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The International Journal
of Not-for-Profit Law

Volume 10, Issue 1, December 2007

A publication of the International Center for Not-for-Profit Law

Table of Contents

Letter from the Editor

The Shifting Landscape for American Not-for-Profit Organizations

Counterterrorism Developments Impacting Charities
Kay Guinane

NGOs Respond to USAID's Proposed Anti-Terror Screening
Sarah R. Eremus

Solving the Necessity Conundrum: What the Drug War Can Teach Us About Due Process for U.S. Charities in the Fight Against International Terrorist Financing
Josh D. Friedman

Good Governance Practices for 501(c)(3) Organizations:
Should the IRS Become Further Involved?

Thomas Silk

Governance Is Key Issue in Regulating Charities,
IRS Official Tells State Leaders

Grant Williams

Articles

International Treaty Protection of Not-for-Profit Organizations
Luke Eric Peterson and Nick Gallus

Notification or Registration?
Guarantees of Freedom of Association in Non-Democratic Environments: Case Studies of Lebanon and Jordan

Marc Makary

Somewhere in Between:
Conceptualizing Civil Society

Benny D. Setianto

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NGOs Respond to USAID’s Proposed Anti-Terror Screening

Sarah R. Eremus1

I. Introduction

The stated mission of the United States Agency for International Development (USAID) is to advance U.S. foreign policy objectives by supporting economic growth, agriculture, trade, global health, democracy, education, conflict prevention, and humanitarian assistance in more than 100 nations throughout Asia, Europe, Africa, and Latin America.2 In 2006, USAID spent $10.4 billion on its operations, with nearly 70 percent devoted to economic, social, and environmental issues, and the remainder devoted to democracy and human rights, regional stability, humanitarian responses, managerial and organizational excellence, counterterrorism, and international crime.3 Close collaboration with nonprofit partners is fundamental to the successful achievement of USAID projects.4 The agency works with international non-governmental organizations (NGOs) and U.S.-based private voluntary organizations (PVOs), among others.5

To receive a grant award, eligible nonprofits submit proposals, which are evaluated by the agency.6 Currently, recipient organizations are required to screen their employees and provide USAID with certification that no employee is affiliated with any government-listed terrorist group.7 Recently, USAID proposed new screening procedures that will be carried out by U.S. intelligence agencies and law enforcement.8

In this article, I provide an overview of USAID’s proposed Partner Vetting System (PVS); the responses from prominent NGOs, categorized by the principal concerns expressed; and the current status of the proposed system.

II. The Proposed Partner Vetting System and Its Consequences

On July 17, 2007, USAID announced that it would implement a new system of records, known as the PVS, pursuant to the Privacy Act of 1974, 5 U.S.C. 552a.9 Under the PVS, an NGO would be required to disclose, for each officer, employee, or trustee, the full name (and any aliases), date and place of birth, government-issued identification numbers such as social security or passport numbers, current mailing address, telephone and fax numbers, email addresses, country of origin and nationality, citizenship, gender, and profession or other employment information. Disclosure of this information would be a prerequisite for receiving USAID grant funds and completing contracts, cooperative agreements, or registration as PVOs.10 Some organizations construe the proposed rules as extending even to recipients of the NGO's assistance.11 The information collected would be screened “to ensure that neither USAID funds nor USAID-funded activities inadvertently or otherwise provide support to entities or individuals associated with terrorism.”12

On July 20, 2007, USAID published a second proposed rule in the Federal Register that would exempt the PVS from the Privacy Act of 1974 “because of criminal, civil, and administrative enforcement requirements.”13 This would allow USAID to withhold the screening results from the NGOs that turn over the data, because the findings would be based on classified and sensitive information.14

On July 23, 2007, USAID published a third notice in the Federal Register. This announcement revealed that the PVS could involve as many as 2,000 respondents.15

Since USAID proposed the PVS, the American Civil Liberties Union (ACLU) and NGOs have responded by sending letters to the Office of Security, the Privacy Office, and the Information and Records Division at USAID, protesting the proposed system and demanding that it be withdrawn.16 The organizations cite several factors: 1) lack of due process to challenge erroneous findings; 2) privacy concerns; 3) lack of necessity for the program; 4) lack of transparency; 5) lack of statutory authority; 6) risk of danger to NGO employees; and 7) administrative burden on NGOs.

  1. Due Process

NGOs worry that an employee could be falsely identified as “associated with” terrorism because the government watch lists are “riddled with error.”17 Furthermore, the term “associated with” terrorism is vague.18 OMB Watch points out that neither the regulations for the PVS system nor American law defines “associated with.”19

Once identified as “associated with” terrorist activities, an employee cannot adequately challenge the designation. In an August 27, 2007, letter, the ACLU points out that “the fact that USAID will not confirm to individuals or entities that its denial of funds or refusal to enter into a contract with those individuals or entities is a result of their having failed its undisclosed screening process, and the fact that there appears to be no effective means of challenging such denial or refusal, raises serious due process concerns.”20 The International Center for Not-for-Profit Law (ICNL) describes a “Catch-22” scenario: in order to challenge an alleged positive finding, an individual must specify the data that need to be changed; however, because USAID would not disclose the findings, the individual would be unable to do so.21

  1. Privacy

Because of the highly personal nature of the information NGOs would have to disclose under the PVS, NGOs oppose the system based on privacy concerns. The ACLU writes that “[t]he creation of such a database by USAID and the fact that it, or portions of it, will be shared with other governmental entities raises privacy concerns that should be thought through more critically.”22 ICNL states that the Privacy Act of 1974 was intended to bar just such forms of data-gathering, and that the Act “should be scrupulously followed to avoid unwarranted intrusions on civil liberties.”23

NGOs express concerns not only about contravening privacy policies in the United States, but about violating privacy laws in foreign jurisdictions as well. In its letter, EngenderHealth states that “providing information on foreign nationals in the countries where EngenderHealth works may violate privacy laws and personal data directives and laws of these countries, and would place us in an untenable position of being forced to ignore host country laws.”24

  1. Necessity

The failure of USAID to demonstrate the necessity for such a system is another basis for NGO opposition. Samuel A. Worthington, President of InterAction, a coalition of charity organizations focusing on international humanitarian efforts, writes in a September 21, 2007, letter that USAID has failed to explain the need for the PVS, because it “has not conclusively demonstrated that its funds have been used for criminal activities associated with terrorism or wound up in the hands of individuals or organizations responsible for such criminal activities. Nor has USAID demonstrated that the PVS will be an effective means of ensuring its funds are not used for such purposes and do not wind up in such hands.”25 According to USAID, the system is necessary because the organization operates in 90 percent of countries with active terrorists. “[E]xisting systems do not provide an appropriate level of due diligence,” according to USAID, which makes its staff members “potentially liable."26

  1. Lack of Transparency

NGOs also complain of the lack of consultation concerning the PVS.27 Furthermore, the fact the PVS was to take effect August 27, 2007, the same date as the deadline for responses and comments,28 makes it appear that USAID had no interest in views expressed by the NGOs.29 This deadline was not the only problem confronting NGOs that wished to comment on the proposal. According to InterAction, the lack of even basic information about the system and an explanation regarding its necessity leaves “the NGO community … unable to provide meaningful comment.”30 OMB Watch urges USAID to withdraw the proposal and consult with NGOs to develop “mechanisms to protect USAID funds that would be both more effective and less subject to mistake and abuse.”31

EngenderHealth contends that “USAID has unilaterally initiated a questionable, counterproductive, and burdensome system without proactive consultation with the NGO community.”32 After "repeated assurances" that the agency would consult with partners on significant matters, USAID’s failure to solicit NGO involvement here is “disrespectful” and “provocative.”33

  1. Lack of Statutory Authority

NGOs also point out that there is no statutory authority for PVS.34 The ACLU notes questions about “whether the PVS may actually exceed the authority granted to USAID by Congress.”35

USAID bases its authority on the foreign operations appropriation bill, which requires the Secretary of State to “take all appropriate steps” to make certain that U.S. funds in the West Bank and Gaza do not reach any individual or group involved with terrorism.36 However, as ICNL observes, 22 C.F.R. 226.4 specifies that “USAID shall not impose additional or inconsistent requirements except as provided in Sections 226.4 and 226.14, or unless specifically required by federal statute or executive order.” The PVS proposal does not fall under either section of the regulations, and no statute or executive order specifically requires it. Although Executive Order 13224 grants authority to the Secretary of State to identify Specially Designated Global Terrorists, it does not cover the PVS. If the order did require such a system, ICNL continues, the system would apply to all federal awards, and not just USAID ones.37

  1. Risk of Danger to NGO Employees

ICNL and other organizations are also concerned about the international ramifications and safety issues that may result. According to ICNL, there has already been a backlash against NGOs, and USAID should not give “precedential comfort” to countries that “seek to curtail civil society” by collecting such personal information on NGO employees.38 If the collected data are misused, the Global Health Council notes, NGO employees and their relatives may be endangered.39 InterAction voices a related concern: “If they are perceived to be extension of the U.S. intelligence community, terrorist attacks against them can only increase. Putting our employees in this position is totally inconsistent with efforts USAID is making to help its implementing partners improve the security of staff members working in hazardous places."40

  1. Administrative Burden

Finally, NGOs oppose the PVS because of the administrative burden it will impose.41 NGOs with thousands of employees all over the world are concerned about diverting time and resources from program work to PVS paperwork.42

III. Current Status of the PVS

USAID is considering revising the system. The International Herald Tribune quotes James Kunder, acting deputy administrator of USAID, as saying, “We are trying to strike a reasonable balance here. We’re trying not to make these requirements too onerous. But we have to have reasonable requirements to insure that aid money is not going to assist terrorists.”43 For now, the PVS will work only as a pilot program in Gaza and the West Bank. USAID will not expand the PVS until reviewing the pilot program and receiving comments from NGOs and other partners of USAID.44 The responses from NGOs appear to have persuaded USAID to reconsider the PVS.

Notes

1 Sarah R. Eremus is a third-year student at the William S. Boyd School of Law at the University of Nevada, Las Vegas, and a student editor of the International Journal of Not-for-Profit Law.

2 U.S. Agency for International Development, USAID Primer: What We Do and How We Do It 1 (Jan. 2006).

3 See U.S. Agency for International Development, Analysis of USAID's Financial Statements, chart 3.

4 USAID Primer, supra note 2, at 10.

5 Id. at 24.

6 Id. at 25.

7 USAID , Certification Regarding Terrorist Financing, USAID Acquisition and Assistance Policy Directive (AAPD) 02-19 (Dec. 31, 2002).

8 See discussion infra.

9 Privacy Act System of Records Notice, 72 Fed. Reg. 39042 (proposed July 17, 2007) (original effective date of Aug. 27, 2007, postponed).

10 Id.

11 Ian Wilhelm, “Charities Protest Proposed Change in Federal Foreign-Aid Rules,” The Chronicle of Philanthropy (August 24, 2007); Steven R. Weisman, “Aid Groups Urge U.S. to Revise Plan to Screen Their Workers,” New York Times (August 24, 2007).

12 72 Fed. Reg. 39042.

13 Privacy Act of 1974, Implementation of Exemptions, 72 Fed. Reg. 39768 (proposed July 20, 2007).

14 Walter Pincus, “Foreign Aid Groups Face Terror Screens,” The Washington Post (August 23, 2007).

15 Notice of Public Information Collections Being Reviewed by the U.S. Agency for International Development; Comments Requested, 72 Fed. Reg. 40110 (proposed July 23, 2007).

16 See discussion infra.

17 Letter from Kay Guinane, Director of Nonprofit Speech Rights at OMB Watch, to Philip M. Heneghan, Chief Privacy Officer of USAID (Aug. 27, 2007).

18 Id.

19 Id. While USAID bases its authority to implement the PVS in part on Executive Order 13224, the Order does not define the term “associated with.” See Executive Order 13224 of September 23, 2001, 66 Fed. Reg. 49079 (Sept. 25, 2001).

20 Letter from Terence Dougherty, General Counsel, and Dorothy Ehrlich, Deputy Executive Director, ACLU, to Philip M. Heneghan, Chief Privacy Officer of USAID (Aug. 27, 2007).

21 Letter from Douglas Rutzen, President of ICNL, to Philip M. Heneghan, Chief Privacy Officer of USAID.

22 Supra note 20.

23 Supra note 21.

24 EngenderHealth, “EngenderHealth Expresses Deep Concern over U.S. Proposal to Gather Private Information” (Aug. 24, 2007).

25 Letter from Samuel A. Worthington, President & CEO of InterAction, to USAID Officers (Sept. 21, 2007). See also "Global Health Council Opposes Implementation of the Proposed Partner Vetting System" (Aug. 22, 2007).

26 Ian Wilhelm, “International Aid Groups Balk at Latest Federal Antiterror Screening Plan,” The Chronicle of Philanthropy (August 31, 2007).

27 Global Health Council, supra note 25.

28 72 Fed. Reg. 39042. See also Pincus, supra note 14; ACLU, supra note 20.

29 InterAction, supra note 25.

30 Id.

31 OMB Watch, supra note 17.

32 EngenderHealth, supra note 24.

33 Id.

34 Global Health Council, supra note 25; ACLU, supra note 20.

35 ACLU, supra note 20.

36 72 Fed. Reg. 39042.

37 ICNL, supra note 21.

38 Id.

39 Global Health Council, supra note 25.

40 Letter from Samuel A. Worthington, President & CEO of InterAction, to Philip M. Heneghan, Chief Privacy Officer of USAID (Aug. 17, 2007).

41 Wilhelm, supra note 26.

42 OMB Watch, supra note 17; Interaction, supra note 40.

43 Steven R. Weisman, “Plan to screen aid groups for terror ties may be revised: Critics fear the U.S. Agency for International Development proposal would violate charities' privacy and drive away beneficiaries,” International Herald Tribune (Aug. 24, 2007).

44 OMB Watch , “USAID Temporarily Delays Implementation of Partner Vetting System,”.

 

 

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ISSN: 1556-5157