[Federal Register Volume 62, Number 78 (Wednesday, April 23, 1997)]
[Rules and Regulations]
[Pages 19668-19670]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-10487]
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DEPARTMENT OF COMMERCE
Office of the Secretary
15 CFR Parts 15, 15a, and 15b
[Docket No. 970416092-7092-01]
RIN 0690-XX03
Statement of Policy and Procedures Regarding Indemnification of
Department of Commerce Employees
AGENCY: Department of Commerce.
ACTION: Final rule.
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SUMMARY: This final rule adds a statement of policy and procedures
regarding indemnification of Department of Commerce employees. During
the 1980s, largely in response to the flood of Bivens type lawsuits,
Bivens v. Six Unknown Named Agents of the Federal Bureau of Narcotics,
403 U.S. 388 (1971), approximately a dozen agencies issued regulations
establishing procedures and policies to indemnify their employees
against personal liability for actions taken within the
[[Page 19669]]
scope of their employment. The Justice Department's Office of Legal
Counsel has issued several opinions upholding the legality of these
regulations. In addition, there is a logical connection between the
achievement of an agency's underlying mission and protecting the
agency's employees from financial liability for actions taken within
the scope of their employment. At present there is no Department of
Commerce (the ``Department'') policy that allows for the payment of
Department funds to indemnify Department employees who suffer adverse
money judgments as a result of official acts, or for the settlement of
personal damages claims by the payment of Department funds. This policy
statement will permit such payment in appropriate cases as determined
by the Secretary.
Effective Date: May 23, 1997.
FOR FURTHER INFORMATION CONTACT: M. Timothy Conner or Donald J. Reed,
Department of Commerce, Office of the General Counsel, Room 5890,
Washington, DC 20230, (202) 482-1067.
SUPPLEMENTARY INFORMATION: Unlike most state and local governments and
private sector corporations, the Department does not now indemnify its
employees who are sued personally and suffer an adverse judgment as a
result of conduct taken within the scope of employment, nor does it
settle ``individual capacity'' claims with Department funds. Lawsuits
against federal employees in their individual capacity have
proliferated since the 1971 Supreme Court decision in Bivens. As
reported by the Department of Justice, over 12,000 claims have been
filed against federal employees since 1971; nearly 5,000 actions are
now pending. These suits personally attack officials at all levels of
government and target all federal activities, particularly law
enforcement.
The prospect of personal liability and the burden of defending a
claim arising from the performance of an employee's official duties has
a negative and chilling impact on the Department's law enforcement
effectiveness. Uncertainty regarding what conduct may lead to a claim
tends to intimidate employees, stifle creativity, and limit decisive
action. As Professor Kenneth Culp Davis noted, ``The public suffers
whenever a government employee resolves doubt in order to protect his
own pocketbook instead of resolving doubt in order to protect the
public interest * * *. Courageous action of public employees is
discouraged by the threat of a lawsuit against the employee
personally.'' K. Davis, Constitutional Torts at 25, 26 (1984).
The Department believes that lawsuits against Federal employees in
their personal capacity are an impediment to the Department's effective
functioning. A Departmental policy to permit the indemnification of
employees would facilitate the removal of this impediment and accord
Department employees the same protection now enjoyed by most state and
local government employees as well as most corporate employees. This
policy would permit, but not require, the Department to indemnify an
employee who suffers an adverse verdict, judgment or other monetary
award, provided that the actions giving rise to the judgment were taken
within the scope of employment and that such indemnification is in the
interest of the Department as determined by the Secretary. The policy
also allows the Department, in rare cases, to settle an ``individual
capacity'' claim with Department funds prior to entry of judgment.
However, absent exceptional circumstances, the Department will not
agree either to indemnify or settle before entry of an adverse
judgment. This policy is thus designed to discourage the filing of
lawsuits against employees in their individual capacity solely in order
to pressure the government into settlement.
In addition to adding the policy and procedures for indemnification
of employees, these regulations reorganize 15 CFR parts 15, 15a, and
15b into one part 15 in order to streamline regulations regarding legal
proceedings and Department of Commerce employees.
These regulations are published in final form without the
opportunity for public notice and comment because they constitute a
general statement of policy regarding Department of Commerce management
and personnel; consequently, publication for public notice and comment
is not required (5 U.S.C. 533(a)(2)).
Since a notice of proposed rulemaking is not required by 5 U.S.C.
533, or any other law, the analytical requirements of the Regulatory
Flexibility Act, 5 U.S.C. 601 et seq., are inapplicable.
These amendments do not impose additional reporting or
recordkeeping requirements on the public that require the approval of
the Office of Management and Budget under 44 U.S.C. 3501 et seq.
List of Subjects in 15 CFR Part 15
Administrative practice and procedure, Alimony, Child support,
Courts, Government employees, Indemnity payments, NOAA Corps
allotments, Wages.
For the reasons set forth in the preamble, the Department of
Commerce amends 15 CFR parts 15, 15a, and 15b as follows:
PART 15--LEGAL PROCEEDINGS
1. The authority for part 15 is revised to read as follows:
Authority: 5 U.S.C. 301; 15 U.S.C. 1501, 1512, 1513, 1515 and
1518; Reorganization Plan No. 5 of 1950; 3 CFR, 1949-1953 Comp., p.
1004; 44 U.S.C. 3101; subpart C is issued under 37 U.S.C. 101, 706;
15 U.S.C. 1673; 42 U.S.C. 665.
2. The heading of part 15 is revised to read as set forth above.
PART 15--[REDESIGNATED AS SUBPART A OF PART 15 (Secs. 15.1-15.3)]
3. Part 15 is redesignated as subpart A of part 15 consisting of
Secs. 15.1, 15.2, and 15.3.
PART 15A--[REDESIGNATED AS SUBPART B OF PART 15 (Secs. 15.11-
15.18)]
4. Part 15a is redesignated as subpart B of part 15 consisting of
Secs. 15.11, 15.12, 15.13, 15.14, 15.15, 15.16, 15.17 and 15.18.
PART 15B--[REDESIGNATED AS SUBPART C OF PART 15 [Secs. 15.21-
15.25)]
5. Part 15b is redesignated as subpart C of part 15 consisting of
Secs. 15.21, 15.22, 15.23, 15.24, and 15.25.
6. In the regulatory text of newly designated subparts A, B, and C,
all references to ``part'' are redesignated to read ``subpart''.
7. In the regulatory text of newly designated subparts A, B, and C,
references are amended as indicated in the table below:
[[Page 19670]]
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Section Removed Added
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15.1(c).................................. Part 15a................... Subpart B.
15.16, introductory text................. 15a.1 through 15a.6........ 15.11 through 15.16.
15.17 (twice)............................ 15a.1 through 15a.8........ 15.11 through 15.18.
15.24(b)................................. 15b........................ 15.25.
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8. A new subpart D is added to part 15 to read as follows:
Subpart D--Statement of Policy and Procedures Regarding Indemnification
of Department of Commerce Employees
Sec.
15.31 Policy.
15.32 Procedures for the handling of lawsuits against Department
employees arising within the scope of their office or employment.
Subpart D--Statement of Policy and Procedures Regarding
Indemnification of Department of Commerce Employees
Sec. 15.31 Policy.
(a) The Department of Commerce may indemnify a present or former
Department employee who is personally named as a defendant in any civil
suit in state or federal court, or other legal proceeding seeking
damages against a present or former Department employee personally, for
any verdict, judgment or other monetary award which is rendered against
such employee, provided that the conduct giving rise to the verdict,
judgment or award was taken within the scope of his/her employment and
that such indemnification is in the interest of the Department as
determined by the Secretary or his/her designee.
(b) The Department may settle or compromise a personal damage claim
against a present or former employee by the payment of available funds
at any time provided the alleged conduct giving rise to the personal
property claim was taken within the employee's scope of employment and
such settlement is in the interest of the Department as determined by
the Secretary or his/her designee.
(c) Absent exceptional circumstances, as determined by the
Secretary or his/her designee, the Department will not consider a
request either to indemnify or to settle a personal damage claim before
entry of an adverse verdict, judgment or award.
(d) Any payment under this section either to indemnify a present or
former Department employee or to settle a personal damage claim shall
be contingent upon the availability of appropriated funds of the
Department of Commerce.
Sec. 15.32 Procedures for the handling of lawsuits against Department
employees arising within the scope of their office or employment.
The following procedures shall be followed in the event that a
civil action or proceeding is brought, in any court, against a present
or former employee of the Department (or against his/her estate) for
personal injury, loss of property or death, resulting from the
Department employee's activities while acting within the scope of his/
her office or employment:
(a) After being served with process or pleadings in such an action
or proceeding, the employee (or the executor(rix) or
administrator(rix)) of the estate shall within five (5) calendar days
of receipt, deliver all such process and pleadings or an attested true
copy thereof, together with a fully detailed report of the
circumstances of the incident giving rise to the court action or
proceeding to the General Counsel. Where appropriate, the General
Counsel, or his/her designee, may request that the Department of
Justice provide legal representation for the present or former
Department employee.
(b)(1) Only if a present or former employee of the Department has
satisfied the requirements of paragraph (a) of this section in a timely
fashion, may the employee subsequently request indemnification to
satisfy a verdict, judgment, or award entered against that employee.
(2) No request for indemnification will be considered unless the
employee has submitted a written request, with appropriate
documentation, including copies of the verdict, judgment, appeal bond,
award, or settlement proposal through the employee's supervisory chain
to the head of the employee's component. The written request will
include an explanation by the employee of how the employee was working
within the scope of employment and whether the employee has insurance
or any other source of indemnification.
(3) The head of the component or his/her designee will forward the
employee's request with a recommendation to the General Counsel for
review. The request for indemnification shall include a detailed
analysis of the basis for the recommendation. The head of the component
will also certify to the General Counsel that the component has funds
available to pay the indemnification.
(c) The General Counsel or his/her designee will review the
circumstances of the incident giving rise to the action or proceeding,
and all data bearing upon the question of whether the employee was
acting within the scope of his/her employment. Where appropriate, the
agency shall seek the views of the Department of Justice and/or the
U.S. Attorney for the district embracing the place where the action or
proceeding is brought.
(d) The General Counsel shall forward the request, the accompanying
documentation, and the General Counsel's recommendation to the
Secretary or his/her designee for decision.
Alden F. Abbott,
Assistant General Counsel for Finance and Litigation.
[FR Doc. 97-10487 Filed 4-22-97; 8:45 am]
BILLING CODE 3510-BW-P
