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

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