**TO:** U.S. Department of State

CA/OCS/PRI

Adoption Regulations Docket Room, SA-29

2201 C Street NW.

Washington, DC 20520

**FROM:** Ethica

1116 W. 7^th^ St.

Columbia, TN 38401

\(931\) 840-4565

**RE:** Comments on State Department Regulations on Intercountry
Adoption

**State/AR-01/96**

# 

# INTRODUCTION

*Ethica* is a nonprofit education, assistance, and advocacy group, which
seeks to be an independent voice for ethical adoption practices
worldwide. In order to maintain our impartiality, *Ethica* does not
accept monetary donations from agencies or other child-placing entities,
nor are any of our managing Board of Directors currently affiliated with
adoption agencies. *Ethica* strives to develop organizational policy and
recommendations based solely on the basic ethical principles that
underscore best practices in adoption and speak to the best interests of
children.

*Ethica* believes that ethical adoption services must include family
preservation efforts, birth family counseling and advocacy, adequate
pre-adoption training for adoptive parents, ethical placement practices,
post-adoption services that include disruption assistance, and the
fulfillment of lifelong responsibilities to adoptees and their families.
The 1993 Hague Convention on Protection of Children and Cooperation in
Respect of Intercountry Adoption (the Convention) is a landmark step
forward in achieving these goals, and we welcome this opportunity to
comment on the proposed U.S. regulations for its implementation.

A thorough review of the proposed regulations reveals that the
Department of State (the Department) has responded to many of the
concerns and suggestions voiced by the adoption community. Crafting a
system that simultaneously balances the needs of children and creates a
regulatory mechanism is difficult at best, and requires that a delicate
balance be struck between the need for regulation and the need to create
a workable system that will not be unduly burdensome. The Department\'s
effort to show this balance is evident in many places throughout the
proposed regulations, and we commend the Department for its effort in
this regard.

We are especially pleased to see the increased consumer protections
evident in the regulations, especially the creation of the Complaint
Registry. Such a system will serve the important function of providing a
non-biased vehicle for parents to lodge complaints and a significant
public service with its ability to make such information available to
parents seeking to adopt children.

In addition, we are pleased by the evident effort to enact regulations
that take into consideration the role of market forces, which can often
serve to shape policy and procedure without the addition of burdensome
regulation. The acknowledgment of such forces is evident in several
sections of the proposed regulations, including **§96.13** regarding
exempt providers. We encourage the Department to retain this important
recognition.

These are only a few of the many positive aspects of the regulations
that *Ethica* has observed and we gratefully acknowledge the effort the
Department has expended in this regard. There are a few areas of concern
that remain, and we respectfully submit the following comments for your
review.

*Ethica* has identified several main issues of concern. In light of the
fact that many of these issues are reflected in various sections of the
proposed regulations, we have opted to group our comments by subject
rather than solely by section number. These subject areas are followed
by comments on particular sections.

**[Child Buying and Protection]{.underline}**

One of the foremost purposes of the Convention is to "prevent the
abduction, the sale of, or traffic in children." As such, parties to the
Convention have a responsibility to enact regulations that enable the
fulfillment of this purpose. Contracting States are obligated to
"eliminate any obstacles to its application" and to "deter all practices
contrary to the objects of the Convention" (the Convention, Articles 7
and 8). The regulations, as written, fall seriously short of achieving
this goal.

While we realize that this function is largely the responsibility of the
country of origin under the Convention, the United States cannot fail to
take into consideration its own responsibilities in the prevention of
child trafficking. As the world\'s largest receiving nation, we must
accept that the practices and policies of our adoption industry play a
direct role in this problem.

While **§96.36** contains the required stipulation that an agency must
have a policy to prohibit its employees or agents from giving money or
other consideration as payment for a child or as an inducement to
release a child for adoption, it lacks specific parameters and
mechanisms for monitoring or enforcing such a prohibition.

In addition, **§96.36** expands on the types of expenses that can be
paid in connection with adoption cases, leaving open the possibility
that parents could receive significant amounts of cash for the payment
of living expenses or prenatal costs. While we are aware of the
difficult circumstances that birth parents face, and support the need
for appropriate medical and counseling services for parents, the lack of
specificity and regulation regarding the payment of expenses is very
problematic. This expansion, coupled with the difficulty in proving that
payments could serve as an inducement to release a child, could actually
lead to an *increase* in the trafficking of children. Therefore, Ethica
would recommend that there be no expansion from current regulations in
the type of expenses that can be paid.

[Enforcement]{.underline}

The language contained in **§96.36** is remarkably similar to the
current regulatory language implementing the Immigration and Nationality
Act concerning child buying. It, too, prohibits payment for the release
of a child or as an inducement to release the child. In practice,
however, this standard has proven virtually impossible to enforce
without a confession from the birth parent. A report on the difficulty
in

proving child trafficking under the current standard is attached hereto
and incorporated herein by reference.

Even when investigators prove that money has changed hands, they have
great difficulty in proving where the money originated, which portion of
it was for allowable expenses and whether the birth parent was coerced.
Often all that is needed to thwart an investigation is for the birth
parent to state that (s)he intended to place the child for adoption
regardless of the payment received. Unfortunately, this statement is
easily coached.

At the same time, there is an increase in solicitation activity in
foreign countries.

The increased demand from U.S. citizen parents for infants and young
children and the growing competitive forces within the adoption
community have led to unfortunate practices, which prey on parents
living in difficult economic circumstances.

*Ethica* has heard numerous stories from adoptive parents in this
regard. Families have recounted how they were picked up from the airport
and driven through the countryside, where the facilitators stopped to
ask people if they wanted to place their children for adoption. Other
families tell of being asked to pay nannies a \"gift\" for caring for
their children, only to later learn that the \"nanny\" was the child\'s
mother.

Solicitation is also reportedly occurring on a larger scale. In one
country, officials from the Immigration Service discovered that
attorneys were using advertisements to offer assistance to pregnant
women. The women who answered the advertisements were given prenatal
care. However, if a mother later decided not to place her child for
adoption, she was given a bill for the services rendered. In countries
where women are living in impoverished conditions, such tactics can only
be viewed as coercion.

It is vital that the Department carefully consider when, how, and by
whom investigations will be done to \"prevent the abduction, sale of, or
traffic in children\" and to ensure that the regulations provide the
tools such investigators need to fulfill their responsibilities. These
tools may include limitations on the way that birth parent services and
expenses can be provided, a prohibition of payment of
non-adoption-related expenses, a prohibition of solicitation activity,
and a reasonable standard of evidence. Lacking such provisions, Section
96.36 simply applies a veneer of legality to one of the most troublesome
aspects of intercountry adoption.

[Birth Parent Expenses and Solicitation]{.underline}

*Ethica* believes that birth parents living in other countries should be
provided protections that are equal to those of birth parents in the
United States.  Given the difficulties in enforcing protections in other
countries, those protections may need to differ from those in the United
States if they are to provide the same level of protection that is given
to U.S. birth parents. Many have argued that the payment of prenatal and
adoption expenses for birth parents overseas should be allowed because
such expenses are allowed in domestic adoptions. However, there are
serious concerns about some practices regarding the payments of expenses
in the United States, too, and the Department should be careful not to
perpetuate those same concerns abroad. Indeed, *Ethica* believes that
the concerns are so serious that the better practice would be to
prohibit payment of expenses that are not directly related to the
adoption.  If, however, the determination is made that other types of
expenses are to be allowed, then *Ethica* believes that significantly
greater controls should exist with regard to such expenses.

The lack of specificity in **§96.36** regarding the payment of expenses
is troubling and invites abuse. This section contains none of the
safeguards or requirements normally used in domestic adoption to
regulate the payment of expenses. Such protections are particularly
important in that payments that are considered small by U.S. standards
may be large enough by the standards of a developing country to serve as
an inducement to release a child for adoption.

According to the National Adoption Information Clearinghouse,
approximately[^1] 46 U.S. states have statutes specifying the type of
birth parent expenses a prospective adoptive family is allowed to pay.
Eight states stipulate expenses that families are not allowed to pay.
Other states do not specify which expenses are not allowed, but their
statutes contain regulatory language that precludes the payment of any
expense not expressly stated. Some states allow nothing beyond the
payment of legal and/or medical services (Maryland, Delaware), while
others allow payments for prenatal living expenses, counseling, and
medical and legal services.

Approximately 18 states specify that payments may not be made beyond a
set time or may not exceed a stated amount. Thirty-seven states have
statutes requiring that an accounting of all adoption-related expenses
be made to the court having jurisdiction over the adoption proceedings.
Many states require court approval of expenses prior to payment. In
addition, some states require that expenses be paid to the agency or
provider of services and not directly to the birth parent.

Only one state (Idaho) requires the repayment of expenses if a parent
decides not to place her child for adoption. A majority of states have
laws stipulating that the payment of expenses *cannot obligate the
parent to place the child for adoption*. This is an important protection
for birth parents, as it enables them to retain the choice over
placement regardless of their economic circumstances at the time of
birth.

Examples of such regulatory language:

> Arizona: The court shall approve living expenses that the person has
> paid, unless found unreasonable. The person who wishes to pay the one
> thousand dollars in living expenses of a birth mother shall file an
> affidavit with the court signed by the birth mother verifying that the
> birth mother has been given written notice and that she understands
> that the payment of these expenses by any person does not obligate the
> birth mother to place the child for adoption and that a valid consent
> to the adoption can only be given after the child\'s birth without
> regard to any cost or expense paid by any person in connection with
> the adoption.
>
> Illinois: (d) Payment of their reasonable living expenses, as provided
> in this Section, shall not obligate the biological parents to place
> the child for adoption. In the event the biological parents choose not
> to place the child for adoption, the petitioners shall have no right
> to seek reimbursement of moneys paid to the biological parents
> pursuant to a court order under this Section.

Many states have also enacted statutes to control the use of
intermediaries or facilitators, often by allowing only licensed agencies
to act in placing a child for adoption---a policy that is compatible
with the Convention\'s stipulation that those who provide adoption
services must be accredited. An important addition to this requirement
is one that makes it illegal for persons to \"locate\" or solicit
children for adoption. Such prohibitions, included in the laws of many
states, are exemplified below.

Florida: The following fees, costs, and expenses are prohibited:

> a\. Any fee or expense that constitutes payment for locating a minor
> for adoption.
>
> Oregon: (3) No person shall charge, accept or pay or offer to charge,
> accept or pay a fee for locating a minor child for adoption or for
> locating another person to adopt a minor child

Statutes that serve to protect parents from coercion and manipulation
are obviously in common use in the United States today. Despite the
regulatory framework that exists in various states in the United States,
it is still common to hear of abuses in the payment of expenses.
Regulation, while it may limit abuses, is not able to eliminate them
even in the United States. It is even more difficult to limit abuses
when dealing with activity occurring in another country. Therefore, it
is essential that even greater protections be offered to parents abroad,
especially in light of the tremendous economic disparity between
countries of origin and receiving countries implementing the Hague
Convention.

It is also imperative that such regulations be easily enforced if they
are to be truly effective. The only way to reasonably assure such an
outcome is to implement a system in which services, rather than cash
payments, are offered to birth or expectant parents. Such a system would
ensure that intermediaries cannot use cash as an incentive in
\"locating\" a child for adoption, that agencies and attorneys cannot
excuse cash payments as \"expenses,\" and that investigators have a
clear mandate to follow: If cash has been exchanged, the adoption is
automatically illegal. To avoid coercive counseling tactics, additional
safeguards should be employed to assure that the person providing such
services does not benefit financially from the adoption.

In this vein, *Ethica* respectfully recommends that **§96.36** be
modified to provide clear guidance on the payment of adoption expenses
and to include provisions that protect birth parents from coercive
practices. While Ethica believes that payment of non-adoption-related
expenses should not be allowed, if such expenses are allowed, then this
section should stipulate:

-   That cash payments to birth parents for any reason are prohibited;

-   That medical, counseling, legal, or child welfare services to birth
    parents must be delivered by third parties who do not benefit
    financially from the decision to place the child for adoption, and
    that such third-party providers may not rebate or provide anything
    of value to birth families or to adoption service providers;

-   That the provision of services should not obligate a parent to place
    the child for adoption;

-   That services should be provided to any birth parent who seeks such
    services without regard to whether the parent has a plan to place
    the child for adoption;

-   That any third party who provides services to birth parents should
    do so in a transparent manner and that its operation should be open
    to inspection by \\

    local or international authorities;

-   That adoptive parents should not be individually charged for such
    expenses.

The inclusion of such provisions would serve to prevent the sale of, or
trafficking of, children and would provide investigative authorities
with clear parameters by which to enforce such provisions.

**[Responsibility, Supervision, and Consumer Protection]{.underline}**

One of the purposes of both the Convention and the Intercountry Adoption
Act (IAA) is to protect the rights of, and prevent abuses against,
children, birth families and adoptive parents involved in adoptions
(Vol. 68, Federal Register, 54068). Mechanisms intended to serve this
purpose are evident throughout the proposed regulations, and touch on
diverse areas such as insurance, liability, child buying, medical and
social information, and the supervision of service providers. These
areas are garnering much attention from all involved parties, and remain
some of the most difficult to address.

*Ethica* welcomes the clarification of the role of a primary provider,
which serves to ensure that one accredited agency take the primary
responsibility in a case. Such a mechanism is vital for the consumer
protection purposes of the regulations. On the other hand, many adoption
service providers have expressed concerns about some of the attempts to
provide a chain of responsibility, arguing that their ability to closely
monitor foreign service providers is difficult at best, and expressing
concerns about their ability to obtain insurance coverage. *Ethica*
supports the concept of vicarious liability and appreciates the need for
agencies to be responsible for the actions of those with whom they
choose to work in foreign countries.

However, the regulations, as proposed, do not adequately address the
need for consumer protection or provide a workable framework for agency
responsibility. To place our suggestions and comments in context, we
offer the following points for consideration.

[Consumer Protection]{.underline}

Adoptive parents who utilize adoption services have demanded, and are
entitled to, adequate consumer protection. Historically, these
protections have been lacking. Many have expressed concern over the lack
of accountability for fees paid, the lack of medical and social
information on referred children, the lack of adequate preparation of
adoptive parents, and the willingness of agencies to continue to work
with those whom they know or suspect to be engaged in illegal activity.
The vast majority of such concerns implicate foreign service providers,
and thus a mechanism is needed to ensure accountability for these
entities.

The primary provider vehicle (**§96.44-§96.46**) provides a mechanism to
address these needs by making one entity legally and financially
responsible for the adoption process. The benefit of this provision in
respect to foreign supervised providers, however, is vacated by
**§96.14(d)(2),** which exempts \"entities accredited by other
Convention countries,\" and §96.14(e), which also states that approved
persons do not have to be supervised.

Article 9 of the Convention stipulates that adoption services (including
all of the services performed in the foreign country which are included
in the definition of "adoption services" in the regulations) be carried
out by the Central Authority of the country, or by accredited or
approved entities or persons. Therefore, *all* adoption service
providers in a country that has ratified and implemented the Convention
would be exempted from the supervision requirement. The exemption
basically means that U.S. primary providers would be responsible only
for support personnel who are not performing adoption services, such as
drivers, translators, and couriers. This provision does not serve as
adequate consumer protection and would do little to rectify the problems
adoptive parents face in regard to accountability and responsibility.

In order to craft a mechanism that addresses the true concerns about
consumer protection, it is imperative that the Department take into
consideration what adoptive parents actually seek from their agencies.
Adoptive families are not primarily looking for an entity that they can
sue when things go wrong, as some have contended. Their goal is to avoid
problems from the beginning. Many adoption service providers protest
that it is unreasonable for them to be held responsible for all the
activities of persons in foreign countries. However, when things go
wrong as a result of the activities of persons performing services for
U.S. agencies, the issue arises as to who should bear the risk of loss. 
Should it fall upon the adoptive family, who had no control over
selecting or monitoring the behavior of the foreign person, or should it
fall upon the adoption agency, who chose to work with that foreign
person?  Ethica believes that risk of loss should fall upon the adoption
agency because that agency has greater control over the situation than
does the family. Families are merely asking that adoption agencies not
be able to use their lack of control over foreign providers as an excuse
for poor professional conduct.

Take, for example, a parent who receives a referral of a young infant
who is determined to be in reasonably good health by a qualified
physician. There are no indications of developmental delay or serious
health concerns. The parents accept the placement and adopt the child,
only to find out some time later that the child has a genetic medical
condition which was not apparent at the time of adoption. This situation
is obviously not the fault of the agency or the medical provider
overseas, and agencies correctly state that they should not be held
unduly accountable for such a result. There is no actionable liability
in this scenario, and most adoptive parents realize this. Imposing
vicarious liability on agencies for the actions of their foreign service
providers would not change this result: If the foreign service provider
did nothing wrong and the agency did nothing wrong, there would be no
liability. However, adoption service providers often use examples like
this to assert that it is unreasonable for families to want to hold
agencies accountable for the actions of foreign service providers.

Consider a different scenario in which a family receives the referral of
a child who appears to be developmentally delayed and whose head
circumference is small for his age. The agency does not ask any
questions of the physician who performed the exam and does not recommend
that the parents seek the advice of a medical professional in the United
States. Instead, the agency refers the child as a healthy infant and
discounts the concerns the parents express, or perhaps even refuses
additional tests requested by the parents. This agency has not exercised
due diligence in the face of obvious concerns, and there should be a way
to hold it legally liable for its actions.

Concerns about due diligence also arise when agencies are aware that
serious accusations have been made about a foreign service provider.
Perhaps an agency hears that its overseas provider is being investigated
for child trafficking or has failed to complete adoptions for other
clients, resulting in thousands of dollars of lost fees. Agencies should
be held accountable if they ignore such concerns and continue to accept
applications and fees in a situation that could result in significant
financial or emotional risk to adoptive parents. Indeed, agencies should
be both vicariously responsible for the wrongful actions of their
foreign service providers and liable for exercising due diligence in
protecting their client\'s interests and in choosing service providers.

Courts have supported this principle of due diligence; for example, in
wrongful adoption suits. Adoption agencies are not held responsible
simply because a child has an undiagnosed medical condition if no one
has done anything wrongful. Rather, agencies would be held accountable
in two situations: (1) when the foreign service provider they hired has
committed wrongful actions (vicarious liability), and (2) when the
agency failed to to exercise ordinary care or due diligence (for
example, in failing to disclose known information).

[Responsibility, Supervision, and the Imbalance of Power]{.underline}

In an effort to protect consumer interests, the Department has issued
the proposed requirement that agencies assume liability for their
supervised providers overseas. In response, agencies vehemently protest
their inability to \"control\" the actions of foreign service providers.
While providing a chain of responsibility is a valid goal, it is also
vital that the Department consider whether the regulations provide a
viable framework in which agencies can operate.

The Department would do well to consider the true issues that affect an
agency\'s ability to supervise foreign service providers. There is, in
many cases, a marked imbalance of power at play. Most U.S. agencies
contract with a foreign provider to place children. However, that often
means that the foreign entity controls the number of children assigned
to a particular agency, obtains all the medical reports, and demands
fees up front. Agencies who demand improved service or refuse to work
under such a system often find themselves without a program. Often, such
problems are not apparent until the agency has already placed many
adoptive parents into the program, leaving the agency vulnerable to the
demands of the foreign service provider.

A former agency employee related experiences in this regard. In one
case, the adoptive parents received a referral which contained a
detailed lab report---a relatively unusual occurrence for the particular
program. The report showed the child to be markedly anemic, and the U.S.
physician retained by the parents asked for an additional blood test to
rule out a serious medical condition. The foreign service provider
refused to perform the test, stating that it was the provider's belief
that the child was not ill, even though none of its staff were medical
doctors. The family was told to either accept the referral, or decline
it and accept a new child. The family knew that if they declined the
referral, the next referral would simply not have a detailed lab report
attached. When the agency protested, the foreign provider threatened to
remove the referrals of all the agency\'s clients and close the program.
Well over a hundred thousand dollars in fees would have been jeopardized
and the foreign provider had a waiting list of agencies wishing to work
with it. In such a scenario, the agency has few, if any, good choices.

There are also significant market concerns at play. An agency that
attempts to provide services that protect its clients may find itself
with no overseas program. There are, unfortunately, always agencies
willing to step into the void, and thus the foreign service providers
have little reason to correct harmful practices. Prospective adoptive
families continue to enter through the revolving door of agencies that
send them straight into the hands of the persons who refused to correct
service deficiencies for earlier families.

The proposed regulatory scheme does little to change this reality. There
would still be no supervision of the entities that perpetuate these
problems. With increased liability, agencies or persons that attempted
to provide good service and advocate for consumer protection would
likely withdraw from various situations, leaving the venues open for
less experienced or less careful agencies to enter. This could well
result in a \"race to the bottom\" scenario.

The only thing that would change this is the recognition of the
imbalance of power and the addition of regulatory language that seeks to
level the playing field. The Department should consider adding language
that gives U.S. accredited providers the tools they need to effectively
enact good practices. The Department should not underestimate the impact
that a few carefully worded insertions could have on this problem.

For example, one of the most effective tools agencies could wield would
be the timing of the disbursement of funds. In the current market
reality, agencies that suggest a staggered fee schedule are severely
disadvantaged because there are other agencies willing to forward full
fees at the outset. While the Department is trying to rectify this by
the addition of several clauses that ban contingency payments and that
provide for the possibilities of refunds, the reality is that the
foreign service provider is still likely to be the one who escapes
responsibility for repayment of fees or lack of proper practices, while
the U.S. agency is held liable.

The insertion of language stipulating that the U.S. agency cannot
forward the entire fee *until the service is complete* could eliminate
this problem. The agency would then have the tool it needs to encourage
the foreign service provider to fulfill its responsibility, and the
consumer would be afforded the intended protections. Such tools would
also place the onus of due diligence on the U.S. agency, which would
have fewer opportunities to deny responsibility for the actions of its
foreign service providers.

Another significant and necessary addition to the regulations is a duty
to report actions that are illegal under the IAA or these regulations.
Substantiated reports should be made available to the public and other
accredited agencies. Such an addition would protect *both* the adoptive
parents and the U.S. primary provider. The addition of such language
places the onus of responsibility on agencies that continue to work with
foreign service providers who have previously violated laws or
regulatory provisions. Agencies would no longer be able to shield
themselves from this lack of due diligence, which would significantly
increase consumer protection. On the other hand, such language would
also provide U.S. accredited bodies with an important tool in their
attempts to gain some control over the foreign service providers. The
requirement would make agencies more careful and allow them to remind
foreign providers of their responsibilities and the agency\'s
responsibility to report activity contrary to the regulation. This would
help eliminate the \"race to the bottom\" tendency, or at least make it
one of shorter duration.

*Ethica* understands that the exemption of accredited entities from
supervision is designed to place the burden of regulating foreign
service providers on the sending country. We also appreciate the
sensitivity of using language that creates a hierarchy of U.S. and
foreign accredited providers. However, it is crucial that the Department
implement a regulatory scheme that seeks to address both the consumer
protection needs and the need for U.S. entities to take responsibility
for their actions. Failure to do so will mean a lack of any real reform
in this vital area. A scheme that gives primary providers the tools
needed to effectively work with foreign service providers would also
alleviate a considerable amount of the concern over the ability to
obtain insurance coverage. To this end, we respectfully submit the
following suggestions, which illustrate one way to speak to the concerns
expressed above.

(1) **Amend §96.14(d)(2)** to read:

    \(2\) Competent authorities and public authorities of other
    Convention countries.

    **and**

(2) **Amend §96.14 (e)** to read:

    \(e\) Public bodies, competent authorities, and public authorities
    are not required to operate under the supervision of the primary
    provider.

    *These changes allow governmental entities to be exempted, but
    requires that accredited foreign service providers be supervised.*

(3) **Delete §96.46(c)** as written.

(4) **Add §96.46(c)** to read:

> \(c\) The agency or person, when acting as the primary provider and
> using foreign supervised providers to provide adoption services in
> other Convention countries, is responsible:
>
> \(1\) To report directly to the Secretary and the Department of
> Homeland Security any specific instances in which there is a
> reasonable suspicion of a violation of the provisions of the
> Intercountry Adoption Act that prohibit the sale, abduction, or
> trafficking of children, the inducement of consents to adoption by
> payment or compensation of any kind, the receipt of improper financial
> or other gain, or the receipt of remuneration unreasonably high in
> relation to services rendered;
>
> \(2\) To report directly to the Secretary and accrediting entity any
> specific instances in which foreign service providers fail to fulfill
> their responsibilities for providing services implicated in the IAA or
> these regulations, including but not limited to the provision of
> accurate medical and social information for the child, and the
> fulfillment of financial responsibilities.
>
> \(3\) To exercise due diligence in determining whether to use, or
> continue to use, foreign services providers, and to refuse to use (or
> continue to use) such entities where the risks of violation of the
> Intercountry Adoption Act are unreasonably high; or where the risks of
> a supervised provider\'s failure to perform services is unreasonably
> high;
>
> \(4\) To inform prospective adoptive parents, in writing, of
> developments in their adoption process triggering a duty to report
> under section (c)(1) and (2) above.

**5)** **Rename** the current **§96.46 (d)** as **§96.46 (e)**.

**6) Add §96.46 (d)** to read:

\(d\) The agency or person, when acting as the primary provider and
using foreign supervised providers to provide adoption services in other
Convention countries, does the following in relation to risk management:

(1) Assumes tort, contract, and other civil liability to the prospective
    adoptive parent(s) for (i) the foreign supervised provider's
    provision of the contracted adoption services and its compliance
    with the standards in this subpart F; (ii) the failure of the
    primary provider to fulfill its responsibilities for oversight as
    required in 96.46 (a) and (b); and (iii) the primary provider's
    failure to fulfill the reporting, due diligence, refusal to use, and
    assessment requirements of section (c), and (iv) the repayment of
    all fees expended either directly or indirectly to foreign service
    providers, and

(2) Maintains a bond, escrow account, or liability insurance in an
    amount sufficient to cover the risks of liability arising from its
    work with foreign service providers;

**7) Add** **§96.40 (c) (1)** to read:

> \(1\) The agency or person ensures that no more than 15 percent of the
> total amount of fees paid for services in a foreign country may be
> submitted as a case origination fee before the provision of contracted
> services. The remainder of the fees shall be paid only after the
> services are rendered.

In regard to the insurance provisions in **§96.33**, *Ethica* supports
the requirement for insurance coverage. At the same time, serious
questions have been raised about the viability of obtaining insurance
coverage. The inability of agencies to obtain insurance could erect
serious roadblocks to the successful implementation of the Convention.
Therefore, we respectfully request that the Department take all steps
necessary to ensure that the issue of insurance coverage not present
obstacles to the implementation of the Convention. To that end, we would
request that the Department explore, if necessary, alternative means of
ensuring insurance coverage through such vehicles as federal insurance
or federally mandated and regulated insurance coverage.

**[Accrediting Entities]{.underline}**

*Ethica* commends the Department on the many positive aspects of the
proposed designation of accrediting entities. We applaud the addition
that allows entities to take into consideration the prior employment
history of the main personnel of an agency, thus demanding
accountability from those who lose their license under one name and then
open another agency in another state under another name.

In addition, we were especially pleased to see that the Department has
allowed itself the latitude to limit an entity\'s jurisdiction by
geography, type of applicant, or other condition. We encourage the
Department to make ample use of these types of controls to prevent
setting up a system whereby accrediting entities may be placed in the
position of having to compete with each other for the business of the
very people they are supposed to be regulating. Such a scenario is a
likely reality with a system that allows for multiple accrediting
entities. Allowing only one accrediting entity or assigning agencies to
accrediting entities without such entities having to compete would
resolve this problem.

Accrediting entities are being placed in a position that creates heavy,
and costly, responsibilities for them. Placing them in a competitive
environment could lead to serious consequences as costs are lowered in
order to become competitive. This might especially be true in the case
of smaller accrediting entities, which don't have the advantage of
having other accreditation roles with which to offset basic overhead
costs.

In addition, we are particularly concerned about the heavy
responsibilities for investigative activity that are being placed on
accrediting entities, with stipulations that will simultaneously inhibit
their ability to conduct such investigations adequately.

**§96.66** requires that accrediting entities "investigate complaints
about accredited agencies and approved persons, as provided in subpart J
of this part." As provided in subpart J, accrediting entities must
investigate all complaints against an accredited entity. Failure to
investigate properly can lead to sanctions against the accrediting
entity, including removal of its designation as an approved accrediting
entity.

However, **§96.8 (b)(2)** states that accrediting entities must
stipulate a set total cost for providing all services during an
accreditation cycle which can span three to five years. Included in that
cost must be all costs necessary to cover "complaint review and
investigation."

Under the proposed scheme, accrediting entities presented with a
situation that required a large-scale investigation would have to cover
all the fees for such investigation solely out of accreditation fees
that had been collected previously.

*Ethica* understands the difficulties posed by allowing accrediting
entities to assess fees for investigative activity. Under such a
scenario, an agency could be required to pay significant costs for
investigations for unsubstantiated complaints. However, prohibiting
accrediting entities from charging for such services while
simultaneously requiring that the accrediting entity be responsible for
investigations ensures only that investigations will not occur. In
addition, the costs of obtaining liability coverage under this scheme
would be prohibitively expensive for accrediting entities.

While a Central Authority is allowed, under the Convention, to delegate
its *functions* to accrediting entities, it is not allowed to delegate
the *responsibility* for ensuring that children are protected. However,
this is exactly the result produced by proposing a regulatory scheme
that makes the adequate investigation of accredited providers virtually
impossible.

It is our understanding that the Department has answered requests for
financial backing for investigations by replying that the IAA prohibits
such a scenario. It should be noted, however, that what the IAA actually
prohibits is the use of any appropriated funds for functions carried out
by accrediting entities. Therefore, the IAA only prohibits funding
investigations if the Department elects to make this a responsibility of
the accrediting entity. This problem could be solved by removing the
responsibility for investigations from accrediting entities.

We understand the necessity for accrediting entities to assist in the
processing of complaints. At the same time, complaints for the most
serious issues implicated in the Convention, the IAA and these
regulations; i.e. child trafficking, abduction, and fraud, would likely
require extensive field investigations both in the United States and
abroad. It is unlikely that any accrediting entity could effectively
perform such investigations.

Therefore, the Department may wish to consider dividing the
investigative functions to alleviate all of these concerns. Accrediting
entities could be responsible for administrative complaints or those
that involve procedural issues within the United States. The Department
could retain both the responsibility and the function, in cooperation
with law enforcement personnel, to investigate serious allegations of
illegal or fraudulent activity. The Department could then make use of
appropriated funds, if necessary, to adequately investigate
improprieties and thus not place unmanageable burdens on accrediting
entities.

# Additional comments on select sections

**§96.35 Suitability of agencies and persons to provide adoption
services consistent with the Convention**

**§96.35(b)(1)** should be altered to remove the word "permanently."
There have been cases recently where agencies reached a plea bargain
which allowed them to forfeit their license for a period of several
years in a given state for serious wrongdoing. In circumstances like
these, the accrediting entity should be able to determine if the
offenses should result in a similar loss of accreditation for a period
of time.

In addition, we would recommend the addition of language that states
that consideration of previous history also be allowed if an agency, or
an employee of an agency, is served notice that they will be sanctioned
and then takes steps to avoid the sanction. In such cases, the sanction
should be considered as executed for accreditation purposes.

For example, in several cases in recent years, deportation orders have
been issued against U.S. facilitators operating in foreign countries. In
a typical case, after receiving news of the impending order, the
facilitator leaves the country before the order can be served. The
facilitator then tells adoptive families that the deportation was a
"rumor" and that s(he) left the country voluntarily---and often
accompanies this story with a tale of how s(he) was victimized.

Additionally, we would ask that **§96.35 (c)(2)** be amended to include
*any* employee who is convicted or being currently investigated for acts
involving financial irregularities. As the regulations provide only that
the information has to be produced and can be considered when
accreditation concerns, it is not unreasonable that an accrediting
entity be allowed to consider the behavior of all employees.

This is particularly important in the adoption industry because even
those who are not in senior financial management positions often have
the access and ability to engage in serious financial irregularities.
For example, a program coordinator for a particular country may not be,
and likely isn't, considered a senior financial manager. Yet, consumers
should feel secure that if such a person committed major fraud while in
the employ of the agency, or an agency in which he or she was previously
employed, that that person would not be allowed to engage in similar
activities again.

Likewise, **§96.35 (c)(3) and (4)** should be amended to require the
same background checks on all employees. Even those who are not
"working" directly with parents and children often have access to them
in the office or through agency picnics or other events.

**96.38 (a) Training requirements for social services personnel**

Agencies should be required to train *current employees* as well as
newly hired employees in these matters.

**96.39 (d) Blanket waivers of liability**

Many have raised objections to this language and have sought to imply
that the Department is strictly forbidding the use of any type of
informed risk waiver. It is our understanding that what is being sought
is an assurance that agencies cannot make families sign informed risk
waivers that waive their right to hold the agency liable for almost
anything the agency chooses to do. We agree that such broad waivers do
not protect children or consumers.

We encourage the Department to carefully consider any changes that it is
asked to make. Language that takes into consideration informed consent
must be carefully worded so as not to allow agencies to call almost
anything an assumed risk. It is especially vital that the Department
make it clear that agencies are not allowed to ask parents to waive any
of the stipulations and requirements that are set forth in the IAA or
these regulations.

**96.40 Fee Policies and procedures**

**§96.40 (b)** requires agencies and persons to itemize and disclose
fees, but sections **(b)(2) and (3)** require only that *total* fees for
adoption expenses in the United States be declared. This section does
not provide that these lump sum fees be itemized and accounted for.
Failure to do so may result in some agencies declaring, as we have
personally heard, that the entire agency fee is for \"adoption
services\" and thus once it is paid, it is completely non-refundable
because the provision of any service, including reviewing the
application, constitutes \"adoption services." This is obviously not the
intent of this provision.

In addition, **§96.40 (f)** requires an itemized accounting of fees when
extra fees are assessed, and **§96.46** requires that supervised
providers provide detailed accounting for their fees. Therefore, one
assumes that the intent is for the primary provider or any other
accredited agency or person to also produce itemized and detailed
accounting of its fees. Failure to clarify **§96.40 (b) (2)** and
**(3)** could result in agencies operating on a contingency
basis---i.e., one lump sum payment for services---rather than on a
fee-for-service basis.

We respectfully suggest that **§96.40 (b) (1)** and **(2)** be amended
to require the itemized disclosure of expenses and a provision for the
refund of fees for services not rendered.

In addition, **§96.40 (c)** should be clarified to provide consumers the
assurance that fees paid for services not rendered *will* be refunded.
Under the current language, agencies or persons could retain the right
to disclose up front that all fees paid are non-refundable service fees.

**§96.41 Procedures for responding to complaints**

We strongly recommend that the Department add provisions for severe
penalties to be assessed against any agency violating **§96.41 (e)**.

**§96.42 Retention, preservation, and disclosure of adoption records**

*Ethica* encourages the Department to amend **§96.42 (a)** to require
the retention of adoption records for the same period of time that
Convention records are retained; i.e., 75 years. State law will still
regulate the release of the information in those records. State laws do,
however, change over time and the records should be available in the
years to come if the laws change.

**§96.49 Provision of medical and social information in incoming cases**

**§96.49 (k)** should be amended to remove the exception for
"extenuating circumstances involving the child's best interests."
Similar uses of undefined "child's best interests" statements have led
to agencies being able to conclude that almost anything they want is in
the child's best interests. After all, isn't it better for a child not
to wait one day longer than he or she must to join a new family?
Therefore, the inclusion of this exception would basically render the
requirement useless for its intended purpose.

**§96.54 Placement standards in outgoing cases**

We strongly recommend that **§96.54 (a)** be amended to accurately
reflect the subsidiarity principle that is required in the Convention
and the IAA. As written, article (a) could be manipulated to ensure that
any child could be placed from the United States to a foreign country
before having the opportunity to be placed with a family in this
country.

While we support the right to an exception for family members, the
broadness of "in the case in which the birth parent(s) have identified
specific adoptive parents" makes it possible for any agency or attorney
who is assisting a birth parent in finding an adoptive parent to
identify that adoptive parent prior to placement and thus avoid the
subsidiarity principle in violation of the intended purpose of the
Convention and the IAA.

If the United States subscribes to the principles of the Convention and
seeks to have them apply to all other countries of origin, then it is
essential that the United States apply the same principles to itself.

Adult adoptees and others have spoken eloquently of the need for efforts
to place children in their country of birth whenever possible. The
Department should do everything necessary to ensure that those efforts
are made for U.S. children who need adoptive families.

While we recognize that in rare cases the birth parent(s) may have
personal friends living abroad that they wish to place their child with,
this is an exceptional circumstance and would already be covered under
the stipulation for special circumstances in paragraph (a). Therefore,
we recommend that **§96.54(a)** be amended to read:

**§96.54 (a)** "Except in the case of adoption by relatives or in other
special circumstances accepted by the State court with jurisdiction over
the case, the agency or person makes reasonable efforts to find a timely
adoptive placement for the child in the United States by:"

§96.69 Filing of complaints against accredited agencies and approved
persons

We strongly object to the requirement set forth in **§96.69 (a) (1)**
that states that complaints must first be filed with the agency or
person providing adoption services.

While we understand that the likely purpose of this statement was to
ensure that the Complaint Registry would not be inundated with minor
complaints, the Department must recognize that knowledge of serious
criminal offenses should not have to be reported first to the agency or
person committing the crime. In no other circumstance of which we are
aware are criminals afforded the protected right to cover their tracks
or destroy evidence prior to an investigation by an outside body! While
we hope that such a scenario would not be a common one, it is
inadvisable to mandate that all complaints first be filed with the
provider. The Complaint Registry or accredited entity should have the
discretion to decide if a complaint received directly involves an issue
serious enough to launch an investigation.

Likewise, **§96.69 (b)** must be expanded to include others who may have
knowledge of serious criminal or legal violations.

Ethica wishes to thank the Department of State for its consideration of
these comments and hopes that they prove to be of some value as the
Department drafts its final regulations.

[^1]: The word approximately is used by NAIC to acknowledge that laws
    are constantly changing. Numbers were correct at the time of
    publication (2003).