[Federal Register Volume 60, Number 112 (Monday, June 12, 1995)]
[Rules and Regulations]
[Pages 30778-30783]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-14216]



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FARM CREDIT ADMINISTRATION

5 CFR Part 4101

12 CFR Part 601

RIN 3052-AB50, 3209-AA15


Supplemental Standards of Ethical Conduct for Employees of the 
Farm Credit Administration

AGENCY: Farm Credit Administration (FCA or Agency).

ACTION: Interim rule; request for comments.

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SUMMARY: The Farm Credit Administration, with the concurrence of the 
Office of Government Ethics (OGE), is issuing as an interim rule 
regulations for the officers and employees of the FCA that supplement 
the Standards of Ethical Conduct for Employees of the Executive Branch 
(Executive Branch-wide Standards) issued by OGE. The interim rule is a 
necessary supplement to the Executive Branch-wide Standards because it 
addresses ethical issues unique to FCA programs and operations. The 
interim rule establishes regulations imposing prohibitions on the 
ownership of certain financial interests; prohibitions on certain forms 
of borrowing and extensions of credit; limitations on purchases of 
assets owned by Farm Credit System (System) institutions, 
conservatorship or receivership assets, or certain assets held by the 
Farm Credit System Insurance Corporation (Corporation); restrictions 
arising from the employment of relatives; a prohibition against 
involvement in Farm Credit System board member elections; and 
restrictions on outside employment and business activities. The FCA is 
also repealing its current regulations on these subjects and replacing 
them with a single section that provides cross-references to the 
Executive Branch-wide Standards and financial disclosure regulations, 
as well as these new supplemental regulations.

DATES: This interim rule is effective upon the expiration of 30 days 
after publication in the Federal Register during which either or both 
Houses of Congress are in session. Notice of effective date will be 
published in the Federal Register. Comments must be submitted on or 
before July 12, 1995.

ADDRESSES: Comments should be mailed or delivered (in triplicate) to 
Patricia W. DiMuzio, Associate Director, Regulation Development, Office 
of Examination, Farm Credit Administration, McLean, Virginia 22102-
5090. Copies of all comments will be available for examination by 
interested parties in Regulation Development, Office of Examination, 
Farm Credit Administration.

FOR FURTHER INFORMATION CONTACT:
Eric Howard, Policy Analyst, Regulation Development, Office of 
Examination, Farm Credit Administration, McLean, VA 22102-5090, (703) 
883-4498,

      or

Wendy R. Laguarda, Senior Attorney and Deputy Ethics Official, Office 
of General Counsel, Farm Credit Administration, McLean, VA 22102-5090, 
(703) 883-4234, TDD (703) 883-4444.

SUPPLEMENTARY INFORMATION:

I. Background

    On August 7, 1992, OGE published Executive Branch-wide Standards 
for employees of the executive branch. See 57 FR 35006-35067, as 
corrected at 57 FR 48557 and FR 52583, with additional grace period 
extensions at 59 FR 4779-4780 and 60 FR 6390-6391. The Executive 
Branch-wide Standards are 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 FCA, with 
OGE's concurrence, has determined, in light of the FCA's unique 
programs and operations, that the following supplemental regulations, 
being codified in new chapter XXXI, consisting of part 4101, of 5 CFR, 
are necessary to implement the Agency's ethics program successfully.

II. Analysis of the Regulations

Section 4101.101--General
    Section 4101.101 explains that the regulations contained in the 
interim rule apply to FCA employees and supplement the Executive 
Branch-wide Standards. Farm Credit Administration employees must comply 
with the Executive Branch-wide Standards, the supplemental regulations 
in this interim rule, and FCA guidance and procedures issued pursuant 
to the Executive Branch-wide Standards and these supplemental 
regulations.

Section 4101.102--Definitions

    Section 4101.102 identifies and defines the unique terms used in 
the supplemental regulations. The term ``covered employee'' is intended 
to include all FCA examiners and any other employee specified as such 
by FCA directive whose duties and responsibilities require application 
of these supplemental regulations to ensure public confidence that the 
FCA's programs are conducted impartially and objectively. The FCA 
Designated Agency Ethics Official (DAEO) or his or her designee, in 
consultation with the Office Directors, will determine which employees 
are covered for purposes of this regulation.
    The term ``related entity'' is intended to be broadly interpreted 
and includes agricultural mortgage marketing facilities established by 
System institutions, affiliates of the Federal Agricultural Mortgage 
Corporation, service organizations established by the System banks, and 
all other entities owned or controlled by one or more System 
institutions that are not chartered by the FCA.
    The term ``System institution'' refers to all institutions 
chartered and regulated by the FCA, and also includes the Federal Farm 
Credit Banks Funding Corporation and the Federal Agricultural Mortgage 
Corporation.

Section 4101.103--Prohibited Financial Interests

    (a) Prohibition. Section 4101.103(a) prohibits a covered employee, 
or a [[Page 30779]] spouse or minor child of a covered employee, from 
owning securities issued by a System institution or related entity.
    The FCA has determined, in accordance with 5 CFR 2635.403(a), that 
this restriction is necessary, in light of the Agency's sensitive 
regulatory, supervisory, examination, and enforcement functions, to 
maintain public confidence in the impartiality and objectivity with 
which the FCA executes its functions. The restriction will eliminate 
any reason for regulated entities to be concerned that sensitive 
information provided to the FCA might be misused for private gain and 
will avoid widespread disqualification of employees from official 
matters, which might result in the FCA's inability to fulfill its 
mission.
    (b) Definition of Securities. Section 4101.103(b) contains a 
definition of the term ``securities'' to be applied to Sec. 4101.103. 
It includes any ``interest in debt or equity instruments'' such as, for 
example, stocks, bonds, and commercial paper.
    (c) Exceptions. Section 4101.103(c) includes several exceptions to 
the prohibition in Sec. 4101.103(a) against owning securities issued by 
System institutions or related entities. The exceptions are intended to 
permit ownership interests of a character unlikely to raise questions 
regarding the objective and impartial performance of FCA employees' 
official duties or the possible misuse of their positions.
    Section 4101.103(c) (1) and (2) permits employees to retain System 
securities that are in certain funds or plans, the assets of which are 
managed by an independent third party and are not concentrated in 
System securities. Such funds may include a publicly traded or publicly 
available investment fund or an employee's interest in a qualified 
profit sharing, retirement, or similar plan.
    Section 4101.103(c)(3) permits employees to retain securities of 
System institutions held, in accordance with Sec. 4101.104(b), as a 
result of pre-existing credit. This exception is necessary because the 
System institutions are borrower-owned institutions that require 
eligible borrowers to purchase a minimum amount of an institution's 
stock as a condition of obtaining a loan. Thus, if an employee has pre-
existing credit from a System institution, he or she also will own 
stock in the institution, which is generally not retired until after 
the loan is paid off.
    Section 4101.103(c)(4) is included as a specific cross-reference to 
the waiver authority at Sec. 4101.109 which is to be used on a case-by-
case basis.

Section 4101.104--Prohibited Borrowing

    (a) Prohibition on Employee Borrowing. Section 4101.104(a) 
prohibits a covered employee, or a spouse or minor child of a covered 
employee, from seeking or obtaining a loan or extension of credit from 
a System institution or an officer, director, employee, or related 
entity of a System institution.
    Imposed pursuant to 5 CFR 2635.403(a), this prohibition on 
borrowing is necessary for several reasons. First, it is necessary to 
prevent covered employees from obtaining or appearing to obtain loans 
or extensions of credit on preferential terms, or from benefiting or 
appearing to benefit from their official positions through possible 
forbearance by the lender in collecting on the indebtedness. Public 
confidence in the impartiality and objectivity with which FCA programs 
are administered will be strengthened by prohibiting FCA employees from 
engaging in financial transactions with institutions regulated by the 
Agency. The borrowing prohibition also will help to ensure that FCA 
examiners and regulated institutions do not violate the prohibitions in 
18 U.S.C. 212 and 213 against the offer and acceptance of certain 
loans. Finally, limitations on FCA employees borrowing from regulated 
institutions will result in fewer employee disqualifications from 
official matters, thereby avoiding a situation that would have a 
detrimental effect on the FCA's ability to carry out its mission.
    (b) Exception. Section 4101.104(b) serves to clarify that 
Sec. 4101.104(a) only prohibits covered employees and their spouses and 
minor children from seeking or obtaining loans or extensions of credit. 
Thus, a covered employee, or a spouse or minor child of a covered 
employee, is not prohibited from retaining a loan from a System 
institution on its original terms if the loan was obtained prior to 
appointment to a covered employee position at FCA. The renewal or 
renegotiation of a pre-existing loan or extension of credit, however, 
will be treated as a new loan subject to the prohibition in 
Sec. 4101.104(a), but an employee may request, pursuant to the waiver 
provision in Sec. 4101.109, that an exception be made. Employees who 
retain pre-existing credit, by virtue of their own credit or credit of 
a spouse or minor child, will be required to disqualify themselves from 
participation in the regulation, supervision, examination, audit, 
visitation, review, investigation, or other particular matter involving 
the System institution providing the retained credit.

Section 4101.105--Purchase of System Institution Assets
    (a) Prohibition on Purchasing Assets Owned by a System Institution. 
Section 4101.105(a) prohibits a covered employee, or a spouse or minor 
child of a covered employee, from purchasing assets from a System 
institution or related entity. Assets sold by public auction or by a 
method that ensures that the asset is sold at its fair market value are 
exempt from this prohibition. Covered employees are required to obtain 
concurrence from the DAEO, however, about the applicability of this 
exemption.
    (b) Assets Held or Managed by the Farm Credit System Insurance 
Corporation or a Receiver or Conservator. Section 4101.105(b)(1) 
prohibits a covered employee, or a spouse or minor child of a covered 
employee, from purchasing assets held or managed by a receiver or 
conservator for a System institution or by the Corporation as a result 
of its provision of open bank assistance to troubled System banks 
regardless of how the asset is sold. This section prohibits the 
purchase of such assets held by a receiver or conservator appointed by 
the FCA prior to January 1, 1993, as well as assets held by the 
Corporation, which is the only entity FCA may appoint as receiver or 
conservator of troubled System institutions starting January 1, 1993.
    Section 4101.105(b)(2) requires a covered employee who is involved 
in the disposition of receivership or conservatorship assets to 
disqualify himself from a sales transaction when the employee becomes 
aware that anyone with whom he holds a covered relationship, as defined 
in Sec. 2635.502(b)(1) of the Executive Branch-wide Standards, is or 
will be attempting to acquire receivership or conservatorship assets.
    The prohibitions in Sec. 4101.105 are intended to supplement the 
provisions of 5 CFR 2635.702 regarding use of public office for private 
gain and to preserve public confidence in the impartiality and 
objectivity with which FCA programs and operations are administered. 
They are necessary to prevent employees from purchasing or appearing to 
purchase assets on preferential terms, or from benefiting or appearing 
to benefit from their official positions by purchasing assets based on 
information obtained in the course of the employees' performance of 
their official duties. [[Page 30780]] 

Section 4101.106--Restrictions Arising From the Employment of Relatives

    Section 4101.106 requires a covered employee to file a report of 
family member employment with his or her immediate supervisor, the 
ethics liaison in the office, and the DAEO if the covered employee's 
spouse or a relative who is dependent on or resides with the covered 
employee is employed with an entity specified in Sec. 4101.108(a). The 
employee would be disqualified from participating in any matter 
involving the employee's spouse or relative, or the employing entity, 
unless the employee received the appropriate authorization pursuant to 
the standard in Sec. 2635.502(d) of the Executive Branch-wide 
Standards.
    In effect, Sec. 4101.106 supplements Sec. 2635.502 of the Executive 
Branch-wide Standards, relating to impartial performance of official 
duties, and is necessary to ensure that the employment of a close 
family member by System institutions or related entities does not 
interfere with the objective and impartial execution of a covered 
employee's official duties. The requirements of Sec. 4101.106 will help 
to ensure public confidence in the FCA's execution of its mission.

Section 4101.107--Involvement in System Institution Board Member 
Elections

    Section 4101.107 prohibits those covered employees who own stock in 
a System institution, by virtue of retaining a pre-existing loan or 
extension of credit from a System institution in accordance with 
Sec. 4101.104(b), from participating in a stockholder nomination or 
election of a System institution's board members, other than by 
exercising their right to vote. In addition, this section prohibits 
covered employees from making any oral or written statements that could 
be reasonably construed as an attempt to influence a nomination or 
election.
    Section 4101.107 supplements Sec. 2635.702 of the Executive Branch-
wide Standards by prohibiting conduct that, given the broad power of 
the Agency over System institutions, is likely to give rise to an 
appearance of misuse of official authority.

Section 4101.108--Outside Employment and Business Activity

    (a) Prohibition. Section 4101.108(a) supplements Sec. 2635.802 of 
the Executive Branch-wide Standards by prohibiting covered employees 
from engaging in specified outside employment and activities. Covered 
employees are prohibited from performing paid or unpaid services for 
any System institution or related entity, or any officer, director, 
employee, or person connected with a System institution or related 
entity. This regulation is based, in part, on 18 U.S.C. 1909, which 
prohibits an FCA examiner from performing any service for compensation 
for any System institution or for any person connected therewith, such 
as persons working on a contract basis for a System institution. It is 
expanded to cover persons other than examiners in order to ensure that 
covered employees do not engage in outside activities that are likely 
to appear to interfere with the objective and impartial performance of 
their official duties.
    (b) General Requirement for Prior Approval. Pursuant to 
Sec. 2635.803 of the Executive Branch-wide Standards, agencies may, by 
supplemental regulation, require employees to obtain prior approval 
before engaging in outside employment or activities. Under 12 CFR 
601.101, FCA has required employees who engage in outside employment to 
seek prior approval. Based on its finding that this requirement has 
helped ensure that employees' outside activities conform to applicable 
statutes and regulations, FCA has determined that continuing this 
requirement is necessary for the purposes of its ethics program. Thus, 
Sec. 4101.108(b) requires all employees to obtain written approval from 
the DAEO before engaging in any outside employment, with or without 
compensation. This section also provides that 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 these supplemental regulations.
    (c) Definition. The term ``employment'' is broadly defined at 
Sec. 4101.108(c) to cover any form of non-Federal employment or 
business relationship involving the provision of personal services, 
including 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, and similar 
organizations for which no compensation is received other than 
reimbursement for necessary expenses.

Section 4101.109--Waivers

    Section 4101.109 gives the DAEO authority to grant a written waiver 
of any provision in part 4101 based upon a determination that the 
waiver is not inconsistent with law and the Executive Branch-wide 
Standards, and meets the waiver standard established in Sec. 4101.109. 
An employee may be required under the waiver to disqualify himself or 
herself from a particular matter or take other appropriate action.
    The waiver provision is intended, in appropriate cases, to ease the 
burden that the supplemental regulations may impose on the private 
lives of FCA employees, while ensuring that employees do not engage in 
actions that may interfere with the objective and impartial execution 
of their official duties or raise questions about possible misuse of 
their official positions.

III. Repeal of FCA Employee Responsibilities and Conduct Regulations

    On the effective date of the interim rule, the FCA's regulations on 
Employee Responsibilities and Conduct, 12 CFR part 601, will be amended 
to remove Secs. 601.100-601.102. A new Sec. 601.100 will be added to 
provide a cross-reference to FCA's supplemental ethical conduct 
regulation, to be codified at 5 CFR part 4101, and to the Executive 
Branch-wide financial disclosure and standards of ethical conduct 
regulations at 5 CFR parts 2634 and 2635. Most sections of 12 CFR part 
601 were removed and certain sections reserved by action of the FCA 
Board, dated January 25, 1993, 58 FR 5919.

IV. Matters of Regulatory Procedure

Administrative Procedure Act

    Pursuant to 5 U.S.C. 553 (b) and (d), the FCA finds good cause 
exists for waiving the general notice of proposed rulemaking and 30-day 
delay in effectiveness as to this interim final rule. The notice and 
delayed effective date are being waived because these supplemental 
regulations for FCA employees and their families concern matters of 
Agency organization, practice and procedure and because it is in the 
public interest that these supplemental regulations be effective as 
soon as possible. The FCA is, however, issuing these regulations as an 
interim rule, with a request for comments, and will consider any 
comments received when adopting the regulations in final form.

Executive Order 12866

    In promulgating these interim supplemental regulations, the FCA 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 interim rule deals with Agency organization, 
management, and personnel matters and [[Page 30781]] is, therefore, not 
deemed ``significant'' under Executive Order 12866.

Regulatory Flexibility Act

    It is hereby certified that this interim rule will not have 
significant economic impact on a substantial number of small entities. 
This rule affects only Federal employees and their immediate families.

Paperwork Reduction Act

    It is hereby certified that the Paperwork Reduction Act (44 U.S.C. 
chapter 35) does not apply because this regulation does not contain any 
information collection requirements that require the approval of the 
Office of Management and Budget.

List of Subjects

5 CFR Part 4101

    Conflicts of interests, Government employees.

12 CFR Part 601

    Conflict of interests.

    Dated: May 10, 1995.
Floyd Fithian,
Secretary, Farm Credit Administration.

    Approved: May 30, 1995.
Stephen D. Potts,
Director, Office of Government Ethics.

    For the reasons set forth in the preamble, the Farm Credit 
Administration, with the concurrence of the Office of Government 
Ethics, is amending title 5 of the Code of Federal Regulations and part 
601 of chapter VI, title 12, of the Code of Federal Regulations to read 
as follows:

Title 5--[Amended]

    1. A new chapter XXXI, consisting of part 4101, is added to title 5 
of the Code of Federal Regulations to read as follows:

CHAPTER XXXI--FARM CREDIT ADMINISTRATION

PART 4101--SUPPLEMENTAL STANDARDS OF ETHICAL CONDUCT FOR EMPLOYEES 
OF THE FARM CREDIT ADMINISTRATION

Sec.
4101.101  General.
4101.102  Definitions.
4101.103  Prohibited financial interests.
4101.104  Prohibited borrowing.
4101.105  Purchase of System institution assets.
4101.106  Restrictions arising from the employment of relatives.
4101.107  Involvement in System institution board member elections.
4101.108  Outside employment and business activity.
4101.109  Waivers.

    Authority: 5 U.S.C. 7301, 7353; 5 U.S.C. App. (Ethics in 
Government Act of 1978); 12 U.S.C. 2245(c)(2)(C), 2252; E.O. 12674, 
3 CFR, 1989 Comp., p. 215, as modified by E.O. 12731, 3 CFR, 1990 
Comp., p. 306; 5 CFR 2635.105, 2635.403(a), 2635.502, 2635.702, 
2635.802(a), 2635.803.


Sec. 4101.101  General.

    In accordance with 5 CFR 2635.105, the regulations in this part 
apply to Farm Credit Administration (FCA) employees and supplement the 
Standards of Ethical Conduct for Employees of the executive branch 
contained in 5 CFR part 2635. Employees are required to comply with 5 
CFR part 2635, this part, and Agency guidance and procedures 
established pursuant to 5 CFR 2635.105.


Sec. 4101.102  Definitions.

    For purposes of this part:
    (a) Covered employee means:
    (1) Examiners; and
    (2) Any other employee specified by FCA directive whose duties and 
responsibilities require application of these supplemental regulations 
to ensure public confidence that the FCA's programs are conducted 
impartially and objectively. The FCA Designated Agency Ethics Official 
(DAEO) or his or her designee, in consultation with the Office 
Directors, will determine which employees are covered for the purpose 
of this part.
    (b) Related entity means:
    (1) Affiliates defined in section 8.5(e) of the Farm Credit Act of 
1971, as amended (Act), 12 U.S.C. 2001 et seq., 12 U.S.C. 2279aa-5;
    (2) Affiliates defined in section 8.11(e) of the Act, 12 U.S.C. 
2279aa-11;
    (3) Service organizations authorized by section 4.25 of the Act, 12 
U.S.C. 2211; and
    (4) Any other entity owned or controlled by one or more Farm Credit 
System (System) institution that is not chartered by the FCA.
    (c) System institution refers to:
    (1) All institutions chartered and regulated by the FCA as 
described in section 1.2 of the Act, 12 U.S.C. 2002;
    (2) The Federal Farm Credit Banks Funding Corporation, established 
pursuant to section 4.9 of the Act, 12 U.S.C. 2160; and
    (3) The Federal Agricultural Mortgage Corporation, established 
pursuant to section 8.1 of the Act, 12 U.S.C. 2279aa-1.


Sec. 4101.103  Prohibited financial interests.

    (a) Prohibition. Except as provided in paragraph (c) of this 
section and Sec. 4101.109, no covered employee, or spouse or minor 
child of a covered employee, shall own, directly or indirectly, 
securities issued by a System institution or related entity.
    (b) Definition of securities. For purposes of this section, the 
term ``securities'' includes all interests in debt or equity 
instruments. The term includes, without limitation, secured and 
unsecured bonds, debentures, notes, securitized assets and commercial 
paper, as well as all types of preferred and common stock. The term 
encompasses both current and contingent ownership interests, including 
any beneficial or legal interest derived from a trust. It extends to 
any right to acquire or dispose of any long and short position in such 
securities and includes, without limitation, interests convertible into 
such securities, as well as options, rights, warrants, puts, calls, and 
straddles relating to such securities.
    (c) Exceptions. Nothing in this section prohibits a covered 
employee, or spouse or minor child of a covered employee, from:
    (1) Investing in a publicly traded or publicly available investment 
fund which, in its prospectus, does not indicate the objective or 
practice of concentrating its investments in the securities of System 
institutions or related entities, and the employee neither exercises 
control over nor has the ability to exercise control over the financial 
interests held in the fund;
    (2) Having a legal or beneficial interest in a qualified profit 
sharing, retirement, or similar plan, provided that the plan does not 
invest more than 25 percent of its funds in securities of System 
institutions or related entities, and the employee neither exercises 
control over nor has the ability to exercise control over the financial 
interests held in the plan;
    (3) Owning securities of System institutions held as a result of 
pre-existing credit, as specified in Sec. 4101.104(b); or
    (4) Owning any security pursuant to a waiver granted under 
Sec. 4101.109.


Sec. 4101.104  Prohibited borrowing.

    (a) Prohibition on employee borrowing. Except as provided in 
paragraph (b) of this section, no covered employee, or spouse or minor 
child of a covered employee, shall seek or obtain any loan or extension 
of credit from a System institution or from an officer, director, 
employee, or related entity of a System institution.
    (b) Exception. This section does not prohibit a covered employee, 
or spouse or minor child of a covered employee, from retaining a loan 
from a System institution on its original terms if the loan was 
obtained prior to appointment [[Page 30782]] to a covered employee 
position. For loans retained pursuant to this paragraph, a covered 
employee shall submit to his or her immediate supervisor, the ethics 
liaison in his or her office, and the DAEO, a written disqualification 
from examining, auditing, visiting, reviewing, investigating, or 
otherwise participating in the supervision of the System institution 
that is providing the retained credit. Written disqualification shall 
be made within 30 days of appointment to a covered employee position on 
a form prescribed by the DAEO. Any renewal or renegotiation of a pre-
existing loan or extension of credit will be treated as a new loan 
subject to the prohibition in paragraph (a) of this section.


Sec. 4101.105  Purchase of System institution assets.

    (a) Prohibition on purchasing assets owned by a System institution. 
No covered employee, or spouse or minor child of a covered employee, 
shall purchase, directly or indirectly, an asset (such as real 
property, vehicles, furniture, or similar items) from a System 
institution or related entity, unless it is sold at a public auction or 
by other means which assure that the selling price is the asset's fair 
market value. A covered employee shall obtain concurrence from the DAEO 
about whether a proposed purchase of a System institution asset is 
proper.
    (b) Assets held or managed by the Farm Credit System Insurance 
Corporation or a receiver or conservator--(1) Prohibition on purchase. 
No covered employee, or spouse or minor child of a covered employee, 
shall purchase, directly or indirectly, an asset (such as real 
property, vehicles, furniture, or similar items) that is held or 
managed by a receiver or conservator for a System institution or that 
is held by the Farm Credit System Insurance Corporation (Corporation) 
as a result of its provision of open bank assistance to troubled System 
banks regardless of how the asset is sold.
    (2) Disqualification. A covered employee who is involved in the 
disposition of receivership or conservatorship assets, or assets 
acquired by the Corporation as a result of its provision of open bank 
assistance to troubled System banks, shall disqualify himself or 
herself from participation in the disposition of such assets when the 
employee becomes aware that anyone with whom the employee has a covered 
relationship, as defined in Sec. 2635.502(b)(1) of the Executive 
Branch-wide Standards, is or will be attempting to acquire such assets. 
The employee shall provide written notification of the disqualification 
to his or her immediate supervisor, the ethics liaison in his or her 
office, and the DAEO.


Sec. 4101.106  Restrictions arising from the employment of relatives.

    When the spouse of a covered employee, or other relative who is 
dependent on or resides with a covered employee, is employed in a 
position that the employee would be prohibited from occupying by 
Sec. 4101.108(a), the employee shall file a report of family member 
employment with his or her immediate supervisor, the ethics liaison in 
his or her office, and the DAEO on a form prescribed by the DAEO. 
Notice shall be made as soon as possible after learning about 
employment already in existence or in advance of known prospective 
employment. The employee shall be disqualified from participation in 
any matter involving the employee's spouse or relative, or the 
employing entity, unless the DAEO authorizes the employee to 
participate in the matter using the standard in Sec. 2635.502(d) of the 
Executive Branch-wide Standards.
Sec. 4101.107  Involvement in System institution board member 
elections.

    No covered employee who is able to participate in a System 
institution board election because of System securities owned by virtue 
of retaining a pre-existing loan or extension of credit from a System 
institution in accordance with Sec. 4101.104(b) shall take any part, 
directly or indirectly, in the nomination or election of a board member 
of a System institution, other than by exercising the right to vote. In 
addition, a covered employee shall not make any oral or written 
statement that may be reasonably construed as intending to influence 
any vote in such nominations or elections.


Sec. 4101.108  Outside employment and business activity.

    (a) Prohibition. No covered employee shall perform services, either 
on a paid or unpaid basis, for any System institution or related 
entity, or any officer, director, employee, or person connected with a 
System institution or related entity. Nothing in this section would 
prohibit covered employees from providing any service that is a part of 
their official duties.
    (b) General requirement for prior approval. All employees shall 
obtain prior written approval before engaging in any outside employment 
or business activity, with or without compensation, unless the outside 
activity is exempt from the definition of ``employment'' as set forth 
in paragraph (c) of this section. An employee proposing to engage in 
outside employment and business activities is required, prior to 
commencement, to send a written notice of the proposed employment or 
activity to the DAEO on a form prescribed by the DAEO. Approval shall 
be granted only upon a determination that the employment or activity is 
not expected to involve conduct prohibited by statute, part 2635 of 
this title, or paragraph (a) of this section.
    (c) Definition. 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 a nonprofit 
charitable, religious, professional, social, fraternal, educational, 
recreational, public service, or civic organization for which no 
compensation is received other than reimbursement for necessary 
expenses.


Sec. 4101.109  Waivers.

    The DAEO may grant a written waiver from any provision of this part 
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 provision 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.
12 CFR CHAPTER VI--FARM CREDIT ADMINISTRATION
    2. Part 601 is revised to read as follows:

PART 601--EMPLOYEE RESPONSIBILITIES AND CONDUCT

    Authority: 5 U.S.C. 7301; 12 U.S.C. 2243, 2252.


Sec. 601.100  Cross-references to employee ethical conduct standards 
and financial disclosure regulations.

    Board members, officers, and other employees of the Farm Credit 
Administration are subject to the [[Page 30783]] Standards of Ethical 
Conduct for Employees of the Executive Branch at 5 CFR part 2635, the 
Farm Credit Administration regulation at 5 CFR part 4101, which 
supplements the Executive Branch-wide Standards, and the executive 
branch-wide financial disclosure regulations at 5 CFR part 2634.

[FR Doc. 95-14216 Filed 6-9-95; 8:45 am]
BILLING CODE 6705-01-P