Appearances Before the Commission; Restrictions and Public Disclosure Requirements.

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

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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]

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