[Federal Register Volume 61, Number 130 (Friday, July 5, 1996)]
[Rules and Regulations]
[Pages 35085-35088]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-17115]



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  Federal Register / Vol. 61, No. 130 / Friday, July 5, 1996 / Rules 
and Regulations  

[[Page 35085]]



DEPARTMENT OF ENERGY

5 CFR Chapter XXIII

10 CFR Part 1010

RINs 1990-AA04, 3209-AA15


Supplemental Standards of Ethical Conduct for Employees of the 
Department of Energy

AGENCY: Department of Energy (DOE).

ACTION: Interim final rule with invitation for comments.

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SUMMARY: The Department of Energy, with the concurrence of the Office 
of Government Ethics (OGE), is issuing a regulation for employees of 
DOE that supplements the Standards of Ethical Conduct for Employees of 
the Executive Branch issued by OGE. This interim rule is a necessary 
supplement to the Standards because it addresses ethical issues unique 
to DOE. The supplemental regulation requires DOE employees to seek 
approval from management prior to engaging in certain outside 
activities. The supplemental regulation also requires employees to 
document recusals in writing. DOE is also revising its residual 
standards regulation in its own CFR title and adding a cross-reference 
to the new provisions.

DATES: These regulations take effect July 5, 1996. Comments must be 
received on or before September 3, 1996.

ADDRESSES: All comments concerning these regulations should be 
addressed to Susan Beard (Deputy Assistant General Counsel for 
Standards of Conduct), Office of the Assistant General Counsel for 
General Law, GC-80, U.S. Department of Energy, 1000 Independence 
Avenue, SW, Washington, DC 20585.

FOR FURTHER INFORMATION CONTACT: Susan Beard (Deputy Assistant General 
Counsel for Standards of Conduct), Office of the Assistant General 
Counsel for General Law, GC-80, U.S. Department of Energy, 1000 
Independence Avenue, SW, Washington, DC 20585, telephone 202-586-1522.

SUPPLEMENTARY INFORMATION:

I. Background

    On August 7, 1992, OGE published the Standards of Ethical Conduct 
for Employees of the Executive Branch. See 57 FR 35006-35067, as 
corrected at 57 FR 48557, 57 FR 52583, and 60 FR 51667, with additional 
grace period extensions at 59 FR 4779-4780, 60 FR 6390-6391 and 60 FR 
66857-66858. The Standards, codified at 5 CFR part 2635 and effective 
February 3, 1993, establish uniform standards of ethical conduct 
applicable to all executive branch personnel.
    With the concurrence of OGE, 5 CFR 2635.105 authorizes executive 
agencies to publish agency-specific supplemental regulations that are 
necessary to implement an agency's ethics program. DOE, with OGE's 
concurrence, has determined that the following supplemental rules, 
being codified in new chapter XXIII of 5 CFR, consisting of part 3301, 
are necessary for successful implementation of DOE's ethics program.

II. Analysis of the Regulations

Section 3301.101  General

    Section 3301.101 explains that the regulations contained in the 
interim rule apply to all employees of the Department of Energy, with 
the exception of employees of the Federal Energy Regulatory Commission, 
and are supplemental to the uniform executive branch standards at 5 CFR 
part 2635. The Federal Energy Regulatory Commission was established as 
part of DOE by sections 204 and 401 of the Department of Energy 
Organization Act (Pub. L. 95-91, codified at 42 U.S.C. 7134 & 7171). 
Section 401(d) of that Act specifies that employees of the Federal 
Energy Regulatory Commission shall not be subject to supervision or 
direction of any officer, employee, or agent of any other part of DOE. 
Accordingly, employees of the Federal Energy Regulatory Commission are 
not subject to these regulations.
    This section also notes that DOE employees are subject to the 
executive branch financial disclosure regulations at 5 CFR part 2634, 
and additional rules of conduct published in 5 CFR part 735 and DOE's 
Conduct of Employees Regulation at 10 CFR part 1010. In addition, this 
section contains definitions of the terms used in this part. ``Agency 
designee'' is defined as an employee's immediate supervisor. This 
supplement to the definition of this term at 5 CFR 2635.102(b) is 
needed so that DOE employees know how to contact their agency designee. 
This section also defines the term ``counselor,'' a term that has 
historically been used at DOE, to identify the persons primarily 
responsible for providing counseling on ethics and standards of conduct 
matters.

Section 3301.102  Procedure for Accomplishing Disqualification

    Section 3301.102 of the interim rule supplements the Standards for 
disqualification contained in 5 CFR part 2635 by requiring written 
notice of employee disqualifications under 5 CFR 2635.402(c), 
2635.502(e) and 2635.604. In the past, it has been DOE's practice to 
require a written notice of employee disqualification. DOE has 
determined that it is necessary to the success of its ethics program to 
continue its procedures for written notice of employee 
disqualification. DOE recognizes the problems noted by the Office of 
Government Ethics in adopting a requirement for written notice of 
disqualification on an executive branch-wide basis. See 57 FR 35024. It 
is not DOE's purpose to impose an overly technical requirement that 
would result in disciplining an employee for failure to provide written 
notice by some arbitrary deadline. Thus, the notice requirement imposed 
by this regulation is phrased to give an employee flexibility in 
determining precisely when the employee will give notice of 
disqualification from a matter to which the employee has been assigned. 
Notice is to be given when the employee determines that he or she will 
not participate in the matter. In no way does the notice requirement 
affect the employee's obligation not to participate in the matter.

Section 3301.103  Prior Approval for Outside Employment

    The Standards, at 5 CFR 2635.803, recognize that individual 
agencies may find it necessary or desirable to

[[Page 35086]]

supplement the executive branch-wide regulations with a requirement 
that their employees obtain approval prior to engaging in outside 
activities. Pursuant to 10 CFR 1010.204, which is being repealed in 
this rulemaking document, the Department of Energy has long required 
employees, other than special Government employees, to provide written 
notification, and in some cases, to obtain written permission before 
engaging in certain outside activities or employment. The Department 
has found this requirement useful in ensuring that employees' outside 
activities conform to all applicable laws and regulations, and, in 
accordance with 5 CFR 2635.803, has determined that it is necessary to 
the administration of its ethics program to require any employee of DOE 
who wants to engage in outside employment to obtain prior approval of 
such activity from the employee's supervisor and the counselor.
    Accordingly, new Sec. 3301.103(a) imposes a requirement on 
employees to obtain written approval from their immediate supervisors 
before engaging in such activities, and describes what must be 
contained in the approval form. To ensure that this provision is not 
itself construed as authority to deny permission to engage in any 
outside activity, Sec. 3301.103(b) specifies that approval will be 
granted unless the activity is expected to involve conduct prohibited 
by statute or regulation. Section 3301.103(c) defines outside 
``employment'' to include any non- Federal employment involving the 
provision of personal services by the employee.

III. Repeal and Revision of Department of Energy Conduct of 
Employees Regulations

    On November 30, 1993, the National Defense Authorization Act for 
Fiscal Year 1994 was enacted. Pub. L. 103-160, sec. 3161. That statute 
repealed certain statutory conflict-of-interest provisions applicable 
to DOE employees. On February 10, 1996, the National Defense 
Authorization Act for Fiscal Year 1996 was enacted. Public Law 104-106. 
That statute repealed the remaining statutory conflict-of-interest 
provisions that were unique to DOE. Accordingly, DOE is repealing the 
regulatory provisions in 10 CFR part 1010 implementing the repealed 
statutory provisions. This repeal also applies to those provisions of 
part 1010 that were applicable to the Federal Energy Regulatory 
Commission (FERC). The FERC is an independent regulatory commission 
within the DOE and, to an extent, is subject to DOE rulemaking 
authority. 42 U.S.C. Secs. 7134, 7171, & 7254. The FERC has agreed to 
DOE's repeal of this provision, and FERC has indicated its intention to 
publish its own supplemental regulations pursuant to its own regulatory 
authority.
    Because much of the remainder of 10 CFR part 1010, DOE's Conduct of 
Employees regulation, is largely superseded by new chapter XXIII of 
title 5, as added by this rulemaking, and the provisions of 5 CFR part 
2635, DOE is herewith amending part 1010 to remove the existing 
provisions, with the exception of the provisions concerning reporting 
fraud, waste, abuse, and corruption, cooperation with the Inspector 
General, and the conflict of interest waiver for widely diversified 
mutual funds. The latter provision will only remain in effect until the 
Office of Government Ethics publishes final regulations on 18 U.S.C. 
208 (at which time DOE will repeal the residual waiver provision at 
Sec. 1010.105). A new cross-reference provision is also being added to 
part 1010 to refer to the executive branch-wide Standards and financial 
disclosure regulation as well as the new DOE supplemental standards 
regulation.

Section 1010.101  General

    Section 1010.101 explains that these regulations apply to DOE 
employees, excluding employees of the Federal Energy Regulatory 
Commission.

Section 1010.102  Cross Reference to Employee Ethical Conduct Standards 
and Financial Disclosure Regulations

    Section 1010.102 provides cross-references to the executive branch-
wide Standards at 5 CFR part 2635, to DOE's new supplemental regulation 
at 5 CFR part 3301, to the executive branch financial disclosure 
regulation at 5 CFR part 2634, and to the executive branch-wide 
employee responsibilities and conduct regulation at 5 CFR part 735.

Section 1010.103  Reporting Fraud, Waste, Abuse, and Corruption

    Section 1010.103 assists employees in adhering to the general 
principle of ethical conduct at 5 CFR 2635.101(b)(11), under which an 
employee shall disclose waste, fraud, abuse, and corruption to 
appropriate authorities. It identifies the Department's Office of 
Inspector General as an authority to which it would be appropriate for 
an employee to disclose waste, fraud, abuse, and corruption. In 
addition, this section institutes a procedure by which appropriate 
authorities within the Department who receive such allegations that 
involve the ethical restrictions cross-referenced in Sec. 1010.102 of 
this part shall refer those allegations to the designated agency ethics 
official or his delegatee, or the Inspector General.

Section 1010.104  Cooperation with the Inspector General

    This section requires employees to cooperate with official 
inquiries. Section 2(1) & (2) of the Inspector General Act, 5 U.S.C. 
app. sec. 2, provides that the Inspector General shall be responsible 
for conducting investigative activities relating to the promotion of 
economy and efficiency in the administration of, or the detection and 
prevention of fraud and abuse in, programs and operations of the 
Department. This regulation is intended to facilitate such activities 
and those activities provided for in section 6 of the Inspector General 
Act, including accessing materials and information with respect to 
agency programs and operations.

Section 1010.105  Conflict of Interest Waiver

    This section grandfathers an existing exemption to the prohibition 
of 5 CFR 2635.402(a). It exempts ownership of stock in a widely 
diversified mutual fund or other regulated investment company that in 
turn owns stock in, or bonds of, another enterprise. This provision 
will be repealed by DOE when the Office of Government Ethics publishes 
its final regulation on 18 U.S.C. 208.

IV. Matters of Regulatory Procedure

Review Under Executive Order 12866

    Today's regulatory action has been determined by the Department of 
Energy not to be a ``significant regulatory action'' under Executive 
order 12866,

[[Page 35087]]

``Regulatory Planning and Review,'' (58 FR 51735, October 4, 1993). 
Accordingly, today's action was not subject to review under the 
Executive order by the Office of Information and Regulatory Affairs.

Review Under the Regulatory Flexibility Act

    Pursuant to section 605 of the Regulatory Flexibility Act (Pub. L. 
96-354), it is hereby certified that the interim final rule will not 
have a significant economic impact on a substantial number of small 
entities within the meaning of the Act. It is related solely to 
internal agency organization, management, or personnel.

Review Under the National Environmental Policy Act

    This rule revises DOE's regulations on standards of conduct. It 
will not change the environmental effects of the regulations being 
amended. The Department has therefore determined that the rule is 
covered under the Categorical Exclusion found at paragraph A.5 of 
appendix A to subpart D, 10 CFR part 1021, which applies to rulemakings 
interpreting or amending an existing rule. Accordingly, neither an 
environmental assessment nor an environmental impact statement is 
required.

Review Under the Paperwork Reduction Act

    This interim final rule does not impose a ``collection of 
information'' requirement, as defined in 44 U.S.C. 3502(4).

Review Under Executive Order 12988

    Section 3 of Executive order 12988 on Civil Justice Reform, 61 FR 
4729 (February 7, 1996), instructs each agency to adhere to certain 
requirements in promulgating new regulations. These requirements, set 
forth in section 3(a) and (b), include eliminating drafting errors and 
needless ambiguity, drafting the regulations to minimize litigation, 
providing clear and certain legal standards for affected legal conduct, 
and promoting simplification and burden reduction. Agencies are also 
instructed to make every reasonable effort to ensure that regulation 
describes any administrative proceeding to be available prior to 
judicial review and any provisions for the exhaustion of administrative 
remedies. The Department has determined that today's regulatory action 
meets the requirements of sections 3(a) and (b) of Executive order 
12988.

Administrative Procedure Act

    Since these interim final regulations relate to agency management 
and personnel, they are exempt from notice and comment rulemaking 
requirements under the Administrative Procedure Act. 5 U.S.C. 
Sec. 553(a). Accordingly, DOE is neither giving prior notice nor 
providing for a 30-day hiatus between the date of publication and the 
date the regulations take effect. However, DOE will consider public 
comments made within 60 days after the publication of this interim 
final rule.

Congressional Notification

    The Small Business Regulatory Enforcement Fairness Act of 1996 
requires agencies to report to Congress on the promulgation of certain 
final rules prior to their effective dates. 5 U.S.C. 801. That 
reporting requirement does not apply to the interim final rule in this 
notice because it falls within a statutory exception for rules relating 
to agency management personnel. 5 U.S.C. 804(3)(B).

List of Subjects

5 CFR Part 3301

    Conflict of interests, Government employees, Energy Department, 
Standards of conduct.

10 CFR Part 1010

    Conflicts of interest, Government employees, Energy Department, 
Standards of conduct.

    Issued in Washington, DC, June 28, 1996.
Robert R. Nordhaus,
General Counsel, Department of Energy.

    Approved: June 28, 1996.
F. Gary Davis,
Deputy Director, Office of Government Ethics.

    For the reasons set forth in the preamble, title 5 and chapter X of 
title 10 of the Code of Federal Regulations are amended as follows:

TITLE 5--[AMENDED]

    1. A new chapter XXIII, consisting of part 3301, is added to title 
5 of the Code of Federal Regulations to read as follows:

5 CFR Chapter XXIII--Department of Energy

PART 3301--SUPPLEMENTAL STANDARDS OF ETHICAL CONDUCT FOR EMPLOYEES 
OF THE DEPARTMENT OF ENERGY

Sec.
3301.101  General.
3301.102  Procedure for accomplishing disqualification.
3301.103  Prior approval for outside employment.

    Authority: 5 U.S.C. 301, 7301; 5 U.S.C. App. (Ethics in 
Government Act); 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, 2635.402(c), 2635.502(e), 2635.604, 2635.802, 
2635.803.


Sec. 3301.101  General.

    (a) Purpose. The regulations in this part apply to employees of the 
Department of Energy (DOE), excluding employees of the Federal Energy 
Regulatory Commission, and supplement the Standards of Ethical Conduct 
for Employees of the Executive Branch contained in 5 CFR part 2635. DOE 
employees are also subject to the regulations on financial disclosure 
contained in 5 CFR part 2634, and to additional regulations on 
responsibilities and conduct at 5 CFR part 735, and DOE specific 
provisions contained in 10 CFR part 1010.
    (b) Definitions. Unless a term is otherwise defined in this part, 
the definitions set forth in 5 CFR part 2635 apply to terms used in 
this part. In addition, for purposes of this part:
    Agency designee, as used also in 5 CFR part 2635, means the 
employee's immediate supervisor and, for purposes of the approval 
required by Sec. 3301.103(a), includes the Counselor.
    Counselor means the DOE's designated agency ethics official or his 
delegates.


Sec. 3301.102  Procedure for accomplishing disqualification.

    (a) Disqualifying financial interests. A DOE employee who is 
required, in accordance with 5 CFR 2635.402(c), to disqualify himself 
from participation in a particular matter to which he has been assigned 
shall, notwithstanding the guidance in 5 CFR 2635.402(c)(1) and

[[Page 35088]]

(2), provide written notice of disqualification to his supervisor and 
counselor upon determining that he will not participate in the matter.
    (b) Disqualification to ensure impartiality. A DOE employee who is 
required, in accordance with 5 CFR 2635.502(e), to disqualify himself 
from participation in a particular matter involving specific parties to 
which he has been assigned shall, notwithstanding the guidance in 5 CFR 
2635.502(e)(1) and (2), provide written notice of disqualification to 
his supervisor and counselor upon determining that he will not 
participate in the matter.
    (c) Disqualification from matter effecting prospective employers. A 
DOE employee who is required, in accordance with 5 CFR 2635.604(a), to 
disqualify himself from participation in a particular matter to which 
he has been assigned shall, notwithstanding the guidance in 5 CFR 
2635.604(b) and (c), provide written notice of disqualification to his 
supervisor and counselor upon determining that he will not participate 
in the matter.
    (d) Withdrawal of notification. A DOE employee may withdraw written 
notice under paragraphs (a), (b), or (c) of this section upon deciding 
that disqualification from participation in the matter is no longer 
required. A withdrawal of notification shall be in writing and provided 
to the employee's supervisor and counselor.


Sec. 3301.103  Prior approval for outside employment.

    (a) Prior approval requirement. Before engaging in any outside 
employment, whether or not for compensation, an employee, other than a 
special Government employee, must obtain written approval of his 
immediate supervisor and the Counselor. Requests for approval shall 
include the name of the person, group or organization for whom the work 
is to be performed; the type of work to be performed; and the proposed 
hours of work and approximate dates of employment.
    (b) Standard for approval. Approval shall be granted unless there 
is a determination that the outside employment is expected to involve 
conduct prohibited by statute or Federal regulation, including 5 CFR 
part 2635.
    (c) Definition of employment. For purposes of this section, 
``employment'' means any form of non-Federal employment or business 
relationship involving the provision of personal services by the 
employee. It includes but is not limited to personal services as an 
officer, director, trustee, general partner, agent, attorney, 
consultant, contractor, employee, advisor, or teacher. It does not 
include participating in the activities of a nonprofit, charitable, 
religious, public service or civic organization, unless such activities 
involve the provision of professional services or are for compensation.

TITLE 10--ENERGY

Chapter X--Department of Energy (General Provisions)

    2. 10 CFR part 1010 is revised to read as follows:

PART 1010--CONDUCT OF EMPLOYEES

Sec.
1010.101  General.
1010.102  Cross-reference to employee ethical conduct standards and 
financial disclosure regulations.
1010.103  Reporting wrongdoing.
1010.104  Cooperation with the Inspector General.
1010.105  Conflict of interest waiver.

    Authority: 5 U.S.C. 301, 303; 5 U.S.C. App. (Inspector General 
Act of 1978); 18 U.S.C. 208; and 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.


Sec. 1010.101  General.

    This part applies to employees of the Department of Energy (DOE), 
excluding employees of the Federal Energy Regulatory Commission.


Sec. 1010.102  Cross-reference to employee ethical conduct standards 
and financial disclosure regulations.

    Employees of DOE are subject to the Standards of Ethical Conduct 
for Employees of the Executive Branch at 5 CFR part 2635, the DOE 
regulation at 5 CFR part 3301 which supplements the executive branch-
wide standards, the executive branch-wide financial disclosure 
regulations at 5 CFR part 2634, and the executive branch-wide employee 
responsibilities and conduct regulation at 5 CFR part 735.


Sec. 1010.103  Reporting wrongdoing.

    (a) Employees shall, in fulfilling the obligation of 5 CFR 
2635.101(b)(11), report fraud, waste, abuse, and corruption in DOE 
programs, including on the part of DOE employees, contractors, 
subcontractors, grantees, or other recipients of DOE financial 
assistance, to the Office of Inspector General or other appropriate 
Federal authority.
    (b) All alleged violations of the ethical restrictions described in 
section 1010.102 that are reported in accordance with (a) of this 
section to an appropriate authority within the Department shall in turn 
be referred by that authority to the designated agency ethics official 
or his delegatee, or the Inspector General.


Sec. 1010.104  Cooperation with the Inspector General.

    Employees shall respond to questions truthfully under oath when 
required, whether orally or in writing, and must provide documents and 
other materials concerning matters of official interest. An employee is 
not required to respond to such official inquiries if answers or 
testimony may subject the employee to criminal prosecution.


Sec. 1010.105  Conflict of interest waiver.

    If a financial interest arises from ownership by an employee, or 
other person or enterprise referred to in 5 CFR 2635.402(b)(2), of 
stock in a widely diversified mutual fund or other regulated investment 
company that in turn owns stock in, or bonds of, another enterprise, 
that financial interest is exempt from the prohibition of 5 CFR 
2635.402(a).

[FR Doc. 96-17115 Filed 7-3-96; 8:45 am]
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