[Federal Register Volume 61, Number 148 (Wednesday, July 31, 1996)]
[Rules and Regulations]
[Pages 39901-39904]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-19493]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF TRANSPORTATION

Office of the Secretary

5 CFR Chapter L

49 CFR Part 99

RIN 3209-AA15


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

AGENCY: Office of the Secretary, DOT.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: The Department of Transportation, with the concurrence of the 
Office of Government Ethics (OGE), is issuing regulations for DOT 
employees that supplement the Standards of Ethical Conduct for 
Employees of the Executive Branch (Standards) issued by OGE. These 
regulations are a necessary supplement to the executive branch-wide 
Standards because they address ethics matters unique to DOT. In 
particular, they specify agency designees authorized to make 
determinations and grant approvals under the Standards, designate DOT 
components as separate agencies for purposes, in part, of the gift 
rules contained in the Standards, and prohibit employees of the Federal 
Railroad Administration and the Federal Aviation Administration, which 
are two administrations within DOT, from having certain financial 
interests.

EFFECTIVE DATE: These rules become effective: August 30, 1996.

FOR FURTHER INFORMATION CONTACT: William R. Register, Office of the 
General Counsel (C-10), Department of Transportation, 400 7th Street, 
S.W., Room 10102, Washington, D.C. 20590, (202) 366-9154.

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 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.
    Also, effective February 3, 1993, DOT canceled most of the 
regulations on Employee Responsibilities and Conduct in 49 CFR part 99 
which apply to DOT employees. See 58 FR 7993-7995. The remaining DOT 
regulations, which include post-employment guidance and regulatory 
conflict of interest waivers under 18 U.S.C. 208(b)(2), continue in 
effect pending issuance of superseding OGE regulations.
    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 Department 
of Transportation, with OGE's concurrence, has determined that the 
supplemental regulations in this rulemaking are necessary to the 
ongoing implementation of DOT's ethics program.

II. Analysis of the Regulations

Section 6001.101  General

    Section 6001.101 explains that the regulations contained in the 
final rules apply to DOT employees and are supplemental to the 
executive branch-wide standards. Employees of DOT 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.

[[Page 39902]]

Section 6001.102  Agency Designees

    Section 6001.102 explains that, within DOT, the ``agency 
designees'' are the Department's Designated Agency Ethics Official, the 
Alternate Agency Ethics Official, the Deputy Ethics Officials, and 
legal counsel in regional and other offices as designated by Deputy 
Ethics Officials. As defined in 5 CFR 2635.102(b), ``agency designees'' 
are employees having delegated authority to make determinations, give 
approvals, and take other action required or permitted by 5 CFR part 
2635.

Section 6001.103  Designation of Separate Agency Components

    5 CFR 2035.202(a) prohibits, inter alia, an employee from 
soliciting or accepting a gift from a prohibited source. A prohibited 
source is defined by 5 CFR 2635.203(d) to include a person who has a 
specific relationship with an employee's agency. For purposes of 
identifying an employee's agency, 5 CFR 2635.203(a) authorizes an 
executive department, by supplemental regulation, to designate as a 
separate agency a component of the department that exercises distinct 
and separate functions. Designations made pursuant to Sec. 2635.203(a) 
are used also for purposes of applying the prohibition in 5 CFR 
2635.807(a) against the receipt of compensation for teaching, speaking, 
or writing related to an employee's duties.
    Section 6001.103(a) designates eight administrations in the 
Department of Transportation as separate agency components. These 
designated agency components are the Federal Aviation Administration 
(FAA), Federal Highway Administration, Federal Railroad Administration 
(FRA), Federal Transit Administration, Maritime Administration, 
National Highway Traffic Safety Administration, Saint Lawrence Seaway 
Development Corporation, and United States Coast Guard. These 
designated agency components are generally recognized as separate 
agencies within DOT because they exercise separate and distinct 
functions. As further amplified in Sec. 6001.103(b), DOT employees not 
employed in one of these eight designated agency components are deemed 
to be employees of an agency that consists of all parts of the 
Department, other than the eight designated agency components, and that 
is separate and distinct from each of those agency components.
    Pursuant to the designations in Sec. 6001.103, an aircraft 
manufacturer, for example, would be a prohibited source for employees 
of the Federal Aviation Administration, but not for employees of the 
National Highway Traffic Safety Administration. Neither would the 
aircraft manufacturer be a prohibited source for employees in the 
Office of the Secretary, the Research and Special Programs 
Administration, or the Bureau of Transportation Statistics unless the 
manufacturer was seeking official action by one of those components, or 
otherwise had a matter pending before those components or had interests 
substantially affected by official duties of employees of those 
components.

Section 6001.104  Prohibited Financial Interests

    To assure public confidence in the integrity of the programs and 
operations of the FAA and FRA, both of these administrations have 
prohibited their employees, their spouses, and dependents, as matters 
of longstanding policy and practice, from having financial interests in 
entities subject to or substantially affected by regulations issued by 
those administrations. Pursuant to the Standards, at 5 CFR 2635.403(a), 
the supplemental regulations in Sec. 6001.104 continue in effect these 
longstanding prohibitions.
    The Standards, at 5 CFR 2635.403(a), provide that an individual 
agency may, by supplemental regulation, prohibit or restrict the 
acquisition or holding of a financial interest or a class of financial 
interests by its employees, and by the spouses and minor children of 
those employees, based on the agency's determination that the 
acquisition or holding of such financial interests would cause a 
reasonable person to question the impartiality and objectivity with 
which agency programs are administered. The FRA and FAA have made such 
determinations with respect to continuing in effect the above 
prohibitions. Also, determinations have been made, with respect to the 
spouses and minor children of FRA and FAA employees, that there 
continues to be a direct and appropriate nexus between the above 
prohibition as applied to spouses and minor children and the efficiency 
of the services provided by the FRA and FAA.
    The above prohibitions, as codified in section 6001.104, provide as 
follows:
    Section 6001.104(a)(1) prohibits FRA employees from owning stock or 
any other financial interest in a railroad company subject to FRA 
regulation.
    Section 6001.104(a)(2) prohibits FRA employees hired after December 
1991 from holding reemployment rights with a railroad company regulated 
by the FRA after their first year of employment. However, this 
prohibition does not extend to employees hired before January 1992. 
Most employees hired before January 1992 do not hold employment rights 
with former employers, except certain employees who have been allowed 
to retain those rights pursuant to judicial orders issued in American 
Federation of Government Employees, Local 2814 v. Andrew Card, 
Secretary of Transportation and Gilbert Carmichael, Administrator, 
Federal Railroad Administration, Civil Action No. 92-1853 (D.D.C. Oct. 
1, 1992).
    Section 6001.104(a)(3) prohibits the spouse or minor children of an 
FRA employee from holding stock or other securities interest in a 
railroad company subject to FRA regulation.
    Section 6001.104(b) prohibits FAA employees from holding stock or 
any other securities interest in an airline or aircraft manufacturing 
company, or in a supplier of components or parts to an airline or 
aircraft manufacturing company.
    Prohibiting the financial interests described in sections 
6001.104(a) and 6001.104(b) will maintain the FRA's and FAA's 
appearance of impartiality and objectivity in the execution of their 
regulatory functions; and will avoid inopportune disqualification of 
employees from official matters, resulting in an inability of the FRA 
and FAA to fulfill their regulatory functions.
    Section 6001.104(c) provides that the prohibitions in Sec. 6001.104 
(a)(1) and (b) against holding certain financial interests do not apply 
to financial interests held in a publicly traded or publicly available 
investment fund provided that, at the time of the employee's 
appointment or upon initial investment in the fund, whichever occurs 
later, the fund does not have invested more than 30 percent of its 
assets in a particular transportation or geographic sector and the 
employee neither exercises control or has the ability to exercise 
control over the financial interests held in the fund.
    Section 6001.104(d) provides that an employee, spouse, or minor 
child who acquires a financial interest that is subject to 
Sec. 6001.104, through gift, marriage, or inheritance, must divest the 
interest within a period set by the agency designee.

III. Amendment of Employee Responsibilities and Conduct Regulations

    To ensure that employees are on notice of the ethical standards to 
which they are subject, DOT is amending its remaining standards of 
conduct regulations at 49 CFR part 99 to include a provision that cross 
references 5 CFR parts 2634 and 2635 and the Department

[[Page 39903]]

of Transportation supplemental regulations at 5 CFR part 6001.

IV. Matters of Regulatory Procedure

Administrative Procedure Act

    The Department of Transportation has found that good cause exists 
under 5 U.S.C. 553 for waiving, as unnecessary and contrary to the 
public interest, the general requirements for a general notice of 
proposed rulemaking. As noted above, these supplemental rules are a 
restatement of current and longstanding policy and practices, and their 
continued effectiveness under OGE's rules is essential to the 
effectiveness of DOT's ethics program. In addition, these rules relate 
to agency organization, procedure, and practice, and to matters of 
agency management and personnel.

Executive Order 12866

    In promulgating this final regulation, the Department of 
Transportation 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 final rule has not 
been reviewed by the Office of Management and Budget under that 
Executive order.

Regulatory Flexibility Act

    The Department of Transportation has determined under the 
Regulatory Flexibility Act (5 U.S.C. chapter 6) that these regulations 
will not have a significant economic impact on a substantial number of 
small entities because they effect only DOT employees.

Paperwork Reduction Act

    These supplemental rules do not contain any information collection 
requirements that require the approval of the Office of Management and 
Budget pursuant to the Paperwork Reduction Act (44 U.S.C. 3501 et. 
seq.).

DOT Regulatory Policies and Procedures

    These supplemental rules are not significant under DOT Regulatory 
Policy and Procedures, 44 FR 11040, and their economic impact will be 
minimal. For this reason, further regulatory evaluation is not 
necessary.

Federalism Assessment: Executive Order 12012

    These rules have been analyzed in accordance with the principles 
and criteria contained in Executive Order 12012, and it has been 
determined that they do not have sufficient federalism implications to 
warrant the preparation of a Federalism Assessment. This is because the 
rules have no effect on State and local governments since they only 
apply to Federal employees. Furthermore, there are no reporting or 
recordkeeping requirements associated with this rulemaking.

List of Subjects

5 CFR Part 6001

    Conflict of interests, Government employees.

49 CFR Part 99

    Conflict of interests.

    Dated: July 8, 1996.
Federico Pena,
Secretary of Transportation.

    Approved: July 16, 1996.
Stephen D. Potts,
Director, Office of Government Ethics.

    For the reasons set forth in the preamble, the Department of 
Transportation, with the concurrence of the Office of Government 
Ethics, is amending title 5 of the Code of Federal Regulations and 
title 49, subtitle A, of the Code of Federal Regulations as follows:

TITLE 5--[AMENDED]

    1. A new Chapter L, consisting of part 6001, is added to title 5 of 
the Code of Federal Regulations to read as follows:

Chapter L--Department of Transportation

PART 6001--SUPPLEMENTAL STANDARDS OF ETHICAL CONDUCT FOR EMPLOYEES 
OF THE DEPARTMENT OF TRANSPORTATION

6001.101  General.
6001.102  Agency designees.
6001.103  Designation of separate agency components.
6001.104  Prohibited financial interests.

    Authority: 5 U.S.C. 301, 7301; 5 U.S.C. App. (Ethics in 
Government Act of 1978); 49 U.S.C. 322; 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, 2635.203(a), 2635.403(a), 
2635.807.


Sec. 6001.101  General.

    In accordance with 5 CFR 2635.105, the regulations in this part 
apply to employees of the Department of Transportation and supplement 
the Standards of Ethical Conduct for Employees of the Executive Branch 
contained in 5 CFR part 2635. In addition to the standards in 5 CFR 
part 2635, employees are subject to the executive branch financial 
disclosure regulations contained in 5 CFR part 2634.


Sec. 6001.102  Agency designees.

    For purposes of 5 CFR part 2635, the following Department of 
Transportation officials are agency designees within the meaning of 5 
CFR 2635.102(b):
    (a) The Designated Agency Ethics Official;
    (b) The Alternate Agency Ethics Official;
    (c) The Deputy Ethics Officials; and
    (d) As designated by Deputy Ethics Officials, legal counsel in 
regional and other offices.


Sec. 6001.103  Designation of separate agency components.

    (a) Pursuant to 5 CFR 2635.203(a), each of the following components 
of the Department of Transportation is designated as a separate agency 
for purpose of the regulations in subpart B of 5 CFR part 2635 
governing gifts from outside sources and Sec. 2635.807 of this title 
governing teaching, speaking, or writing:
    (1) Federal Aviation Administration;
    (2) Federal Highway Administration;
    (3) Federal Railroad Administration;
    (4) Federal Transit Administration;
    (5) Maritime Administration;
    (6) National Highway Traffic Safety Administration;
    (7) Saint Lawrence Seaway Development Corporation; and
    (8) United States Coast Guard.
    (b) Employees of Department of Transportation components not 
designated as separate agencies, including employees of the Office of 
the Secretary of Transportation, the Research and Special Programs 
Administration, and the Bureau of Transportation Statistics, will be 
treated as employees of DOT which shall be treated as a single agency 
that is separate from the above listed agencies for purposes of 
determining whether the donor of a gift is a prohibited source under 5 
CFR 2635.203(d) and for identifying the DOT employee's agency under 5 
CFR 2635.807 governing teaching, speaking, and writing.


Sec. 6001.104  Prohibited financial interests.

    (a) Federal Railroad Administration (FRA). (1) Except as provided 
in paragraph (c) of this section, no FRA employee shall hold stock or 
have any other financial interest, including outside employment, in a 
railroad company subject to FRA regulation.
    (2) No FRA employee appointed after December 1991 shall hold 
reemployment rights with a railroad company subject to FRA regulation 
after his or her first year of employment.
    (3) No spouse or minor child of an FRA employee shall hold stock or 
any other securities interest in a railroad company subject to FRA 
regulation.

[[Page 39904]]

    (b) Federal Aviation Administration (FAA). Except as provided in 
paragraph (c) of this section, no FAA employee, or spouse or minor 
child of the employee, may hold stock or have any other securities 
interest in an airline or aircraft manufacturing company, or in a 
supplier of components or parts to an airline or aircraft manufacturing 
company.
    (c) Exception. The prohibitions in paragraphs (a)(1) and (b) of 
this section do not apply to a financial interest in a publicly traded 
or publicly available investment fund, provided that, at the time of 
the employee's appointment or upon initial investment in the fund, 
whichever occurs later, the fund does not have invested, or indicate in 
its prospectus the intent to invest more than 30 percent of its assets 
in a particular transportation or geographic sector and the employee 
neither exercises control nor has the ability to exercise control over 
the financial interests held in the fund.
    (d) Period to divest. An individual subject to this section who 
acquires a financial interest subject to this section, as a result of 
gift, inheritance, or marriage, shall divest the interest within a 
period set by the agency designee. Until divestiture, the 
disqualification requirements of 5 CFR 2635.402 and 2635.502 remain in 
effect.

TITLE 49--[AMENDED]

Subtitle A--Office of the Secretary of Transportation

PART 99--EMPLOYEE RESPONSIBILITIES AND CONDUCT

    2. The authority citation for part 99 is revised to read as 
follows:

    Authority: 49 U.S.C. 322; 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.

    3. A new subpart A, consisting of Sec. 99.735-1, is added to read 
as follows:

Subpart A--General


Sec. 99.735-1  Cross-reference to ethical conduct standards and 
financial disclosure regulations.

    Employees of the Department of Transportation are subject to the 
executive branch-wide Standards of Ethical Conduct at 5 CFR part 2635, 
the Department of Transportation regulations at 5 CFR part 6001 which 
supplement the executive branch-wide standards and the executive 
branch-wide financial disclosure regulations at 5 CFR part 2634.

[FR Doc. 96-19493 Filed 7-30-96; 8:45 am]
BILLING CODE 4910-62-P