01-29890. Supplemental Standards of Ethical Conduct for Employees of the Department of Transportation

AGENCY:

Department of Transportation.

ACTION:

Final rule; amendment.

SUMMARY:

The Department of Transportation, with the concurrence of the Office of Government Ethics (OGE), amends the Supplemental Standards of Ethical Conduct for Employees of the Department of Transportation (Transportation Ethics Regulations). The amendment adds authority to waive the general prohibition against Federal Aviation Administration (FAA) employees holding stock or other securities interests in airlines, aircraft manufacturing companies or suppliers of components or parts to those entities. The exercise of this waiver authority will be conditioned in each case upon a determination that the waiver is not inconsistent with the standards of ethical conduct for employees of the Executive Branch and that application of the general FAA prohibition is not necessary to avoid the appearance of misuse of position or loss of impartiality.

EFFECTIVE DATE:

December 3, 2001.

FOR FURTHER INFORMATION CONTACT:

William R. Register, Senior Ethics Counsel, Office of the General Counsel, Department of Transportation, Room 10102, Washington, DC 20590, [phone]; or John Walsh, Associate Chief Counsel for Ethics, [phone], FAA General Law Division, 400 7th Street, SW., Washington, DC 20590.

SUPPLEMENTARY INFORMATION:

I. Background

The Transportation Ethics Regulations were issued in 1996 to minimize potential conflicts of interest and supplement OGE's Standards of Ethical Conduct for Employees of the Executive Branch (5 CFR part 2635) (Standards). See 61 FR 39901-39904 (July 31, 1996), as codified at 5 CFR part 6001. The FAA-pertinent part of the Transportation Ethics Regulations, at 5 CFR 6001.104(b), generally prohibits FAA employees from holding any stock or other securities interest in an airline or aircraft manufacturing company, or in a supplier of components or parts to an airline or aircraft manufacturing company. The requirement prevents employees from taking actions that may violate conflict of interest laws or that may appear to do so. Exceptions to the general prohibition permit FAA employees to invest in certain mutual funds that hold the prohibited interests. See 5 CFR 6001.104(c).

The FAA's experience has shown, however, that the absolute prohibition in the current regulation is not needed to preserve the integrity of FAA operations. Also, employees for whom a waiver may be granted will nevertheless be subject to the conflict of interest laws and ethics regulations that apply to all Federal employees. These laws and regulations prohibit employees from taking action in any matter affecting a company in which they have any stock or other financial interest unless a regulatory exemption or a written waiver is obtained. Therefore, an amendment is being adopted to include in the regulation waiver language such as has been used for years by other agencies. See, for example, the regulations of the Department of the Interior at 5 CFR 3501.104(b)(5).

Under new § 6001.104(d), an agency designee, as defined in 5 CFR 6001.102, may grant a waiver from the regulatory restriction in § 6001.104(b) based on a determination that the waiver is not inconsistent with 5 CFR part 2635 or otherwise prohibited by law and that, under the particular circumstances, application of the restriction is not necessary to avoid the appearance of misuse of position or loss of impartiality and objectivity with which agency programs are administered. An FAA employee may be required under the waiver to disqualify himself from a particular matter or take other appropriate action. Initially, this new waiver authority will permit the FAA to consider a broader pool of applicants currently under consideration for temporary security positions at the nation's airports.

In addition, the Department is revising the authority citation of the Transportation Ethics Regulations to add reference to 5 U.S.C. 7353 concerning restrictions on gifts to Federal employees.

II. Matters of Regulatory Procedure

Administrative Procedure Act

Pursuant to 5 U.S.C. 553(a)(2), (b), and (d), the Department has found that good cause exists for waiving the regular notice of proposed rulemaking, and opportunity for public comment. The Department also finds that good cause exists for making this final rule effective immediately upon publication in the Federal Register. We make these findings because it is in the public interest that this rule, which concerns matters of agency management, personnel, organization, practice and procedure, and which relieves certain restrictions placed on FAA employees, become effective on the date of publication.

Regulatory Flexibility Act Analysis

Pursuant to section 605(b) of the Regulatory Flexibility Act, the Department certifies that this rule will not have a significant economic impact on a substantial number of small entities within the meaning of the Regulatory Flexibility Act (5 U.S.C. 601 et seq.). Accordingly, no regulatory flexibility analysis is required.

Executive Order 12866 Determination

The Department has determined that this final rule does not constitute a “significant regulatory action” for the purposes of Executive Order 12866, nor is the rule significant as defined in DOT's Regulatory Policies and Procedures.

Unfunded Mandates Reform Act of 1995 Determinations

Section 202 of the Unfunded Mandates Reform Act of 1995 (Unfunded Mandates Act)^[1] requires that an agency prepare a budgetary impact statement before promulgating a rule that includes a Federal mandate that may result in expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $100 million or more (as adjusted for inflation) in any one year. If a budgetary impact statement is required, section 205 of the Unfunded Mandates Act also requires an agency to identify and consider a reasonable number of regulatory alternatives before promulgating a rule. As discussed in the preamble, this rule limits the restrictions on FAA employees holding financial interests in aviation industry entities. The Department therefore has determined that the rule will not result in expenditures by State, local or tribal governments or by the private sector of $100 million or more. Accordingly, the Unfunded Mandates Act does not apply to this rulemaking.

List of Subjects in 5 CFR Part 6001

• Conflict of interests
• Ethics
• FAA employees
• Government employees

Dated: November 21, 2001.

Norman Y. Mineta,

Secretary of Transportation.

Approved: November 27, 2001.

Amy L. Comstock,

Director, Office of Government Ethics.

For the reasons set forth in the preamble, the Department, with the concurrence of OGE, amends 5 CFR part 6001 as follows:

PART 6001—SUPPLEMENTAL STANDARDS OF ETHICAL CONDUCT FOR EMPLOYEES OF THE DEPARTMENT OF TRANSPORTATION

1. The authority citation for part 6001 is revised to read as follows:

Authority: 5 U.S.C. 301, 7301, 7353; 5 U.S.C. App. (Ethics in Government Act of 1978); 49 U.S.C. 322; E.O. 12674, 54 FR 15159, 3 CFR, 1989 Comp., p. 215, as modified by E.O. 12731, 55 FR 42547, 3 CFR, 1990 Comp., p. 306; 5 CFR 2635.105, 2635.203(a), 2635.403(a), 2635.807.

2. Section 6001.104 is amended by:

a. Revising paragraph (b);

b. Redesignating paragraph (d) as paragraph (e); and

c. Adding new paragraph (d).

The revision and addition read as follows:

§ 6001.104

Prohibited financial interests.

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(b) Federal Aviation Administration (FAA). Except as provided in paragraphs (c) and (d) of this section, no FAA employee, or spouse or minor child of the employee, may hold stock or have any other securities interest in an airline or aircraft manufacturing company, or in a supplier of components or parts to an airline or aircraft manufacturing company.

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(d) Waiver. An agency designee may grant a written waiver from the prohibition contained in paragraph (b) of this section, based on a determination that the waiver is not inconsistent with 5 CFR part 2635 or otherwise prohibited by law, and that, under the particular circumstances, application of the prohibition is not necessary to avoid the appearance of misuse of position or loss of impartiality, or otherwise to ensure confidence in the impartiality and objectivity with which FAA programs are administered. A waiver under this paragraph may be accompanied by appropriate conditions, such as requiring execution of a written statement of disqualification. Notwithstanding the granting of any waiver, an employee remains subject to the disqualification requirements of 5 CFR 2635.402 and 2635.502.

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Footnotes

1.  Pub. L. 104-4, 109 Stat. 48 (codified at 2 U.S.C. Chs. 17A-25)