[Federal Register Volume 63, Number 62 (Wednesday, April 1, 1998)]
[Rules and Regulations]
[Pages 15758-15760]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-8479]


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FEDERAL TRADE COMMISSION

16 CFR Part 4


Appearances Before the Commission; Restrictions and Public 
Disclosure Requirements.

AGENCY: Federal Trade Commission (FTC).

ACTION: Final rule.

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SUMMARY: The Commission is amending its rules to make more efficacious 
the procedures by which the General Counsel reaches determinations on 
requests by former employees for clearance to participate in Commission 
matters. The revised procedures are intended to provide for effective 
review of the propriety of a former employee's participation in a 
particular matter while reducing the paperwork and resources needed to 
dispose of clearance requests. These amendments also clarify the rule's 
terms and procedures, eliminate certain inconsistencies, and correct 
one provision.

EFFECTIVE DATE: These amendments are effective April 1, 1998.

FOR FURTHER INFORMATION CONTACT: Ira S. Kaye, 202-326-2426, or Laura D. 
Berger, 202-326-2471, Attorneys, Office of the General Counsel, FTC, 
Sixth Street & Pennsylvania Avenue, N.W., Washington, D.C. 20580.

SUPPLEMENTARY INFORMATION: The Commission is revising paragraph (b) of 
Commission Rule 4.1, 16 CFR 4.1, to shorten the time for determining a 
former employee's request for clearance to participate in a Commission 
matter from 15 to 10 business days, and to provide that either the 
General Counsel or the General Counsel's designee has the authority to 
make this determination. Shortening the waiting period from the present 
15 business days to 10 business days is designed to benefit filers and 
their clients, as well as the Commission's ability to resolve 
administrative actions and investigations promptly.
    In addition, the Commission is further revising Rule 4.1(b) to 
simplify its terms and requirements, to eliminate certain 
inconsistencies, and to correct one error. Finally, the Commission is 
modifying the exceptions to the rule in order to make them consistent 
with the provisions of 18 U.S.C. 207. The Commission also is amending 
paragraph (c) of the Rule slightly, to make it consistent with revised 
paragraph (b).
    Apart from these revisions, the changes will affect internal 
procedures only, and are not intended to influence the outcomes of 
filings made under the Rules. Simplified internal processing procedures 
are designed to reduce the time and resources expended in disposing of 
the large number of clearance requests that are not problematic, while 
continuing to ensure the integrity of Commission investigations and 
proceedings.
    The rule amendments relate solely to agency practice, and, thus, 
are not subject to the notice and comment requirements of the 
Administrative Procedure Act, 5 U.S.C. 553(a)(2), or to the 
requirements of the Regulatory Flexibility Act, 5 U.S.C. 601(2).
    The submissions required by the amended rule do not generally 
involve the ``collection of information'' as that term is defined by 
the Paperwork Reduction Act (``PRA''), 44 U.S.C. 3501-3520. Submission 
of a request for clearance to participate or a screening affidavit is 
ordinarily required only during the conduct of an administrative action 
or investigation involving a specific individual or entity. Such 
submissions are exempt from the coverage of the PRA. 5 CFR 
1320.4(a)(2). To the limited extent that the rule could require a 
submission outside the context of an investigation or action involving 
a specific party, the information collection aspects of the rule have 
been cleared by the Office of Management and Budget and assigned OMB 
clearance no. 3084-0047.

List of Subjects in 16 CFR Part 4

    Administrative practice and procedure.

    For the reasons set forth in the preamble, the Federal Trade 
Commission amends Title 16, chapter I, subchapter A, of the Code of 
Federal Regulations as follows:

PART 4--MISCELLANEOUS RULES

    1. The authority citation for part 4 continues to read as follows:

    Authority: Sec. 6, 38 Stat. 721; 15 U.S.C. 46.

    2. Section 4.1 is amended by revising paragraphs (b) and (c) to 
read as follows:


Sec. 4.1  Appearances.

* * * * *
    (b) Restrictions as to former members and employees--(1) General 
Prohibition. Except as provided in this section, or otherwise 
specifically authorized by the Commission, no former member or employee 
(``former employee'' or ``employee'') of the Commission may communicate 
to or appear before the Commission, as attorney or counsel, or 
otherwise assist or advise behind-the-scenes, regarding a formal or 
informal proceeding or investigation1 (except that a former 
employee who is disqualified solely under paragraph (b)(1)(iv) of this 
section, is not prohibited from assisting or advising behind-the-
scenes) if:
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    \1\It is important to note that a new ``proceeding or 
investigation'' may be considered the same matter as a seemingly 
separate ``proceeding or investigation'' that was pending during the 
former employee's tenure. This is because a ``proceeding or 
investigation'' may continue in another form or in part. In 
determining whether two matters are actually the same, the 
Commission will consider: the extent to which the matters involve 
the same or related facts, issues, confidential information and 
parties; the time elapsed; and the continuing existence of an 
important Federal interest. See 5 CFR 2637.201(c)(4). For example, 
where a former employee intends to participate in an investigation 
of compliance with a Commission order, submission of a request to 
reopen an order, or a proceeding with respect to reopening an order, 
the matter will be considered the same as the adjudicative 
proceeding or investigation that resulted in the order. A former 
employee who is uncertain whether the matter in which he seeks 
clearance to participate is wholly separate from any matter that was 
pending during his tenure should seek advice from the General 
Counsel or the General Counsel's designee before participating.
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    (i) The former employee participated personally and substantially 
on behalf of the Commission in the same proceeding or investigation in 
which the employee now intends to participate;

[[Page 15759]]

    (ii) The participation would begin within two years after the 
termination of the former employee's service and, within a period of 
one year prior to the employee's termination, the proceeding or 
investigation was pending under the employee's official responsibility;
    (iii) Nonpublic documents or information pertaining to the 
proceeding or investigation in question, and of the kind delineated in 
Sec. 4.10(a), came to, or would be likely to have come to, the former 
employee's attention in the course of the employee's duties, and the 
employee left the Commission within the previous three years (unless 
Commission staff determines that the nature of the documents or 
information is such that no present advantage could thereby be 
derived); or
    (iv) The former employee's participation would begin within one 
year after the employee's termination and, at the time of termination, 
the employee was a member of the Commission or a ``senior employee'' as 
defined in 18 U.S.C. 207(c).

    Note: Former Commissioners and certain former ``senior'' 
employees who were appointed to those positions on or after January 
20, 1993 may be subject to a five year ban on participation in 
Commission matters pursuant to Executive Order 12834 (58 FR 5911-
5916, January 22, 1993), 3 CFR 1993 Comp., p. 580).

    (2) Clearance Request Required. Any former employee, before 
participating in a Commission proceeding or investigation (see footnote 
1), whether through an appearance before a Commission official or 
behind-the-scenes assistance, shall file with the Secretary a request 
for clearance to participate, containing the information listed in 
Sec. 4.1(b)(4) if:
    (i) The proceeding or investigation was pending in the Commission 
while the former employee served;
    (ii) A proceeding or investigation from which such proceeding or 
investigation directly resulted was pending during the former 
employee's service; or
    (iii) Nonpublic documents or information pertaining to the 
proceeding or investigation in question, and of the kind delineated in 
Sec. 4.10(a), came to or would likely have come to the former 
employee's attention in the course of the employee's duties, and the 
employee left the Commission within the previous three years.

    Note: This requirement applies even to a proceeding or 
investigation that had not yet been initiated formally when the 
former employee terminated employment, if the employee had learned 
nonpublic information relating to the subsequently initiated 
proceeding or investigation.

    (3) Exceptions.
    (i) Paragraphs (b)(1) and (2) of this section do not apply to:
    (A) Making a pro se filing of any kind;
    (B) Submitting a request or appeal under the Freedom of Information 
Act, the Privacy Act, or the Government in the Sunshine Act;
    (C) Testifying under oath (except that a former employee who is 
subject to the restrictions contained in paragraph (b)(1)(i) of this 
section with respect to a particular matter may not, except pursuant to 
court order, serve as an expert witness for any person other than the 
United States in that same matter);
    (D) Submitting a statement required to be made under penalty of 
perjury; or
    (E) Appearing on behalf of the United States.
    (ii) With the exception of subparagraph (b)(1)(iv), paragraphs 
(b)(1) and (2) of this section do not apply to participating in a 
Commission rulemaking proceeding, including submitting comments on a 
matter on which the Commission has invited public comment.
    (iii) Paragraph (b)(1)(iv) of this section does not apply to 
submitting a statement based on the former employee's own special 
knowledge in the particular area that is the subject of the statement, 
provided that no compensation is thereby received, other than that 
regularly provided by law or by Sec. 4.5 for witnesses.
    (iv) Paragraph (b)(2) of this section does not apply to filing a 
premerger notification form or participating in subsequent events 
concerning compliance or noncompliance with Section 7A of the Clayton 
Act, 15 U.S.C. 18a, or any regulation issued under that section.
    (4) Request Contents. Clearance requests filed pursuant to 
Sec. 4.1(b)(2) shall contain:
    (i) The name and matter number (if known) of the proceeding or 
investigation in question;
    (ii) A description of the contemplated participation;
    (iii) The name of the Commission office(s) or division(s) in which 
the former employee was employed and the position(s) the employee 
occupied;
    (iv) A statement whether, while employed by the Commission, the 
former employee participated in any proceeding or investigation 
concerning the same company, individual, or industry currently involved 
in the matter in question;
    (v) A certification that while employed by the Commission, the 
employee never participated personally and substantially in the same 
matter or proceeding;
    (vi) If the employee's Commission employment terminated within the 
past two years, a certification that the matter was not pending under 
the employee's official responsibility during any part of the one year 
before the employee's termination;
    (vii) If the employee's Commission employment terminated within the 
past three years, either a declaration that nonpublic documents or 
information pertaining to the proceeding or investigation in question, 
and of the kind delineated in Sec. 4.10(a), never came to the 
employee's attention, or a description of why the employee believes 
that such nonpublic documents or information could not confer a present 
advantage to the employee or to the employee's client in the proceeding 
or investigation in question; and
    (viii) A certification that the employee has read, and understands, 
both the criminal conflict of interest law on post-employment 
activities (18 U.S.C. 207) and this Rule in their entirety.
    (5) Definitions. The following definitions apply for purposes of 
this section:
    (i) Behind-the-scenes participation includes any form of 
professional consultation, assistance, or advice to anyone about the 
proceeding or investigation in question, whether formal or informal, 
oral or written, direct or indirect.
    (ii) Communicate to or appear before means making any oral or 
written communication to, or any formal or informal appearance before, 
the Commission or any of its members or employees on behalf of any 
person (except the United States) with the intent to influence.
    (iii) Directly resulted from means that the proceeding or 
investigation in question emanated from an earlier phase of the same 
proceeding or investigation or from a directly linked, antecedent 
investigation. The existence of some attenuated connection between a 
proceeding or investigation that was pending during the requester's 
tenure and the proceeding or investigation in question does not 
constitute a direct result.
    (iv) Pending under the employee's official responsibility means 
that the former employee had the direct administrative or operating 
authority to approve, disapprove, or otherwise direct official actions 
in the proceeding or investigation, irrespective of whether the 
employee's authority was intermediate or final, and whether it was 
exercisable alone or only in conjunction with others.
    (v) Personal and substantial participation. A former employee

[[Page 15760]]

participated in the proceeding or investigation personally if the 
employee either participated directly or directed a subordinate in 
doing so. The employee participated substantially if the involvement 
was significant to the matter or reasonably appeared to be significant. 
A series of peripheral involvements may be considered insubstantial, 
while a single act of approving or participating in a critical step may 
be considered substantial.
    (vi) Present advantage. Whether exposure to nonpublic information 
about the proceeding or investigation could confer a present advantage 
to a former employee will be analyzed and determined on a case-by-case 
basis. Relevant factors include, inter alia, the nature and age of the 
information, its relation and current importance to the proceeding or 
investigation in question, and the amount of time that has passed since 
the employee left the Commission.
    (vii) Proceeding or investigation shall be interpreted broadly and 
includes an adjudicative or other proceeding; the consideration of an 
application; a request for a ruling or other determination; a contract; 
a claim; a controversy; an investigation; or an interpretive ruling. 
Proceeding or investigation does not include a rulemaking proceeding.
    (6) Advice as to Whether Clearance Request is Required. A former 
employee may ask the General Counsel, either orally or in writing, 
whether the employee is required to file a request for clearance to 
participate in a Commission matter pursuant to paragraph (b)(2) of this 
section. The General Counsel, or the General Counsel's designee, will 
make any such determination within three business days.
    (7) Deadline for Determining Clearance Requests. By the close of 
the tenth business day after the date on which the clearance request is 
filed, the General Counsel, or the General Counsel's designee, will 
notify the requester either that:
    (i) the request for clearance has been granted;
    (ii) the General Counsel or the General Counsel's designee has 
decided to recommend that the Commission prohibit the requester's 
participation; or
    (iii) the General Counsel or the General Counsel's designee is, for 
good cause, extending the period for reaching a determination on the 
request by up to an additional ten business days.
    (8) Participation of Partners or Associates of Former Employees.
    (i) If a former employee is prohibited from participating in a 
proceeding or investigation by virtue of having worked on the matter 
personally and substantially while a Commission employee, no partner or 
legal or business associate of that individual may participate except 
after filing with the Secretary of the Commission an affidavit 
attesting that:
    (A) The former employee will not participate in the proceeding or 
investigation in any way, directly or indirectly (and describing how 
the former employee will be screened from participating);
    (B) The former employee will not share in any fees resulting from 
the participation;
    (C) Everyone who intends to participate is aware of the requirement 
that the former employee be screened;
    (D) The client(s) have been informed; and
    (E) The matter was not brought to the participant(s) through the 
active solicitation of the former employee.
    (ii) If the Commission finds that the screening measures being 
taken are unsatisfactory or that the matter was brought to the 
participant(s) through the active solicitation of the former employee, 
the Commission will notify the participant(s) to cease the 
representation immediately.
    (9) Effect on Other Standards. The restrictions and procedures in 
this section are intended to apply in lieu of restrictions and 
procedures that may be adopted by any state or jurisdiction, insofar as 
such restrictions and procedures apply to appearances or participation 
in Commission proceedings or investigations. Nothing in this section 
supersedes other standards of conduct applicable under paragraph (e) of 
this section. Requests for advice about this section, or about any 
matter related to other applicable rules and standards of ethical 
conduct, shall be directed to the Office of the General Counsel.
    (c) Public Disclosure. Any request for clearance filed by a former 
member or employee pursuant to this section, as well as any written 
response, are part of the public records of the Commission, except for 
information exempt from disclosure under Sec. 4.10(a) of this chapter. 
Information identifying the subject of a nonpublic Commission 
investigation will be redacted from any request for clearance or other 
document before it is placed on the public record.

    By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 98-8479 Filed 3-31-98; 8:45 am]
BILLING CODE 6750-01-P