1. Overview of HHS/CDC Construction Authorities
HHS Office of the General Counsel
Public Health Division
CDC/ATSDR Branch

2. Relevant CDC Authority
Section 307 of the Public Health Service (PHS) Act [42 U.S.C. §242l], as amended
Section 307 was recently amended pursuant to the Tom Lantos and Henry J. Hyde United States Global Leadership against HIV/AIDS, Tuberculosis and Malaria Reauthorization Act of (P.L )
Now additionally allows the Secretary to participate with other countries in “biomedical research, health care services, health care research, or other related activities in furtherance of the activities, objectives or goals” of the Reauthorization Act

3. 41 U.S.C. § 12
As a general matter, specific authority is required for construction activities
41 U.S.C. § 12: requires CDC to have both a specific appropriation and specific authorization for the erection, repair, or furnishing of any public (Federally-owned) building or improvement, including those overseas
Previously, CDC did not have such authority to construct internationally

4. New Authorities 307(b)(9): New subsection of the PHS Act
Provides CDC with authority to “provide such funds by advance or reimbursement to the Secretary of State, as may be necessary, to pay the costs of acquisition, lease, construction, alteration, equipping, furnishing or management of facilities outside of the United States….”

5. 307(b)(9)
Does not provide HHS with authority to directly construct or make public improvements to Federally-owned buildings
Authorizes the transfer of funds to the Department of State for construction activity outside the United States
Specific appropriation requirement of 41 U.S.C. §12 met by 307(b)(9); specific appropriation for construction and related activities required
Defer to Department of State to determine whether, if HHS transferred funds to it in accordance with 307(b)(9), it would have the authority to acquire, lease, construct, alter, equip, furnish or manage facilities outside the United States

6. 307(b)(9)
Does not appear to limit the transfer of funds to the Department of State for costs related to buildings owned or utilized only by HHS
But: Facilities must be used in connection with cooperative endeavors authorized by 307(a) of the PHS Act

7. 307(b)(10) 307(b)(10): New subsection of the PHS Act
Allows HHS Secretary, “in consultation with the Secretary of State, through grant or cooperative agreement, to make funds available to public or non-profit private institutions or agencies in foreign countries in which the Secretary [of HHS] is participating in activities described under subsection (a) to acquire, lease, construct, alter, or renovate facilities in those countries”
Applies only to construction by grantees
41 U.S.C. §12: does not apply to overseas construction authorized pursuant to 307(b)(10), as 41 U.S.C.§12 only applies to public buildings
Facilities built pursuant to 307(b)(10) are not public buildings

8. 307(b)(10)
Generally, appropriated funds may not be used for permanent improvements to private property
Exception: when specifically authorized by law
307(b)(10) provides such an exception
307(b)(10) allows provision of funds to grantees for construction of overseas grantee facilities engaged in activities described in 307(a), AND
Provides that such funds can come from general appropriations available for carrying out either Title III or Section 307 of the PHS Act

9. Important Points about New Authorities
Neither section 307(b)(9) or (b)(10) authorizes HHS to directly undertake construction of a Federally-owned public building, including through direct contract
While subsection 307(b)(10) authorizes the award of financial assistance to a non-Federal entity for the purposes of acquiring, leasing, constructing, altering, or renovating facilities in foreign countries, CDC can not use 307(b)(10) to construct buildings and then transfer them in-kind to grantees

10. Title Issues
Consistent with HHS grant regulations for awards and sub-awards to institutions of higher education, hospitals and other non-profit organizations (45 C.F.R for real property and for equipment): title in real property constructed with grant funds vests in the grantee
HHS, however, retains a beneficial interest in any property funded with grant funds
Legal difficulty in HHS attempting to enforce grant conditions on a grantee building constructed in a foreign country
Potential remedies available to HHS in the Federal courts and before the Departmental Appeals Board likely not available to HHS overseas

11. Title Issues
Because in some countries ownership of land might not be available and therefore only the structure is owned, the nuances of differentiating between the structure and the land itself should be clearly defined and documented in any grant/cooperative agreement of authorized construction projects
Recommendation: Include a grant condition which requires the grantee to record the and encumbrances with the land records authority in-country; doing so may increase the likelihood of success in enforcing the grant condition

12. Questions????
Contact CDC OGC: