[Federal Register Volume 63, Number 62 (Wednesday, April 1, 1998)]
[Rules and Regulations]
[Pages 15758-15760]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-8479]
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FEDERAL TRADE COMMISSION
16 CFR Part 4
Appearances Before the Commission; Restrictions and Public
Disclosure Requirements.
AGENCY: Federal Trade Commission (FTC).
ACTION: Final rule.
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SUMMARY: The Commission is amending its rules to make more efficacious
the procedures by which the General Counsel reaches determinations on
requests by former employees for clearance to participate in Commission
matters. The revised procedures are intended to provide for effective
review of the propriety of a former employee's participation in a
particular matter while reducing the paperwork and resources needed to
dispose of clearance requests. These amendments also clarify the rule's
terms and procedures, eliminate certain inconsistencies, and correct
one provision.
EFFECTIVE DATE: These amendments are effective April 1, 1998.
FOR FURTHER INFORMATION CONTACT: Ira S. Kaye, 202-326-2426, or Laura D.
Berger, 202-326-2471, Attorneys, Office of the General Counsel, FTC,
Sixth Street & Pennsylvania Avenue, N.W., Washington, D.C. 20580.
SUPPLEMENTARY INFORMATION: The Commission is revising paragraph (b) of
Commission Rule 4.1, 16 CFR 4.1, to shorten the time for determining a
former employee's request for clearance to participate in a Commission
matter from 15 to 10 business days, and to provide that either the
General Counsel or the General Counsel's designee has the authority to
make this determination. Shortening the waiting period from the present
15 business days to 10 business days is designed to benefit filers and
their clients, as well as the Commission's ability to resolve
administrative actions and investigations promptly.
In addition, the Commission is further revising Rule 4.1(b) to
simplify its terms and requirements, to eliminate certain
inconsistencies, and to correct one error. Finally, the Commission is
modifying the exceptions to the rule in order to make them consistent
with the provisions of 18 U.S.C. 207. The Commission also is amending
paragraph (c) of the Rule slightly, to make it consistent with revised
paragraph (b).
Apart from these revisions, the changes will affect internal
procedures only, and are not intended to influence the outcomes of
filings made under the Rules. Simplified internal processing procedures
are designed to reduce the time and resources expended in disposing of
the large number of clearance requests that are not problematic, while
continuing to ensure the integrity of Commission investigations and
proceedings.
The rule amendments relate solely to agency practice, and, thus,
are not subject to the notice and comment requirements of the
Administrative Procedure Act, 5 U.S.C. 553(a)(2), or to the
requirements of the Regulatory Flexibility Act, 5 U.S.C. 601(2).
The submissions required by the amended rule do not generally
involve the ``collection of information'' as that term is defined by
the Paperwork Reduction Act (``PRA''), 44 U.S.C. 3501-3520. Submission
of a request for clearance to participate or a screening affidavit is
ordinarily required only during the conduct of an administrative action
or investigation involving a specific individual or entity. Such
submissions are exempt from the coverage of the PRA. 5 CFR
1320.4(a)(2). To the limited extent that the rule could require a
submission outside the context of an investigation or action involving
a specific party, the information collection aspects of the rule have
been cleared by the Office of Management and Budget and assigned OMB
clearance no. 3084-0047.
List of Subjects in 16 CFR Part 4
Administrative practice and procedure.
For the reasons set forth in the preamble, the Federal Trade
Commission amends Title 16, chapter I, subchapter A, of the Code of
Federal Regulations as follows:
PART 4--MISCELLANEOUS RULES
1. The authority citation for part 4 continues to read as follows:
Authority: Sec. 6, 38 Stat. 721; 15 U.S.C. 46.
2. Section 4.1 is amended by revising paragraphs (b) and (c) to
read as follows:
Sec. 4.1 Appearances.
* * * * *
(b) Restrictions as to former members and employees--(1) General
Prohibition. Except as provided in this section, or otherwise
specifically authorized by the Commission, no former member or employee
(``former employee'' or ``employee'') of the Commission may communicate
to or appear before the Commission, as attorney or counsel, or
otherwise assist or advise behind-the-scenes, regarding a formal or
informal proceeding or investigation1 (except that a former
employee who is disqualified solely under paragraph (b)(1)(iv) of this
section, is not prohibited from assisting or advising behind-the-
scenes) if:
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\1\It is important to note that a new ``proceeding or
investigation'' may be considered the same matter as a seemingly
separate ``proceeding or investigation'' that was pending during the
former employee's tenure. This is because a ``proceeding or
investigation'' may continue in another form or in part. In
determining whether two matters are actually the same, the
Commission will consider: the extent to which the matters involve
the same or related facts, issues, confidential information and
parties; the time elapsed; and the continuing existence of an
important Federal interest. See 5 CFR 2637.201(c)(4). For example,
where a former employee intends to participate in an investigation
of compliance with a Commission order, submission of a request to
reopen an order, or a proceeding with respect to reopening an order,
the matter will be considered the same as the adjudicative
proceeding or investigation that resulted in the order. A former
employee who is uncertain whether the matter in which he seeks
clearance to participate is wholly separate from any matter that was
pending during his tenure should seek advice from the General
Counsel or the General Counsel's designee before participating.
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(i) The former employee participated personally and substantially
on behalf of the Commission in the same proceeding or investigation in
which the employee now intends to participate;
[[Page 15759]]
(ii) The participation would begin within two years after the
termination of the former employee's service and, within a period of
one year prior to the employee's termination, the proceeding or
investigation was pending under the employee's official responsibility;
(iii) Nonpublic documents or information pertaining to the
proceeding or investigation in question, and of the kind delineated in
Sec. 4.10(a), came to, or would be likely to have come to, the former
employee's attention in the course of the employee's duties, and the
employee left the Commission within the previous three years (unless
Commission staff determines that the nature of the documents or
information is such that no present advantage could thereby be
derived); or
(iv) The former employee's participation would begin within one
year after the employee's termination and, at the time of termination,
the employee was a member of the Commission or a ``senior employee'' as
defined in 18 U.S.C. 207(c).
Note: Former Commissioners and certain former ``senior''
employees who were appointed to those positions on or after January
20, 1993 may be subject to a five year ban on participation in
Commission matters pursuant to Executive Order 12834 (58 FR 5911-
5916, January 22, 1993), 3 CFR 1993 Comp., p. 580).
(2) Clearance Request Required. Any former employee, before
participating in a Commission proceeding or investigation (see footnote
1), whether through an appearance before a Commission official or
behind-the-scenes assistance, shall file with the Secretary a request
for clearance to participate, containing the information listed in
Sec. 4.1(b)(4) if:
(i) The proceeding or investigation was pending in the Commission
while the former employee served;
(ii) A proceeding or investigation from which such proceeding or
investigation directly resulted was pending during the former
employee's service; or
(iii) Nonpublic documents or information pertaining to the
proceeding or investigation in question, and of the kind delineated in
Sec. 4.10(a), came to or would likely have come to the former
employee's attention in the course of the employee's duties, and the
employee left the Commission within the previous three years.
Note: This requirement applies even to a proceeding or
investigation that had not yet been initiated formally when the
former employee terminated employment, if the employee had learned
nonpublic information relating to the subsequently initiated
proceeding or investigation.
(3) Exceptions.
(i) Paragraphs (b)(1) and (2) of this section do not apply to:
(A) Making a pro se filing of any kind;
(B) Submitting a request or appeal under the Freedom of Information
Act, the Privacy Act, or the Government in the Sunshine Act;
(C) Testifying under oath (except that a former employee who is
subject to the restrictions contained in paragraph (b)(1)(i) of this
section with respect to a particular matter may not, except pursuant to
court order, serve as an expert witness for any person other than the
United States in that same matter);
(D) Submitting a statement required to be made under penalty of
perjury; or
(E) Appearing on behalf of the United States.
(ii) With the exception of subparagraph (b)(1)(iv), paragraphs
(b)(1) and (2) of this section do not apply to participating in a
Commission rulemaking proceeding, including submitting comments on a
matter on which the Commission has invited public comment.
(iii) Paragraph (b)(1)(iv) of this section does not apply to
submitting a statement based on the former employee's own special
knowledge in the particular area that is the subject of the statement,
provided that no compensation is thereby received, other than that
regularly provided by law or by Sec. 4.5 for witnesses.
(iv) Paragraph (b)(2) of this section does not apply to filing a
premerger notification form or participating in subsequent events
concerning compliance or noncompliance with Section 7A of the Clayton
Act, 15 U.S.C. 18a, or any regulation issued under that section.
(4) Request Contents. Clearance requests filed pursuant to
Sec. 4.1(b)(2) shall contain:
(i) The name and matter number (if known) of the proceeding or
investigation in question;
(ii) A description of the contemplated participation;
(iii) The name of the Commission office(s) or division(s) in which
the former employee was employed and the position(s) the employee
occupied;
(iv) A statement whether, while employed by the Commission, the
former employee participated in any proceeding or investigation
concerning the same company, individual, or industry currently involved
in the matter in question;
(v) A certification that while employed by the Commission, the
employee never participated personally and substantially in the same
matter or proceeding;
(vi) If the employee's Commission employment terminated within the
past two years, a certification that the matter was not pending under
the employee's official responsibility during any part of the one year
before the employee's termination;
(vii) If the employee's Commission employment terminated within the
past three years, either a declaration that nonpublic documents or
information pertaining to the proceeding or investigation in question,
and of the kind delineated in Sec. 4.10(a), never came to the
employee's attention, or a description of why the employee believes
that such nonpublic documents or information could not confer a present
advantage to the employee or to the employee's client in the proceeding
or investigation in question; and
(viii) A certification that the employee has read, and understands,
both the criminal conflict of interest law on post-employment
activities (18 U.S.C. 207) and this Rule in their entirety.
(5) Definitions. The following definitions apply for purposes of
this section:
(i) Behind-the-scenes participation includes any form of
professional consultation, assistance, or advice to anyone about the
proceeding or investigation in question, whether formal or informal,
oral or written, direct or indirect.
(ii) Communicate to or appear before means making any oral or
written communication to, or any formal or informal appearance before,
the Commission or any of its members or employees on behalf of any
person (except the United States) with the intent to influence.
(iii) Directly resulted from means that the proceeding or
investigation in question emanated from an earlier phase of the same
proceeding or investigation or from a directly linked, antecedent
investigation. The existence of some attenuated connection between a
proceeding or investigation that was pending during the requester's
tenure and the proceeding or investigation in question does not
constitute a direct result.
(iv) Pending under the employee's official responsibility means
that the former employee had the direct administrative or operating
authority to approve, disapprove, or otherwise direct official actions
in the proceeding or investigation, irrespective of whether the
employee's authority was intermediate or final, and whether it was
exercisable alone or only in conjunction with others.
(v) Personal and substantial participation. A former employee
[[Page 15760]]
participated in the proceeding or investigation personally if the
employee either participated directly or directed a subordinate in
doing so. The employee participated substantially if the involvement
was significant to the matter or reasonably appeared to be significant.
A series of peripheral involvements may be considered insubstantial,
while a single act of approving or participating in a critical step may
be considered substantial.
(vi) Present advantage. Whether exposure to nonpublic information
about the proceeding or investigation could confer a present advantage
to a former employee will be analyzed and determined on a case-by-case
basis. Relevant factors include, inter alia, the nature and age of the
information, its relation and current importance to the proceeding or
investigation in question, and the amount of time that has passed since
the employee left the Commission.
(vii) Proceeding or investigation shall be interpreted broadly and
includes an adjudicative or other proceeding; the consideration of an
application; a request for a ruling or other determination; a contract;
a claim; a controversy; an investigation; or an interpretive ruling.
Proceeding or investigation does not include a rulemaking proceeding.
(6) Advice as to Whether Clearance Request is Required. A former
employee may ask the General Counsel, either orally or in writing,
whether the employee is required to file a request for clearance to
participate in a Commission matter pursuant to paragraph (b)(2) of this
section. The General Counsel, or the General Counsel's designee, will
make any such determination within three business days.
(7) Deadline for Determining Clearance Requests. By the close of
the tenth business day after the date on which the clearance request is
filed, the General Counsel, or the General Counsel's designee, will
notify the requester either that:
(i) the request for clearance has been granted;
(ii) the General Counsel or the General Counsel's designee has
decided to recommend that the Commission prohibit the requester's
participation; or
(iii) the General Counsel or the General Counsel's designee is, for
good cause, extending the period for reaching a determination on the
request by up to an additional ten business days.
(8) Participation of Partners or Associates of Former Employees.
(i) If a former employee is prohibited from participating in a
proceeding or investigation by virtue of having worked on the matter
personally and substantially while a Commission employee, no partner or
legal or business associate of that individual may participate except
after filing with the Secretary of the Commission an affidavit
attesting that:
(A) The former employee will not participate in the proceeding or
investigation in any way, directly or indirectly (and describing how
the former employee will be screened from participating);
(B) The former employee will not share in any fees resulting from
the participation;
(C) Everyone who intends to participate is aware of the requirement
that the former employee be screened;
(D) The client(s) have been informed; and
(E) The matter was not brought to the participant(s) through the
active solicitation of the former employee.
(ii) If the Commission finds that the screening measures being
taken are unsatisfactory or that the matter was brought to the
participant(s) through the active solicitation of the former employee,
the Commission will notify the participant(s) to cease the
representation immediately.
(9) Effect on Other Standards. The restrictions and procedures in
this section are intended to apply in lieu of restrictions and
procedures that may be adopted by any state or jurisdiction, insofar as
such restrictions and procedures apply to appearances or participation
in Commission proceedings or investigations. Nothing in this section
supersedes other standards of conduct applicable under paragraph (e) of
this section. Requests for advice about this section, or about any
matter related to other applicable rules and standards of ethical
conduct, shall be directed to the Office of the General Counsel.
(c) Public Disclosure. Any request for clearance filed by a former
member or employee pursuant to this section, as well as any written
response, are part of the public records of the Commission, except for
information exempt from disclosure under Sec. 4.10(a) of this chapter.
Information identifying the subject of a nonpublic Commission
investigation will be redacted from any request for clearance or other
document before it is placed on the public record.
By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 98-8479 Filed 3-31-98; 8:45 am]
BILLING CODE 6750-01-P
