ethics (OGE), is amending the 
HHS regulation that supplements the OGE Standards of Ethical Conduct. 
This interim final rule specifies additional procedural and substantive 
requirements that are necessary to address ethical issues at the 
National Institutes of Health (NIH) and updates nomenclature, 
definitions, and procedures applicable to other components of the 
Department. The rule: Revises the definition of a significantly 
regulated organization for the Food and Drug Administration (FDA); 
Updates the organization titles of designated separate agencies; Amends 
the gift exception for native artwork and craft items received from 
Indian tribes or Alaska Native organizations; Aligns the FDA prohibited 
holdings limit with the de minimis holdings exemption in OGE 
regulations; Revises prior approval procedures for outside activities; 
and, subject to certain exceptions: Prohibits NIH employees from 
engaging in certain outside activities with supported research 
institutions, health care providers or insurers, health-related trade 
or professional associations, and biotechnology, pharmaceutical, 
medical device, and other companies substantially affected by the 
programs, policies, or operations of the NIH; Bars NIH employees who 
file a public or confidential financial disclosure report from holding 
financial interests in substantially affected organizations; Subjects 
NIH non-filer employees to a monetary cap on holdings in such 
organizations; Specifies for NIH employees prior approval procedures 
for and limitations on the receipt of certain awards from outside 
sources; and Imposes a one-year disqualification period during which 
NIH employees are precluded from official actions involving an award 
donor. In addition, the Department is adding a new supplemental part to 
expand financial disclosure reporting requirements for certain outside 
activities and to ensure that prohibited financial interests are 
identified.

DATES: This interim rule is effective February 3, 2005. Comments 
received by April 4, 2005, will be considered prior to issuance of a 
final rule.

ADDRESSES: Send comments in writing to the Office of the General 
Counsel, Ethics Division, Department of Health and Human Services, Room 
700-E, Hubert H. Humphrey Building, 200 Independence Avenue, SW, 
Washington, DC 20201, Attention: Linda L. Conte. Comments also may be 
sent electronically to the following e-mail address: ethics@hhs.gov. 
For e-mail messages, the subject line should include the following 
reference: ``Comments on Interim Final HHS Supplemental Ethics Rule.''

FOR FURTHER INFORMATION CONTACT: Edgar M. Swindell, Associate General 
Counsel, Office of the General Counsel, Ethics Division, Department of 
Health and Human Services, telephone (202) 690-7258, fax (202) 205-
9752.

SUPPLEMENTARY INFORMATION:

I. Background

    The Standards of Ethical Conduct for Employees of the Executive 
Branch, 5 CFR part 2635, establish uniform rules of ethical conduct 
applicable to all executive branch personnel. Pursuant to 5 CFR 
2635.105, an agency may, with the approval of the Office of Government 
Ethics, supplement those standards with additional rules that the 
agency determines are necessary and appropriate, in view of its 
programs and operations, to fulfill the purposes of part 2635. On July 
30, 1996, with the concurrence and co-signature of the OGE Director, 
HHS published at 61 FR 39755 a final rule establishing supplemental 
standards of ethical conduct for its employees. This interim final rule 
amends that final rule codified at 5 CFR part 5501.
    In addition to several changes with respect to rules applicable to 
employees of the National Institutes of Health related to outside 
activities, financial holdings, and awards, this interim final rule 
makes several changes to the HHS Supplemental Standards of Ethical 
Conduct applicable to all Department employees. These changes are based 
on the experience that has been garnered by the Department in 
implementing the regulation since it was issued in 1996. The interim 
final rule establishes more specific requirements with respect to 
requests for approval of outside activities and imposes an annual 
reauthorization process.
    Although immediately effective, this is as an interim rule. HHS 
intends to evaluate certain provisions in the rule, particularly on 
outside activities and financial holdings, within the next year. During 
this time, HHS also will: (1) Complete a review of existing outside 
activities that is presently ongoing; (2) evaluate possible effects on 
hiring and retention that may result from the imposition of outside 
activity and financial holdings prohibitions; and (3) develop a 
comprehensive oversight system to address concerns raised about the NIH 
ethics program.
    In addition, the Executive Branch Financial Disclosure Regulation, 
5 CFR part 2634, specifies uniform rules governing the public and 
confidential financial disclosure systems established under the Ethics 
in Government Act. Pursuant to 5 CFR 2634.103, an agency may, subject 
to the prior written approval of the Office of Government Ethics, issue 
supplemental financial disclosure regulations that are necessary to 
address special or unique circumstances. This interim final rule amends 
chapter XLV of title 5 by adding new part 5502 to provide for an annual 
reporting by all employees of financial and other information 
concerning outside activities and a supplemental disclosure by all FDA 
and NIH employees with respect to prohibited financial interests.
    Post-promulgation comments on this interim final rule are 
requested. Those comments and experience under the

[[Page 5544]]

interim rule will inform the development of a final permanent rule, in 
consultation with OGE.

II. Analysis of the Amendments

A. Supplemental Standards of Ethical Conduct

Section 5501.101 General

    The definition of a ``significantly regulated organization'' found 
at Sec.  5501.101(c)(2) is amended to make clear that for entities that 
do not have a record of sales of FDA-regulated products, and which have 
not yet commenced operations in a field regulated by FDA, an entity 
will nonetheless be deemed significantly regulated if its research, 
development, or other business activities are reasonably expected to 
result in the development of products that are regulated by FDA.
    Since the issuance of the HHS Supplement, the existing language of 
the regulation has suggested to some employees that until a company 
submits an investigational new drug application and begins conducting 
clinical trials, the company is not significantly regulated (assuming 
there is no record of prior sales of FDA-regulated products). Because 
FDA does not have a generalized authority to regulate the ``field'' of 
scientific research, some employees have interpreted the existing 
regulation as permitting employment with a company that is thus far 
only conducting preliminary research, even when it is reasonable to 
conclude that the research is conducted with the aim of developing FDA-
regulated products.
    Accordingly, this amendment ensures that newly-formed business 
entities that do not yet have products that are approved for sale, and 
which have not yet undertaken operations that bring them within FDA's 
regulatory jurisdiction, will be understood to fall within the 
definition of significantly regulated if their research, development, 
or other business activities are reasonably expected to result in the 
development of products that are regulated by FDA. It also makes clear 
that where a company's operations are regulated by FDA, to fall within 
the definition, the operations need not be entirely in areas regulated 
by FDA as long as they are primarily in such areas.

Section 5501.102 Designation of HHS Components as Separate Agencies

    The changes to this section reflect the name change of two HHS 
agencies, the Agency for Healthcare Research and Quality, previously 
known as the Agency for Health Care Policy and Research, and the 
Centers for Medicare and Medicaid Services, previously known as the 
Health Care Financing Administration. The Office of Consumer Affairs 
was abolished in 1998 and is deleted from the list. In addition, the 
amendment specifies that the designation of separate agencies will 
apply in defining a prohibited source for purposes of the new awards 
rule in Sec.  5501.111 for NIH employees.

Section 5501.103 Gifts From Federally Recognized Indian tribes or 
Alaska Native Villages or Regional or Village Corporations

    The change to this section clarifies that items representative of 
traditional native culture from federally recognized Indian tribes or 
Alaska Native villages, or regional or village corporations, fall 
within the previously established rule permitting HHS employees to 
accept gifts of native artwork and crafts, provided that the aggregate 
market value of individual gifts received from any one tribe or village 
does not exceed $200 per year and other criteria are satisfied. The 
amendment permits gifts that, while representative of traditional 
native culture, were not necessarily produced or manufactured by the 
donor entity.

Section 5501.104 Prohibited Financial Interests Applicable to Employees 
of the Food and Drug Administration

    The section heading and text have been revised to delete redundant 
references to the ``FDA Office of the Chief Counsel.'' Section 
5501.102(b)(1) already specifies that any section in part 5501 that is 
made applicable to employees of an identified component that is 
designated as a separate agency is applicable, in addition to employees 
actually working within a component, to employees in a division or 
region of the Office of the General Counsel (OGC) that principally 
advises or represents that component.
    Section 5501.104(a) prohibits FDA employees from holding financial 
interests in significantly regulated organizations, subject to certain 
exceptions in Sec.  5501.104(b). The change in paragraph (b)(1) 
broadens the scope of the exception, which previously covered only 
pension interests, such as those arising from participation in defined 
benefit or defined contribution plans. Experience since the issuance of 
the supplemental regulation indicates that many incoming employees hold 
financial interests which, like a pension interest, were acquired as a 
form of compensation from a significantly regulated organization, but 
which do not qualify as a pension. For example, a recent report by the 
National Academy of Sciences found that stock and stock options are 
common employee benefits in small, private technology firms in the 
fields of engineering and health care, and the report recommended 
against forced divestiture of such employee benefits for scientists 
entering public service, as such requirements may unreasonably hamper 
the recruitment of talented and experienced scientific personnel. 
National Academy of Sciences, Science and Technology in the National 
Interest: Ensuring the Best Presidential and Federal Advisory Committee 
Science and Technology Appointments 199-201 (2004). Therefore, the 
exception has been amended to include not only pensions but other 
employee benefits.
    This exception is not intended to permit retention of financial 
interests merely because the interest was purchased by an employee 
contemporaneously with employment in private industry through a broker, 
financial advisor, or other source not acting as part of the private 
employer's compensation system.
    In addition, like all the exceptions in this section, the provision 
merely permits retention of a financial interest notwithstanding the 
prohibited financial holdings provision of this section. The recusal 
requirements of 18 U.S.C. 208 apply to all financial interests, 
including those covered by the exceptions in this section. (References 
to Sec.  208 within this regulation are descriptive and not intended to 
interpret or expand upon the text of the statute.) Moreover, all 
financial interests are subject to directed divestiture pursuant to 5 
CFR 2635.403(b), when there has been a determination by the agency that 
holding the particular financial interest, or a class of financial 
interests, will require the employee's disqualification from matters so 
central or critical to the performance of his official duties that the 
employee's ability to perform the duties of his office would be 
materially impaired, or will adversely affect the efficient 
accomplishment of the agency's mission because another employee cannot 
readily be assigned to perform the work from which the employee is 
recused by reason of the financial interest.
    Section 5501.104(b)(2) contains an exception to the prohibited 
holdings rule for employees who are not required to file a public or 
confidential financial disclosure report. Non-filers have been 
permitted to have a financial interest not exceeding $5,000 in 
significantly regulated organizations. The amendment raises the amount 
of the allowable holding to $15,000. The change parallels the increase 
from

[[Page 5545]]

$5,000 to $15,000 in the OGE regulatory exemption for matters involving 
parties, found at 5 CFR 2640.202(a), that occurred after the original 
issuance of the HHS supplemental provision. The OGE exemption allows an 
employee to participate in any particular matter involving specific 
parties in which the disqualifying financial interest does not exceed 
$15,000 in publicly traded securities or long-term Federal Government 
or municipal securities. Because the allowable holding amount in the 
HHS Supplement corresponded to the OGE de minimis amount, an increase 
in the latter justifies an increase in the allowable holding limit in 
the HHS Supplement. Further, the section will track any future change 
in the OGE de minimis amount.
    Although the dollar amounts are identical, the two provisions 
substantively are not coextensive. Not all financial interests that may 
be covered by the FDA exception will be covered by the OGE regulatory 
exemption. For example, the FDA exception permits a non-filer to hold a 
financial interest in a non-publicly traded company (assuming all the 
other criteria in the section are also satisfied), but the OGE 
regulatory exemption only applies when the corporate securities are 
publicly traded. Therefore, the financial interest may still be 
problematic under 18 U.S.C. 208 and require a recusal, a divestiture, 
or an individual waiver, even though Sec.  5501.104(b)(2) excepts the 
holding from the FDA automatic divestiture requirement.
    In applying the allowable holding amount, the existing section 
specifies that the asset value is to be measured ``at the time of 
acquisition.'' The amendment to this section now defines that phrase. 
This change is intended to obviate the possibility of unintended 
situations which, depending on the interpretation of that phrase, could 
lead to treatment for some employees that is inconsistent with 
treatment of similarly-situated employees, and lead to results that are 
inconsistent with the intent of the provision. Specifically, there 
could be scenarios in which an employee who recently joined the agency, 
and who had acquired an asset in the distant past, could be permitted 
to retain an asset, now valued well over $15,000, because it had been 
valued under $15,000 ``at the time of acquisition,'' while other new 
employees who acquired an asset more recently, but at a level above 
$15,000, are required to divest a much lower valued financial interest 
in the same or other significantly regulated organizations. Such 
inconsistent results in the implementation of the regulation could 
undermine the very purpose of the provision (i.e., that only de minimis 
holdings should be permitted) and undermine employee confidence that 
the regulation is being applied fairly and uniformly. Accordingly, this 
change is intended to make clear that for assets that were acquired 
prior to joining FDA, the ``time of acquisition'' will be deemed to be 
the date of the employee's entrance on duty at the agency. The change 
will prevent unfair and unwarranted inconsistencies in how the 
prohibited holding regulation is applied and will prevent situations in 
which employees are treated disparately, as a consequence of investment 
decisions made prior to their entrance on duty.
    New Sec.  5501.104(c) provides that, for purposes of determining 
the divestiture period specified in 5 CFR 2635.403(d), an employee is 
not considered to have been directed to divest a financial interest 
prohibited under paragraph (a) of this section until the due date for 
disclosure of such interests. For new entrant employees, this 
disclosure would be submitted on either a public or confidential 
financial disclosure report or the supplemental report required by new 
Sec.  5502.106(c), depending upon their filing status. For incumbent 
employees, the due date of the report required by Sec.  5502.106(c) 
would be determinative. This rule allows the agency to analyze an 
employee's holdings and make a determination as to whether a particular 
financial interest is covered by the prohibition before the requirement 
to divest becomes applicable. The text codifies existing agency 
practice and parallels a similar provision in the Department of Housing 
and Urban Development supplemental ethics regulations at 5 CFR 
7501.104(c) which prescribes a divestiture period of 90 days from the 
date a prohibited financial interest is reported.

Section 5501.106 Outside Employment and Other Outside Activities

    The paragraph heading and introductory text of paragraph (c)(3) 
have been revised to delete redundant references to the FDA ``Office of 
the Chief Counsel.'' Section 5501.102(b)(1) already specifies that any 
section in part 5501 that is made applicable to employees of an 
identified component that is designated as a separate agency is 
applicable, in addition to employees actually working within a 
component, to employees in a division or region of the Office of the 
General Counsel that principally advises or represents that component.
    The amended paragraph (c)(4) provides that the attorneys in the 
Office of the Counsel to the Inspector General are subject to the same 
outside activities restrictions as those in the Office of the General 
Counsel.
    The amended paragraph (d)(2)(i) adds employees of the NIH to the 
prior approval requirement, currently applicable to employees of the 
FDA, for any outside employment, whether or not for compensation, or 
any self-employed business activity.
    The amended paragraph (d)(3) requires an employee's supervisor to 
review the request for approval of an outside activity and provide a 
statement addressing the extent to which the employee's duties are 
related to the proposed outside activity. This information shall then 
be forwarded to an agency designee to make a final determination with 
respect to the request. The amendment also specifies that the following 
information be included with the request: the employee's step within a 
grade, appointment type, and financial disclosure filing status; a 
description of how the employee's official duties will affect the 
interests of the outside employer; whether stock or other remuneration 
in cash or in-kind will be received in connection with the activity; 
the amount of compensation to be received in connection with the 
activity; the amount and date of compensation received, or due for 
services performed, within the prior six years; a syllabus, outline, 
summary, synopsis, draft, or similar description of content and subject 
matter if the activity involves teaching, speaking, or writing; and 
other information as determined by the designated agency ethics 
official, or the HHS component with the concurrence of the designated 
agency ethics official, to be necessary or appropriate to evaluate 
whether the request is prohibited by statute or regulation. Should 
other types of information be routinely required of all employees, 
general notice of such requirements will be disseminated through 
instructions or manual issuances and revisions to the forms that are 
utilized for these purposes.
    The amendment to paragraph (d)(4) clarifies that a request for 
approval of outside employment or other outside activity may not be 
granted unless there is an affirmative determination that the 
employment or other activity is not expected to involve conduct 
prohibited by statute or regulation.
    Existing paragraph (d)(5) has been renumbered as paragraph (d)(6). 
New paragraph (d)(5) specifies that approval of an outside activity is 
effective for one year only. Employees must renew their request for 
approval annually if they

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desire to continue any long term outside activity. In addition, 
employees must submit a revised request for approval if they change 
positions within the agency or if a significant change occurs in the 
nature of the outside activity or in the scope of the employees' 
duties.
    Paragraph (e) incorporates a waiver provision to be used where, 
under the particular circumstances, application of the prohibited 
outside activity rules for FDA, OGC, or NIH employees is not necessary 
to ensure confidence in the impartiality and objectivity with which 
agency programs are administered. The waiver must not be inconsistent 
with part 2635 of this title or otherwise prohibited by law. This 
standard parallels the waiver provision at 5 CFR 3101.108(g) in the 
Department of the Treasury supplemental ethics regulation that imposes 
outside activity prohibitions applicable to employees of the Office of 
the Comptroller of the Currency. This provision could be applied to 
provide some relief, for example, where the prohibition unduly causes 
personal or family hardship or, prohibits an employee from completing a 
professional obligation entered into prior to Government service, or 
restricts the Department from securing necessary and uniquely 
specialized services.

Section 5501.109 Prohibited Outside Activities Applicable to Employees 
of the National Institutes of Health

    Prior to the publication of this interim final rule, the criteria 
for approving or disapproving requests for approval of outside 
activities of NIH employees were set forth in the OGE regulation at 5 
CFR part 2635, subpart H, and the Supplemental Standards of Ethical 
Conduct for Employees of HHS at 5 CFR 5501.106. Both the OGE rules and 
the HHS provisions in Sec.  5501.106 remain in effect for all NIH 
employees. This interim final rule imposes additional, more stringent 
requirements, similar to those in 5 CFR 5501.106(c)(3) for employees of 
the FDA.
    Outside activities with entities substantially affected by NIH 
programs, policies, or operations must be further restricted in order 
to avoid the potential for real or apparent conflicts of interest that 
may threaten the integrity of the critically important research 
conducted and sponsored by the NIH. This assessment is informed by 
recommendations of the Advisory Committee to the NIH Director that were 
presented in the June 22, 2004, Report of the NIH Blue Ribbon Panel on 
Conflict of Interest Policies (Blue Ribbon Panel Report), available at 
https://www.nih.gov/about/ethics_COI_panelreport.htm, but is 
predicated upon a consideration of various outside activities of NIH 
employees that have been subject to inquiry and the desire to advance 
sound public policy. Many of the panel recommendations and related 
issues were highlighted and discussed at Congressional hearings on 
outside consulting arrangements by NIH employees. Panel recommendations 
to liberalize certain current restrictions were not adopted in this 
rule. Additional restrictions are necessary because NIH operations 
increasingly require significant interaction with pharmaceutical, 
biotechnological, biostatistical, and medical device companies 
(referred to within the regulation as ``substantially affected 
organizations'') and utilization of their products; the size and scope 
of NIH funding of biomedical and behavioral research, research 
training, and related activities have grown substantially; and NIH 
research findings are broad in range and influence within the health 
care sector. Moreover, in light of recent Congressional oversight and 
media reports, HHS has determined that the existing rules governing 
outside activities have not prevented reasonable public questioning of 
the integrity of NIH employees and the impartiality and objectivity 
with which agency programs are administered.
    Through its approximately 17,500 full-time equivalent employees, 
NIH conducts biomedical and behavioral research, research training and 
related activities in its intramural program, and its extramural 
program funds those activities at universities, medical centers, 
research institutes and other nonprofit and for-profit organizations 
through grants, cooperative agreements, and contracts. Both the 
intramural and extramural programs interact with academic research 
institutions and substantially affected organizations in many ways, 
both formal (e.g., funding agreements, research agreements, 
intellectual property licenses, and research and development contracts) 
and informal (e.g., exchange of research materials and other research 
collaborations, public and private scientific discussions, and joint 
sponsorship of projects). The official actions of many NIH employees 
can affect the financial interests of a broad range of businesses and 
organizations, including health care providers and health insurers, 
often in subtle ways. Informed by recent experience, it is appropriate 
to limit broadly employees' outside activities with those entities to 
avoid any appearance that official actions may be potentially 
influenced by private financial interests or loyalty to an outside 
employer.
    The current HHS supplemental regulation on outside employment and 
other outside activities, 5 CFR 5501.106, prohibits employees of the 
NIH and other employees of HHS from providing certain services, for 
compensation, in the preparation of grant applications, contract 
proposals or other documents to be submitted to HHS, and from 
compensated outside employment with respect to a particular activity 
funded by an HHS grant, contract, cooperative agreement, or other 
funding mechanism authorized by statute, or conducted under a 
cooperative research and development agreement (CRADA).
    Under Sec.  5501.109(c)(1) of this interim final rule, subject to 
certain exceptions, all NIH employees are also prohibited from engaging 
in employment (which includes serving as an officer, director, or other 
fiduciary board member, serving on a scientific advisory board or 
committee, and consulting or providing professional services) and 
compensated teaching, speaking, writing, or editing with a 
substantially affected organization; a hospital, clinic, health 
maintenance organization, or other health care provider (defined 
comprehensively to include the types of entities that are eligible to 
receive payments under the Medicare program for the provision of health 
care items or services); a health insurer; a health, science, or health 
research-related trade, professional, consumer, or advocacy 
association; or a supported research institution.
    A ``substantially affected organization'' is defined in paragraph 
(b)(8) to include those entities, irrespective of corporate form, that 
are engaged in the research, development, or manufacture of 
biotechnological, biostatistical, pharmaceutical, or medical devices, 
equipment, preparations, treatments, or products. The term includes 
those organizations a majority of whose members are engaged in such 
activities.
    Section 5501.109(b)(8)(iii) also permits the designated agency 
ethics official or, in consultation with the designated agency ethics 
official, the NIH Director or the NIH Director's designee to determine 
that other entities shall be classified as substantially affected 
organizations. These determinations will be based upon whether such 
entities are engaged in activities that are substantially affected by 
the programs, policies, or operations of the NIH and whether, in view 
of the ongoing research conducted or sponsored by the NIH, interests in 
these organizations are likely to pose ethics

[[Page 5547]]

concerns for NIH employees similar to those presented by the entities 
specifically listed in paragraph (b)(8)(i). This authority might be 
used, for example, to cover a food, beverage, or tobacco manufacturer, 
if its products became a pervasive subject of NIH research activities 
into the health benefits or detriment associated with the product or 
its ingredients, and the research activities required a substantial 
coordinated effort across institutes and centers, such that it would be 
necessary or appropriate to apply a prophylactic rule applicable to all 
NIH employees. Lists of organizations designated as substantially 
affected organizations under paragraph (b)(8)(iii) will be maintained 
by the designated agency ethics official and the NIH deputy ethics 
counselor and disseminated to employees through appropriate means, 
including website posting.
    A ``supported research institution'' is defined in paragraph (b)(9) 
as an educational institution or a non-profit independent research 
institute that within the last year or currently has applied for, 
proposed, or received an NIH grant, cooperative agreement, research and 
development contract, or CRADA.
    Employees are also prohibited under paragraph (c)(1) from engaging 
in any self-employed business activity that involves the sale or 
promotion of products or services of a substantially affected 
organization or a health care provider or insurer. This section excepts 
the ownership of a patent or related commercialization activities 
conducted pursuant to Executive Order 10096, the Federal Technology 
Transfer Act of 1986 (FTTA), 15 U.S.C. 3710d, or implementing 
regulations at 37 CFR 404, as amended. Those activities will continue 
to be reviewed and approved on a case-by-case basis in accordance with 
existing conflict of interest and other applicable rules and policies. 
For example, under the FTTA the NIH might allow an employee inventor to 
obtain, or retain, title to an NIH invention, because the NIH has 
determined that it does not wish to file for a patent or otherwise 
commercialize the invention. The activities of owning that invention in 
a personal capacity, seeking and owning patent protection on that 
invention in a personal capacity, and engaging in commercialization 
activities related to that invention have been encouraged under the 
FTTA, and are not automatically prohibited by this regulation. Instead, 
these activities will continue to be scrutinized in accordance with the 
facts of each situation to determine whether they present a conflict or 
potential conflict and the situation should be managed to best serve 
the public interest.
    These prohibited outside activities rules are applicable to all NIH 
employees, but are focused on those types of activities and external 
entities that may pose the most significant risk of potential 
conflicts. In addition, the need for prophylactic rules barring certain 
types of outside activities derives from the considerable complexity of 
the current regulatory scheme, the intractable difficulties encountered 
at NIH in differentiating scientific work performed as an official duty 
from that proposed as an outside activity, and the significant 
administrative burden inherent in case-by-case determinations.
    The outside activity prior approval process is complicated. The 
following discourse describes the analysis required for each potential 
outside activity: Approval requires an assessment of whether the 
proposed outside activity violates any statute or regulation, including 
the OGE Standards of Ethical Conduct for Employees of the Executive 
Branch or the HHS Supplemental Ethics Regulation. Included in the OGE 
Standards is the requirement that the proposed outside activity cannot 
create an actual or apparent conflict that would result in recusals 
that would materially impair an employee's ability to do his job.
    In evaluating outside activities for conflicts, the reviewer 
initially addresses two provisions that form the core of Federal ethics 
law. A criminal statute, 18 U.S.C. 208, deals with an ``actual 
conflict'' due to the employee's own or imputed financial interest in 
the resolution of a government matter. A regulatory provision in the 
OGE Standards, 5 CFR 2635.502, principally addresses disqualifications 
called for when an ``appearance of a conflict'' arises from a ``covered 
relationship.''
    Under section 208 of the criminal code, to avoid a conflict of 
interest that results from outside employment, among other types of 
financial interests, a Federal employee must not participate personally 
and substantially in a particular matter that, to his knowledge, 
directly and predictably affects his own financial interest in the 
employment opportunity or the financial interests of his outside 
employer. To prevent an ``appearance of a conflict'' that results from 
serving in a role short of employment, for example, as an advisor, 
consultant, or other type of independent contractor compensated with 
fees and expenses, a different rule applies. Under section 502 of the 
regulations, if a reasonable person with knowledge of the relevant 
facts would question the Federal employee's impartiality, the employee 
must recuse, but only from ``particular matters involving specific 
parties,'' such as grants, contracts, applications, clinical trials, 
audits, investigations, or lawsuits that involve, as a party or 
representative of a party, the company to which the employee is 
providing consulting services.
    Both sections are disqualification provisions in that they do not 
prohibit the acquisition of an employment or consulting relationship, 
rather they bar actual ``participation'' in a potentially conflicting 
matter, either personally or through the direct and active supervision 
of the participation of a subordinate. However, neither section is 
triggered by mere knowledge of, or official responsibility for, a 
particular matter. In short, if an employee can recuse appropriately 
and still be able to perform the duties of his position, then an 
outside activity may be approved, provided there are no other statutory 
or regulatory impediments.
    A number of statutes and regulations preclude certain outside 
activities. For example, if an employee seeks approval to be a lobbyist 
before the Federal Government, the anti-representation statutes, 18 
U.S.C. 203 and 205, would be implicated. If the activity is clearly one 
that should be done as an official duty, such as an official speech on 
agency programs, then approval would be denied, under 18 U.S.C. 209, as 
an improper salary supplementation.
    If the circumstances would create an appearance of violating 
ethical standards, for example where the employee appears to have used 
his official position to obtain an outside compensated business 
opportunity or his actions reasonably create the impression of using 
his public office for the private gain of the outside company, then 
under the principles in the OGE Standards, 5 CFR 2635.101(b), and the 
rules governing misuse of position, 5 CFR 2635.702, the outside 
activity may be denied. An arrangement for compensation that far 
exceeds a market rate or that involves first class or foreign travel or 
extravagant accommodations, for example, may create the appearance that 
the offer was made or the remuneration was enhanced due to the 
employee's official position. Another situation cited in the OGE 
Standards in example 2 following 5 CFR 2635.802 would be where an 
employee was recently instrumental in formulating industry standards 
and will again be so involved. If an affected company offers a 
consulting contract to the employee to render advice to the company 
about how it can restructure its operations to comply with the very 
industry

[[Page 5548]]

standards that the employee has just drafted, the consulting 
arrangement should not be approved even though the employee lacks any 
current assignments affecting the industry, and even though the outside 
consulting can be finished before he again works on such matters.
    Another regulation, 5 CFR 2635.807 precludes compensation, subject 
to certain exceptions, if an employee wants to teach a course, deliver 
a speech, or write a book that relates to his official duties. 
(Consulting, technically, is not covered by this section, but the 
analysis in section 807 does provide guidance in evaluating many 
outside activities.) The ``relatedness'' test evaluates, among other 
factors, the subject matter of the activity. For career employees, 
compensation is precluded if the teaching, speaking, or writing deals 
in significant part with any current assignment (or one completed 
within the last year) or any ongoing policy, program, or operation of 
the agency. However, in a note following the provision, OGE observes 
that a career employee may receive compensation for ``teaching, 
speaking, or writing on a subject within the employee's discipline or 
inherent area of expertise based on his educational background or 
experience even though the [activity] deals generally with a subject 
within the agency's areas of responsibility.'' But this textual note 
does not lessen the applicability of other requirements of section 807, 
notably that the invitation to engage in the activity must not have 
been extended to the employee primarily because of his official 
position or tendered, directly or indirectly, by a person or entity 
that has interests that may be affected substantially by the 
performance or nonperformance of the employee's official duties. The 
circumstances of the invitation and the identity of the inviter are as 
important as the subject matter of the activity.
    Determining whether an invitation was prompted by official position 
requires an inquiry into whether the invitation to participate in the 
outside activity would not have been forthcoming had the employee not 
held the status, authority, or duties associated with the employee's 
Federal position. Resolving whether the inviter has interests that may 
be affected substantially by the performance or nonperformance of the 
employee's official duties depends upon whether it is reasonable to 
assume that the invitee may become involved in a matter substantially 
affecting the inviter, or whether the chance of such intervention is 
simply a remote and speculative possibility. These judgments are at 
times difficult and capable of reasonable debate.
    Ascertaining whether the subject matter of the proposed activity 
deals significantly with a current or recent assignment often may be 
particularly difficult given the technical scientific nature of the 
research conducted or funded by the NIH. For example, only a trained 
expert could discern whether a scientist engaged in basic research on 
the molecular basis for the development of skin cancer could be 
approved to lecture for compensation on the etiology of acute 
lymphocytic leukemia. The analysis would focus on whether the 
presenter, in discussing the latter subject, would draw substantially 
on the knowledge gleaned from the former. Parsing through biomedical 
jargon to exclude the possibility of a significant overlap is not a 
task to which the current NIH ethics program is well-suited.
    This analytical framework is comprised of requirements that apply 
across the executive branch. While the framework may be capable of 
being applied readily at other agencies, historically NIH has 
confronted unique challenges in implementing these executive branch-
wide requirements. In its recent review of the NIH ethics program, OGE 
noted that, in examining outside activity requests, its reviewers 
generally were not in a position to identify potential conflict of 
interest situations because a lack of scientific expertise prevented 
them from determining how the employees' official duties may have 
related to their outside consulting activities. The Office of 
Government Ethics observed that a case-by-case approach utilizing the 
executive branch-wide standards has not been adequate to protect the 
reputation of the NIH and its employees. It strongly recommended that 
the Department develop supplemental regulations to address the kinds of 
consulting activities that have raised integrity concerns at the NIH.
    This rule in fact expands upon that recommendation by addressing 
other activities that may pose similar concerns. Compensated teaching, 
speaking, and writing activities when performed by an NIH scientist for 
a substantially affected organization or a supported research 
institution can be no less troubling to the public than employment or 
consulting with these entities. Where biomedical research and 
publication activities are involved, any financial connection to 
affected industries may be perceived adversely. The British charitable 
trust, Sense About Science, in a recent working paper on scientific 
peer review observed this phenomenon in the context of sponsored 
research, stating that often ``critical commentators simply emphasi[z]e 
the source of research funding in order to imply that the researcher's 
findings may be unreliable in some unspecified way.'' Sense About 
Science, Peer Review and the Acceptance of New Scientific Ideas (2004), 
p. 18, available at www.senseaboutscience.org.uk/.
    For the NIH, section 807 does not adequately address this problem. 
Steps have been taken to incorporate review by a panel of technical 
advisors into the outside activity approval process in order to verify 
that the subject matter of a proposed activity is not related to 
official duties within the meaning of section 807. Efforts to augment 
training and guidance on the section have been initiated, and 
additional staff resources have been committed to its implementation. 
However, neither the addition of scientific expertise, nor training, 
nor improved administration can avoid the result that section 807 at 
times permits activities that members of the public might intuitively 
suppose are prohibited. For example, under current law, an NIH 
intramural researcher who proposes to deliver a paid lecture on general 
scientific topics within her inherent area of expertise for a drug 
company or a grantee university potentially may be allowed to do so if 
the various tests under section 807 and other applicable provisions are 
satisfied. Explanations--such as the lecture would not focus on any 
current or recent research; or the drug company did not have a product 
affected by her research; or although the university received a grant 
from her institute, she was not responsible for extramural funding 
decisions--may be perceived as legal technicalities.
    Section 5501.109(c)(1)(ii) addresses this inherent perception 
problem and solves the difficulty of evaluating scientific content 
under the ``relatedness'' test by targeting the prohibition to those 
sources of compensation for teaching, speaking, and writing activities 
that are most directly connected to these identified problems, i.e., 
substantially affected organizations, supported research institutions, 
health care providers or insurers, or related trade, professional, or 
similar associations. These sources of compensation by definition have 
interests that are affected by NIH programs, policies, and operations 
and may be perceived as exerting influence on an employee's 
governmental actions whenever a financial relationship exists. Recent 
press accounts alleging NIH employee participation as compensated

[[Page 5549]]

industry spokespersons or as authors of articles or other presentations 
that purport to endorse the benefits of specific products highlight 
this concern. Moreover, these entities, whether in industry or 
academia, are among those most likely to ask an NIH employee to speak 
or write on technical subjects related to their official duties, thus 
presenting the analytical quandary previously described when applying 
the ``subject matter'' part of the ``relatedness'' test in section 807.
    Although stringent limitations on outside activities have been 
imposed, the Department is especially mindful of the need for 
substantive interaction within the scientific community. As the 
National Academy of Sciences has stated:

    [S]cience is inherently a social enterprise--in sharp contrast 
to a popular stereotype of science as a lonely, isolated search for 
the truth. With few exceptions, scientific research cannot be done 
without drawing on the work of others or collaborating with others. 
... The object of research is to extend human knowledge of the 
physical, biological, or social world beyond what is already known. 
But an individual's knowledge properly enters the domain of science 
only after it is presented to others in such a fashion that they can 
independently judge its validity. This process occurs in many 
different ways. Researchers talk to their colleagues and supervisors 
in laboratories, in hallways, and over the telephone. They trade 
data and speculations over computer networks. They give 
presentations at seminars and conferences. They write up their 
results and send them to scientific journals, which in turn send the 
papers to be scrutinized by reviewers. After a paper is published or 
a finding is presented, it is judged by other scientists in the 
context of what they already know from other sources. Throughout 
this continuum of discussion and deliberation the ideas of 
individuals are collectively judged, sorted, and selectively 
incorporated into the consensual but ever evolving scientific world 
view. In the process, individual knowledge is gradually converted 
into generally accepted knowledge. * * * The social mechanisms of 
science do more than validate what comes to be known as scientific 
knowledge. They also help generate and sustain the body of 
experimental techniques, social conventions, and other ``methods'' 
that scientists use in doing and reporting research. * * * Because 
they reflect socially accepted standards in science, their 
application is a key element of responsible scientific practice.

National Academy of Sciences, On Being a Scientist. (Washington, D.C.: 
National Academy Press, 1994). Therefore, it is important to observe 
that the impact of the regulatory ban on outside activities is 
mitigated in several significant respects, through a transition period, 
a waiver provision, textual exceptions, and future actions that the 
Department has committed to undertake.
    First, the prohibition provides for a grace period to allow 
employees responsibly to conclude outstanding obligations. Employees 
may continue to engage in outside activities that would otherwise be 
prohibited for a period not to exceed 30 days from the effective date 
of the rule, and extensions of time for a maximum of 90 days from the 
effective date may be granted for good cause.
    Second, a process exists under Sec.  5501.106(e) for the designated 
agency ethics official to waive the application of the across-the-board 
rule in appropriate circumstances.
    Third, as to the teaching, speaking, writing, and editing 
restrictions, it should be stressed that the ban reaches only 
compensated activities; travel reimbursement will be permitted.
    Fourth, the NIH has determined that current policies and practices 
governing permissible official duty activities involving speaking or 
lecturing should be revised. Consequently, the NIH has decided to 
develop means to ensure that NIH scientists' knowledge continues to be 
conveyed to the scientific community at large. The NIH will act 
administratively to accommodate, as official duty activities, those 
speaking opportunities that might previously have been considered less 
directly connected to agency mission. The NIH will consider expanding 
the availability of scientists to appear before relevant audiences and 
organizations at government expense, when appropriate, or through 
agency acceptance of travel reimbursement from non-Federal sources 
under 31 U.S.C. 1353, where permitted.
    Fifth, the regulations contain exceptions designed to facilitate 
professional obligations and certain academic endeavors. These 
exceptions partially lift the absolute bar on outside activities with 
supported research institutions and other organizations (except 
substantially affected organizations) described in Sec.  
5501.109(c)(1), but they do not affirmatively permit an activity that 
would otherwise violate Federal law or regulations, including 5 CFR 
parts 2635, 2636, and 5501. Specifically, exceptions are provided that 
will allow participation in pursuits that are critical to maintaining 
technical proficiency, professional licenses, and academic credentials 
and disseminating scientific information, such as teaching involving 
multiple presentations at academic institutions, providing individual 
patient care, moderating or presenting at continuing professional 
education programs, and writing or editing scientific articles, 
textbooks, and treatises that are subjected to scientific peer review 
or a substantially equivalent editorial review process. The rule also 
contains exceptions for employment with, providing professional or 
consultative services to, or teaching, speaking, writing, or editing 
for, a political, religious, social, fraternal, or recreational 
organization. The rule also recognizes that individuals may be employed 
in non-problematic roles with outside entities such as providing 
clerical assistance, janitorial services, or unskilled labor.
    The exception for moderating or speaking at continuing professional 
education programs extends not only to sessions conducted for members 
of professions that impose licensure and program accreditation 
requirements, but includes events at which scientists, such as chemists 
or microbiologists, gather to share new insights and findings in their 
respective fields, provided that the educational events are 
substantially equivalent to those frequented by their professionally 
licensed colleagues.
    The licensing and program accreditation infrastructure established 
by certain learned professions generally has not been adopted by 
doctorates in scientific research. Most professional groups have 
promulgated standards for their educational programs that are designed 
to avoid conflicts, commercial promotion, and control by industry 
sponsors. See, for example, American College of Surgeons Guidelines for 
Collaboration of Industry and Surgical Organizations in Support of 
Research and Continuing Education, available at www.facs.org/fellows_
info/statements/st-36.html; American Society of Consultant Pharmacists 
Guidelines for Industry Support of ASCP Educational Activities, 
available at www.ascp.com/public/pr/guidelines/indsupp.shtml; and the 
discussion generally in the Food and Drug Administration publication 
entitled ``Final Guidance on Industry-Supported Scientific and 
Educational Activities; Notice'' at 62 FR 64074, Dec. 3, 1997. These 
groups police educational activities at which NIH employees may be 
asked to speak through strict policies limiting industry support to 
unrestricted educational grants. To provide a similar assurance in all 
contexts, including at gatherings convened by scientists and 
researchers from various academic disciplines, the regulations 
explicitly negate the exception if a substantially affected 
organization plays a role other than that of a donor of an unrestricted 
educational grant.

[[Page 5550]]

    In addition, in order to ensure that the exception is limited to 
continuing professional education or similar programs, as intended, and 
not interpreted to encompass every speaking occasion that has some 
educational content or instructional benefit, the regulation confines 
the exception to accredited programs or, in the case of a profession or 
academic discipline whose members are not subject to licensure and 
which does not have program accreditation requirements, an education 
program determined by the designated agency ethics official or his 
designee or, in consultation with the designated agency ethics official 
or his designee, the NIH Director or the NIH Director's designee to be 
substantially equivalent to an accredited continuing professional 
education program.
    In determining substantial equivalency for these purposes, a number 
of factors may be considered. Among them would be whether the education 
program is sponsored by a regional, national, or international 
organization that serves the interests of scientists or researchers in 
a specific discipline (e.g., neuroscientists or experimental 
biologists). Another attribute would be whether, as part of its 
mission, the program sponsor has a stated goal of ensuring that 
audience members remain current with respect to the latest scientific 
developments in their field of interest. Also important is the extent 
to which the sponsor regularly holds meetings that attract presenters 
and panel participants who are renowned for their expertise in the 
topics covered. Similarly critical is whether the education program is 
characterized by sufficient academic rigor and known within the 
scientific community as a venue that enables scientists to disseminate 
and exchange the latest information, particularly, among different sub-
disciplines (e.g., inorganic chemistry as opposed to organic 
chemistry). An education program conducted by a well established 
sponsor that has a longstanding reputation for presenting refereed 
papers and other scientific discourse of high caliber and which 
attracts, from around the globe, attendees of diverse viewpoints within 
the relevant discipline would be the paradigm.
    The regulation includes an exception for writing activities 
subjected to scientific peer review or substantially equivalent 
editorial processes. Scientific peer review is commonly understood in 
principle, with the primary purposes being to ``evaluate scientific and 
technical merit,'' ``screen for obvious errors in methodology and 
reasoning,'' and ``ensure that the research is novel and ``important''' 
within the relevant discipline. Effie J. Chan, Note, The ``Brave New 
World'' of Daubert: True Peer Review, Editorial Peer Review, and 
Scientific Validity, 70 N.Y.U. L. Rev. 100, 119 n.121 (1995). The 
concept of scientific peer review also generally involves the 
application of standards governing scientific misconduct and research 
integrity. E.g., International Committee of Medical Journal Editors, 
Uniform Requirements for Manuscripts Submitted to Biomedical Journals: 
Writing and Editing for Biomedical Publication (2004), available at 
https://www.icmje.org. HHS recognizes that actual editorial processes 
may vary in practice, for example, in terms of number of levels of 
review and the extent to which the publisher or journal relies on 
outside reviewers. Therefore, the exception is intended to cover 
writings subjected to any scientific peer review or substantially 
equivalent processes that are designed to ensure that the material 
disseminated is scientifically accurate, has technical merit, 
demonstrates originality, evinces an important contribution to the body 
of knowledge, and adheres to research and scientific conduct standards 
generally accepted within the relevant discipline.

Section 5501.110 Prohibited Financial Interests Applicable to Employees 
of the National Institutes of Health

    New Sec.  5501.110 creates, for employees of the NIH who file 
either a public or confidential financial disclosure report, a 
prohibited financial holdings regulation that bars owning a financial 
interest, such as stock, in substantially affected organizations. In 
accordance with 5 CFR 2635.403(a), the Department has determined that 
the acquisition or holding of these financial interests would cause a 
reasonable person to question the impartiality or objectivity with 
which NIH programs are administered.
    Public and confidential filers by definition are senior officials 
or other employees whose duties involve the exercise of significant 
discretion in certain critical areas of agency operations. Section 
5501.110 is similar to an existing financial holdings restriction 
applied to FDA employees that dates back to 1972. The current version 
of the restriction applicable to FDA employees was part of the HHS 
Supplemental Ethics Regulation as it was first issued in 1996, and is 
found at Sec.  5501.104. Since the enactment of the HHS Supplement, the 
work of the NIH has been determined to pose similar unique challenges 
for the agency ethics program. NIH employees, like FDA employees, 
participate in particular matters that substantially affect significant 
sectors of the United States economy, in particular, the 
pharmaceutical, medical device, and biotechnology industries. Even the 
food and beverage sector that is more associated with the FDA has begun 
to come within the NIH sphere through research on obesity and other 
diet-related conditions. Many NIH employees have access to confidential 
commercial information and trade secrets, the misuse of which can have 
serious financial consequences. Unethical conduct in this context, 
including misuse of information, could have serious public health 
consequences. In sum, the NIH has a compelling need to monitor, and 
impose reasonable prophylactic restrictions on, the financial ties 
between NIH employees and the vast number of entities that are 
substantially affected by NIH programs.
    Therefore, Sec.  5501.110 creates a prohibited financial holdings 
rule that serves the above-described interests and relieves the NIH of 
the significant administrative burden of resolving many conflict of 
interest problems on a case-by-case basis. However, Sec.  5501.110 is 
narrowly tailored in three important respects. First, Sec.  5501.110 
distinguishes between interests in organizations that are substantially 
affected by NIH programs, policies, or operations, i.e., those 
organizations principally involved in the pharmaceutical and 
biotechnology industries, and those interests that are not in such 
organizations. Second, Sec.  5501.110 imposes the strictest limitations 
on employees whose duties carry the greatest potential for conflict of 
interest, i.e., those employees who are required to file either a 
public financial disclosure statement or a confidential financial 
disclosure statement, pursuant to 5 CFR part 2634. Third, Sec.  
5501.110 incorporates a mechanism to exclude certain confidential 
filers or classes of confidential filers from the prohibited holdings 
requirement if the across-the-board prohibition is deemed unnecessary 
to ensure public confidence in the integrity of agency operations and 
their positions do not fall in certain enumerated categories nor entail 
responsibilities that are likely to pose conflicts related to financial 
holdings.
    While the new rule prohibits public and confidential filers at the 
NIH from holding or acquiring any interest in a substantially affected 
organization, all other NIH employees (as well as those confidential 
filers excluded from

[[Page 5551]]

coverage by the rule) will be subject to a $15,000 limit on the holding 
or acquisition of such interests and certain other restrictions. 
Currently, in order to avoid a conflict of interest, these employees 
must monitor their work activities and know the identity and value of 
their holdings at any given moment. A regulatory exemption at 5 CFR 
2640.202 allows employees to work on specific party matters, such as 
contracts, grants, investigations, or clinical trials, as long as the 
value of the affected stocks does not exceed $15,000, and on a general 
matter, such as rulemaking or policy determination, if the value of any 
one affected holding does not exceed $25,000, subject to a $50,000 cap 
when cumulating all affected interests. However, if the asset value 
exceeds these thresholds, employees must recuse from official 
participation in particular matters that would have a direct and 
predictable effect on the financial interests of the companies in which 
they are invested. These monitoring and recusal responsibilities are 
exacerbated by the increasing number of mergers, acquisitions, joint 
ventures, partnerships, intellectual property licensing agreements, and 
even name changes, particularly within the biotechnology and 
pharmaceutical industries that, on any given day, may make it difficult 
to know whether one has a conflict to avoid. By imposing a $15,000 cap 
on such holdings, the employee, the NIH, and the public can be better 
assured that the participation by NIH employees in their respective 
work assignments, whether specific or general in scope, does not pose a 
conflict created by stock holdings. The $15,000 cap will adjust 
automatically to any change in the de minimis exemption limit for 
matters involving parties at 5 CFR 2640.202(a).
    Although the dollar amounts in the two provisions are linked, 
substantively they differ in an important respect. Not all financial 
interests valued at $15,000 or less will be covered by the OGE 
regulatory exemption. For example, although the NIH exception permits a 
non-filer to hold a financial interest in a non-publicly traded company 
(assuming all the other criteria in the section are also satisfied), 
the OGE regulatory exemption only applies to securities in publicly 
traded companies or long-term Federal Government or municipal 
securities. Accordingly, NIH employees are reminded that even though 
Sec.  5501.110 may allow retention of certain assets that would 
otherwise be prohibited, the financial interest may nevertheless be 
problematic under 18 U.S.C. 208. Absent a regulatory exemption that 
specifically addresses the financial interest, a recusal, a 
divestiture, or an individual waiver may be required.
    The prohibitions relating to financial interests will apply to the 
spouses and minor children of NIH employees. Inasmuch as the financial 
interests of these relatives are imputed to employees and pose 
identical conflicts concerns, the Department has made the 
determination, pursuant to 5 CFR 2635.403(a), that there is a direct 
and appropriate nexus between this prohibition as applied to spouses 
and minor children and the efficiency of the service. It should be 
noted, however, that Sec.  5501.110 is not intended to prohibit 
employment by spouses and minor children in the affected industry 
sectors, although any actual or apparent conflicts of interests created 
as to NIH employees by such employment must be resolved under other 
applicable provisions of 5 CFR part 2635.
    Section 5501.110(e)(1) permits the holding of financial