[Federal Register Volume 61, Number 150 (Friday, August 2, 1996)]
[Rules and Regulations]
[Pages 40500-40504]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-19704]
[[Page 40499]]
_______________________________________________________________________
Part IV
Environmental Protection Agency
_______________________________________________________________________
5 CFR Ch. LIV
40 CFR Part 3
Supplemental Standards of Ethical Conduct for Employees of the
Environmental Protection Agency; Final Rule
Federal Register / Vol. 61, No. 150 / Friday, August 2, 1996 / Rules
and Regulations
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[[Page 40500]]
ENVIRONMENTAL PROTECTION AGENCY
5 CFR Chapter LIV
40 CFR Part 3
[FRL-5544-5]
RIN 3209-AA15
Supplemental Standards of Ethical Conduct for Employees of the
Environmental Protection Agency
AGENCY: Environmental Protection Agency (EPA).
ACTION: Final rule.
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SUMMARY: The Environmental Protection Agency, with the concurrence of
the Office of Government Ethics (OGE), is issuing regulations for the
employees of EPA that supplement the Standards of Ethical Conduct for
Employees of the Executive Branch (Standards) issued by OGE. This final
rule is a necessary supplement to the executive branch-wide Standards
because it addresses ethical issues unique to EPA. This rule prohibits
certain financial interests, including compensated outside employment
with certain persons, and requires prior approval to engage in certain
categories of outside employment. The Agency is also revoking
superseded portions of its existing standards of conduct regulation, 40
CFR part 3, and, in their stead, inserting cross-references to the
executive branch-wide Standards and this supplemental regulation, as
well as to executive branch financial disclosure regulations.
EFFECTIVE DATE: These regulations are effective August 2, 1996.
FOR FURTHER INFORMATION CONTACT: Hale W. Hawbecker, Office of General
Counsel (2379), Environmental Protection Agency, 401 M Street, SW.,
Washington, DC 20460, (202) 260-4550.
SUPPLEMENTARY INFORMATION:
I. Background
On August 7, 1992, the Office of Government Ethics published the
Standards of Ethical Conduct for Employees of the Executive Branch. See
57 FR 35006-35067, as corrected at 57 FR 48557 and 57 FR 52583 with
additional extensions for certain existing provisions at 59 FR 4779-
4780 and 60 FR 6390 - 6391. The executive branch-wide Standards are now
codified at 5 CFR part 2635. Effective February 3, 1993, they
established uniform ethical conduct standards applicable to all
executive branch personnel.
With the concurrence of OGE, 5 CFR 2635.105 authorizes executive
branch agencies to publish agency-specific supplemental regulations
necessary to implement their respective ethics programs. The
Environmental Protection Agency, with OGE's concurrence, has determined
that the following supplemental regulations, for codification in new 5
CFR chapter LIV, to consist of part 6401, are necessary to implement
EPA's ethics program successfully, in light of EPA's unique programs
and operations. The Environmental Protection Agency is also
simultaneously revoking the provisions of its existing standards of
conduct regulations which have already been superseded or which are
superseded upon issuance of this supplemental regulation and replacing
them with a new section that provides a cross reference to these
supplemental regulations and to 5 CFR parts 2634 and 2635.
II. Analysis of the Regulations
Section 6401.101 General
Section 6401.101 explains that the regulations apply to all EPA
employees and supplement the executive branch-wide Standards. Employees
of the Environmental Protection Agency are also subject to the
Standards of Ethical Conduct for Employees of the Executive Branch at 5
CFR part 2635 and the executive branch financial disclosure regulations
at 5 CFR part 2634.
Section 6401.102 Prohibited Financial Interests
5 CFR 2635.403(a) authorizes agencies, by supplemental regulation,
to prohibit or restrict the acquisition or holding of financial
interests or classes of financial interests by agency employees based
on the determination that the acquisition or holding of such interests
would cause reasonable persons to question the impartiality and
objectivity with which agency programs are administered. As under 5 CFR
2635.802(a), this authority may be used to prohibit compensated outside
employment relationships.
In developing its supplemental regulation, EPA has determined that
the financial holdings of employees in manufacturers and others
impacted directly by the work of three EPA program offices would cause
reasonable persons to question the impartiality and objectivity with
which those program offices carry out their responsibilities. Thus, EPA
restricts certain outside employment and financial interests of
employees of the Office of Mobile Sources, the Office of Pesticide
Programs, and the Office of Information Resources Management. These
restrictions will help (1) To ensure public confidence in the
impartiality and objectivity with which these offices administer their
programs; (2) eliminate any reason for affected entities to be
concerned that information they provide to the three offices might be
used for private gain; and (3) avoid the disqualification of employees
from official matters to an extent that might result in the offices'
inability to administer their programs.
Section 6401.102(a)(1) prohibits employees in the Office of Mobile
Sources from having compensated employment relationships with or
holding stocks or other financial interests in automobile manufacturers
and manufacturers of mobile source pollution control equipment. Most of
those employees participate in matters that directly affect the
production and profitability of automobile manufacturers and
manufacturers of mobile source pollution control equipment.
Section 6401.102(a)(2) prohibits employees in the Office of
Pesticide Programs from having outside employment with or holding
stocks or other financial interests in companies that manufacture or
provide wholesale distribution of pesticides. This office is primarily
involved in the regulation of the pesticide industry. The prohibition
is not limited to employment with or other financial interests in a
company that itself engages in the manufacturing or wholesale
distribution of pesticides, but extends to employment with or financial
interests in any parent company of which that manufacturer or
distributor is a subsidiary. The regulation specifies, by way of
clarification, that the prohibition does not extend to employment with
or financial interests in any company or other entity simply because it
engages in the retail distribution of pesticides.
Section 6401.102(a)(3) prohibits employees in the Office of
Information Resources Management who are involved in contracting for
data management or computer-related services from having employment
with or holding stocks or other financial interests in data management,
computer, or information processing firms.
As reflected in 5 CFR 2635.403, certain prohibitions on outside
employment and financial interests are statutory. Section
6401.102(a)(4) reflects the provision of the Surface Mining Control and
Reclamation Act (SMCRA) at 15 U.S.C. 2603(e) which prohibits a Federal
employee who performs any function or duty under SMCRA from holding any
``direct or indirect'' interest in underground or surface coal mining.
[[Page 40501]]
The Office of Government Ethics has no authority to interpret SMCRA and
has concurred in Sec. 6401.102(a)(4) only to the extent of
incorporating a reference to and information about SMCRA to provide
affected EPA employees notice of the statutory prohibition to which
they are subject. The Office of Government Ethics' concurrence in this
final rule does not indicate its concurrence or other participation in
any language of proposed Sec. 6401.102(a)(4) that may appear to involve
interpretation or implementation of SMCRA.
Section 6401.102(a)(5) reflects the statutory prohibition which,
under the Toxic Substances Control Act (TSCA) at 15 U.S.C. 2603(e),
applies to members of the Interagency Testing Committee. Committee
members are prohibited from holding stocks, bonds, or other substantial
pecuniary interests in any person, including any corporation, engaged
in the manufacture, processing, or distribution in commerce of any
substance or mixture subject to any rule or order under the Act. The
regulation makes it clear that compensated outside employment of any
such person is encompassed by the prohibition on substantial pecuniary
interests. For one year after their service on the Committee has
ceased, members are subject to an additional statutory prohibition on
accepting employment or compensation from any person subject to any
requirement of the TSCA. Because these restrictions are imposed by a
statute for which OGE has no interpretative or other authority, OGE's
concurrence in proposed Sec. 6401.102(a)(5) does not extend to any
language which might be viewed as an interpretation of TSCA. It
reflects only OGE's concurrence in EPA's determination that these
employment and financial interest prohibitions should be reflected in
EPA's supplemental regulations to provide notice to affected employees.
Section 6401.102(b) permits the EPA Designated Agency Ethics
Official or the employee's Deputy Ethics Official, upon making the
appropriate determination, to waive in writing the prohibitions in
Sec. 6401.102 (a)(1)-(a)(3) precluding certain outside employment for
employees in the Office of Mobile Sources, employees in the Office of
Pesticide Programs, and employees in the Office of Information
Resources Management.
Section 6401.103 Outside Employment
The requirement for prior written approval is made pursuant to 5
CFR 2635.803 of the Executive Branch-wide Standards. EPA has determined
that in order to effectively avoid conflicts arising from outside
employment and activities, employees considering certain types of
employment or activities outside of the EPA must obtain written
approval before engaging in such employment or activities. Given the
breadth of the Agency's responsibilities, requiring prior written
approval of certain outside employment and activities provides a
necessary control to ensure that employees do not engage in outside
employment or activities in violation of applicable laws and
regulations.
Section 6401.103(a) listing the types of outside employment for
which the written approval of the employee's Deputy Ethics Official is
required is similar to those found in existing 40 CFR 3.508 that EPA is
hereby revoking. Employment requiring advance approval from the
employee's Deputy Ethics Official is listed in Sec. 6401.103(a) and
includes (1) consulting services; (2) the practice of a profession as
defined in 5 CFR 2636.305(b)(1); (3) holding State or local public
office; (4) employment regarding subject matter that deals in
significant part with EPA policies, programs, or operations to which
the employee is assigned or has been assigned during the previous one-
year period; and (5) the provision of services to an EPA contractor, to
a holder of an EPA assistant agreement, or to a firm regulated by the
EPA office in which the employee serves. Prior approval is required for
these activities because, by their nature, such activities tend to
raise questions under the Standards of Ethical Conduct. Section
6401.103(b) prescribes the content of the request for approval. Section
6401.103(c) makes clear that section 6401 is not itself authority to
deny permission to engage in any outside employment activity; that
approval for outside employment will be granted unless the prospective
outside employment is likely to involve conduct prohibited by statute
or Federal regulations, including 5 CFR part 2635 and this supplemental
regulation. To assure the integrity of the approval process,
Sec. 6401.103(d) requires that requests for approval be updated if
there is a change in the outside duties, or services performed, or the
nature of the employee's business. New approval also must be requested
when the employee transfers to an organization within the Agency for
which a different Deputy Ethics Official has responsibility and unless
the employee's Deputy Ethics Official specifies a longer period after
five years. Section 6401.103(e) broadly defines ``employment'' to cover
any form of non-Federal employment or business relationship involving
the provision of personal services, whether or not for compensation,
including personal services and writing when done under an arrangement
with another person for production or publication of the written
product. It does not, however, include participation in the activities
of a nonprofit charitable, religious, professional, social, fraternal,
educational, recreational, public service, or civic organization unless
such activities are for compensation other than reimbursement for
expenses.
III. Revocation of Superseded Portions of the EPA's Responsibilities
and Conduct Regulations
This final rule revokes those portions of EPA's employee
responsibility and conduct regulations at 40 CFR 3.100 through 3.605
now superseded. Some of those regulations were superseded when the
confidential financial disclosure provisions of the Executive Branch-
wide financial disclosure regulations at 5 CFR part 2634 took effect on
October 5, 1992 and many others were superseded when the Standards of
Ethical Conduct for Employees of the Executive Branch at 5 CFR part
2635 became effective on February 3, 1993. Those regulations at 40 CFR
2.304 and 3.305 which reflect statutory prohibitions on financial
interests are also superseded by this supplemental regulation, as is
EPA's requirement at 40 CFR 3.508 for prior approval of outside
employment which, as extended by 59 FR 4779-4780 and 60 FR 6390-6391,
remains in effect until no later than January 3, 1996.
Of its responsibilities and conduct regulations in 40 CFR 3.100-
3.508, the rule at new Sec. 3.101 retains only EPA's regulatory
conflict of interest waivers at existing 40 CFR 3.301(b), which remain
in effect under 5 CFR 2635.402(d)(1) until OGE has issued superseding
regulatory waivers under 18 U.S.C. 208(b)(2). In that regard, see OGE's
recent issuances at 60 FR 44706-44709 (August 29, 1995) and 60 FR
47208-47233 (September 11, 1995). This EPA residual standards rule also
replaces EPA's revoked regulations with a cross-reference at new
Sec. 3.100 to 5 CFR parts 2634, 2635, and 6401.
IV. Matters of Regulatory Procedure
Executive Order 12866
In issuing this rule, EPA has adhered to the regulatory philosophy
and the applicable principles of regulation set forth in Section 1 of
Executive Order 12866, Regulatory Planning and Review. This regulation
has not been reviewed by the Office of Management and
[[Page 40502]]
Budget under that Executive Order, as it deals with agency
organization, management, and personnel matters and is not, in any
event, deemed ``significant'' thereunder.
Paperwork Reduction Act
EPA has determined that the Paperwork Reduction Act (44 U.S.C.
chapter 35) does not apply because the proposed regulation does not
contain any information collection requirements that require the
approval of the Office of Management and Budget.
Administrative Procedure Act
EPA has found that good cause exists under 5 U.S.C. 553(b)(3) (A),
(B) and (d)(3) for waiving, as unnecessary and contrary to the public
interest, the general notice of proposed rulemaking and the 30-day
delay in effectiveness as to these rules and revocations. This
rulemaking is related solely to EPA's organization, procedure, and
practice. Further, the supplemental regulations are essentially a
restatement of rules previously contained in EPA's employee
responsibilities and conduct regulations, and EPA believes that it is
important to a smooth transition from EPA's regulations to the
executive branch standards that these rules become effective
immediately.
Regulatory Flexibility Act
EPA hereby certifies that this rule will not have significant
economic impact on a substantial number of small entities. This rule
affects only Federal employees and their immediate families.
List of Subjects
5 CFR Part 6401
Conflict of interests, Government employees.
40 CFR Part 3
Conflict of interests, Government employees.
Dated: June 13, 1996.
Carol M. Browner,
Administrator, Environmental Protection Agency.
Approved: July 19, 1996.
Stephen D. Potts,
Director, Office of Government Ethics.Q
For the reasons set forth in the preamble, the Environmental
Protection Agency, with the concurrence of the Office of Government
Ethics, amends title 5 of the Code of Federal Regulations and Title 40,
chapter I, part 3 of the Code of Federal Regulations as follows:
TITLE 5--[AMENDED]
1. A new chapter LIV, consisting of part 6401, is added to title 5
of the Code of Federal Regulations to read as follows:
CHAPTER LIV--ENVIRONMENTAL PROTECTION AGENCY
PART 6401--SUPPLEMENTAL STANDARDS OF ETHICAL CONDUCT FOR EMPLOYEES
OF THE ENVIRONMENTAL PROTECTION AGENCY
Sec.
6401.101 General.
6401.102 Prohibited financial interests.
6401.103 Prior approval for outside employment.
Authority: 5 U.S.C. 7301; 5 U.S.C. App. (Ethics in Government
Act of 1978); 42 U.S.C. 203(c)(1); 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, 2635.403(a), 2635.802(a),
2635.803.
Sec. 6401.101 General.
In accordance with 5 CFR 2635.105, the regulations in this part
apply to employees of the Environmental Protection Agency and
supplement the Standards of Ethical Conduct for Employees of the
Executive Branch contained in 5 CFR part 2635.
Sec. 6401.102 Prohibited financial interests.
(a) The following employees are prohibited from holding the types
of financial interests described in this section:
(1) Employees in the Office of Mobile Sources are prohibited from
having outside employment with or holding stock or any other financial
interest in manufacturers of automobiles and mobile source pollution
control equipment.
(2) Employees in the Office of Pesticide Programs are prohibited
from having outside employment with or holding stock or any other
financial interest in companies that manufacture or provide wholesale
distribution of pesticide products registered by the EPA. These
restrictions apply to companies with subsidiaries in these areas but do
not include retail distributors to the general public.
(3) Employees in the Office of Information Resources Management
involved with data management contracting or computer contracting are
prohibited from having outside employment with or holding stock or any
other financial interest in data management, computer, or information
processing firms.
(4) Employees who perform functions or duties under the Surface
Mining Control and Reclamation Act (such as reviewing Environmental
Impact Statements of the Office of Surface Mining in the Department of
Interior) are prohibited by 30 U.S.C. 1211(f) from holding direct or
indirect interests in underground or surface coal mining operations.
(i) Implementing regulations of the Office of Surface Mining at 30
CFR 706.3 define the terms ``direct financial interest'' and ``indirect
financial interest'' as follows:
(A) Direct financial interest means ownership or part ownership by
an employee of land, stocks, bonds, debentures, warrants, a
partnership, shares, or other holding and also means any other
arrangement where the employee may benefit from his or her holding in
or salary from coal mining operations. Direct financial interests
include employment, pensions, creditor, real property and other
financial relationships.
(B) Indirect financial interest means the same financial
relationships as for direct ownership but where the employee reaps the
benefits of such interests, including interests held by the employee's
spouse, minor child or other relatives, including in-laws, residing in
the employee's home. The employee will not be deemed to have an
indirect financial interest if there is no relationship between the
employee's functions or duties and the coal mining operation in which
the spouse, minor child or other resident relative holds a financial
interest.
(ii) Violation of the restrictions in this section is punishable by
a fine of up to $2,500 or imprisonment for not more that one year, or
both.
(iii) Employees who perform functions or duties under the Surface
Mining Control and Reclamation Act are not prohibited thereunder from
holding interests in excepted investment funds as defined at 5 CFR
2634.310(c)(2) provided that such funds are widely diversified, that
is, hold no more than 5% of the value of their portfolios in the
securities of any one issuer (other than the United States Government)
and no more than 20% in any particular economic or geographic sector.
(5) Members of the Interagency Testing Committee established under
section 4(e) of the Toxic Substances Control Act (15 U.S.C. 2603(e))
are prohibited thereunder from holding any stocks or bonds, or having
any substantial pecuniary interest, in any person engaged in the
manufacture, processing, or distribution in commerce of any substance
or mixture subject to any requirement of the Act or any rule or order
issued under the Act and, for a period of twelve months after their
committee service has ceased, are prohibited thereunder from accepting
[[Page 40503]]
employment or compensation from any person subject to any requirement
of the Act or to any rule or order issued under the Act.
(i) The statutory prohibitions in this section are enforceable by
an action for a court order to restrain violations.
(ii) Members of the Interagency Testing Committee are not
prohibited thereunder from holding interests in excepted investment
funds as defined at 5 CFR 2634.310(c)(2) provided that such fund are
widely diversified, that is, hold no more than 5% of the value of their
portfolios in the securities of any one issuer (other than the United
States Government) and no more than 20% in any particular economic
sector.
(b) The Designated Agency Ethics Official or the cognizant Deputy
Ethics Official may grant a written waiver from the prohibitions in
paragraph (a)(1) through (a)(3) of this section based on a
determination that the waiver is not inconsistent with part 2635 of
this title 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 agency programs are administered. A waiver under
this paragraph may impose appropriate conditions, such as requiring
execution of a written disqualification.
Sec. 6401.103 Prior approval for outside employment.
(a) Requirement for approval. An employee shall obtain approval
from his or her Deputy Ethics Official before engaging in outside
employment, with or without compensation, that involves:
(1) Consulting services;
(2) The practice of a profession as defined in 5 CFR
2636.305(b)(1);
(3) Holding State or local public office;
(4) Subject matter that deals in significant part with the
policies, programs or operations of EPA or any matter to which the
employee presently is assigned or to which the employee has been
assigned during the previous one-year period; or
(5) The provision of services to or for:
(i) An EPA contractor or subcontractor;
(ii) The holder of an EPA assistance agreement or subagreement; or
(iii) A firm regulated by the EPA office or Region in which the
employee serves.
(b) Form and content of request. The employee's request for
approval of outside employment shall be submitted in writing to his or
her Deputy Ethics Official. The request shall be sent through the
employee's immediate supervisor (for the supervisor's information) and
shall include:
(1) Employee's name, title and grade;
(2) Nature of the outside activity, including a full description of
the services to be performed and the amount of compensation expected;
(3) The name and business of the person or organization for which
the work will be done (in cases of self-employment, indicate the type
of services to be rendered and estimate the number of clients or
customers anticipated during the next 6 months);
(4) The estimated time to be devoted to the activity;
(5) Whether the service will be performed entirely outside of
normal duty hours (if not, estimate the number of hours of absence from
work required);
(6) The employee's statement that no official duty time or
Government property, resources, or facilities not available to the
general public will be used in connection with the outside employment;
(7) The basis for compensation (e.g., fee, per diem, per annum,
etc.);
(8) The employee's statement that he or she has read, is familiar
with, and will abide by the restrictions described in 5 CFR part 2635
and Sec. 6401.102; and
(9) An identification of any EPA assistance agreements or contracts
held by a person to or for whom services would be provided.
(c) Standard for approval. Approval shall be granted only upon a
determination that the outside employment is not expected to involve
conduct prohibited by statute or Federal regulation, including 5 CFR
part 2635 and Sec. 6401.102. The decision must be in writing.
(d) Keeping the record up-to-date. If there is a change in the
nature or scope of the duties or services performed or the nature of
the employee's business, the employee must submit a revised request for
approval. Where an employee transfers to an organization for which a
different Deputy Ethics Official has responsibility, the employee must
obtain approval from the new Deputy Ethics Official. In addition, each
approved request is valid only for five years unless the employee's
Deputy Ethics Official specifies a longer time period.
(e) Definition of employment. For purposes of this section,
``employment'' means any form of non-Federal employment, business
relationship, or activity involving the provision of personal services
by the employee, whether or not for compensation. It includes but is
not limited to personal services as an officer, director, employee,
agent, attorney, consultant, contractor, general partner, trustee,
teacher, or speaker. It includes writing when done under an arrangement
with another person for production or publication of the written
product. It does not, however, include participation in the activities
of nonprofit charitable, religious, professional, social, fraternal,
educational, recreational, public service, or civic organizations,
unless such activities are for compensation other than reimbursement
for expenses.
TITLE 40--PROTECTION OF ENVIRONMENT
CHAPTER I--ENVIRONMENTAL PROTECTION AGENCY
Part 3 of 40 CFR chapter I is revised to read as follows:
PART 3--EMPLOYEE RESPONSIBILITIES AND CONDUCT
Sec.
3.100 Cross-reference to employee ethical conduct standards and
financial disclosure regulations.
3.101 Waiver of certain financial interests.
Authority: 5 U.S.C. 7301 and 18 U.S.C. 208(b)(2).
Sec. 3.100 Cross-reference to employee ethical conduct standards and
financial disclosure regulations.
Employees of the Environmental Protection Agency (EPA) should refer
to the Standards of Ethical Conduct for Employees of the Executive
Branch at 5 CFR part 2635, the EPA regulations at 5 CFR part 6401 that
supplement those standards, and the Executive Branch financial
disclosure regulations at 5 CFR part 2634.
Sec. 3.101 Waiver of certain financial interests.
(a) The prohibition of 18 U.S.C. 208(a) may be waived by general
regulation. Financial interests derived from the following have been
determined to be too remote or too inconsequential to affect the
integrity of employee's services, and employees may participate in
matters affecting them:
(1) Mutual funds (including tax-exempt bond funds), except those
which concentrate their investments in particular industries;
(2) Life insurance, variable annuity, or guaranteed investment
contracts issued by insurance companies;
(3) Deposits in a bank, savings and loan association, credit union,
or similar financial institution;
(4) Real property used solely as the personal residence of an
employee;
(5) Bonds or other securities issued by the U.S. Government or its
agencies.
[[Page 40504]]
(b) This provision will be superseded when the Office of Government
Ethics publishes its Executive Branch-wide exemptions and EPA will
publish a document in the Federal Register revoking it at that time.
[FR Doc. 96-19704 Filed 8-1-96; 8:45 am]
BILLING CODE 6560-50-P
