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                                                  Proposed Rules                                                                                                Federal Register
                                                                                                                                                                Vol. 76, No. 85

                                                                                                                                                                Tuesday, May 3, 2011



                                                  This section of the FEDERAL REGISTER                    telephone: 202–482–9300; TTY: 800–                    Ethics in Government Act of 1978, as
                                                  contains notices to the public of the proposed          877–8339; Fax: 202–482–9237.                          amended, 5 U.S.C. appendix, section
                                                  issuance of rules and regulations. The                  SUPPLEMENTARY INFORMATION:                            402, OGE has consulted with both the
                                                  purpose of these notices is to give interested                                                                Department of Justice (as additionally
                                                  persons an opportunity to participate in the            I. Background                                         required under 18 U.S.C. 208(d)(2)) and
                                                  rule making prior to the adoption of the final
                                                                                                             Section 208(a) of title 18 of the United           the Office of Personnel Management on
                                                  rules.
                                                                                                          States Code prohibits Government                      this rule.
                                                                                                          employees from participating in an                    II. Analysis of the Proposed Changes
                                                  OFFICE OF GOVERNMENT ETHICS                             official capacity in particular
                                                                                                          Government matters in which, to their                    The proposed rule would add a new
                                                  5 CFR Part 2640                                         knowledge, they or certain other                      regulatory exemption, section
                                                                                                          persons specified in the statute have a               2640.203(m), which would permit
                                                  RIN 3209–AA09                                           financial interest, if the particular                 employees to participate in particular
                                                                                                          matter would have a direct and                        matters affecting the financial interests
                                                  Government Employees Serving in                         predictable effect on that interest.                  of nonprofit organizations in which they
                                                  Official Capacity in Nonprofit                          Section 208(b)(2) of title 18 permits the             participate, in their official Government
                                                  Organizations; Sector Unit Investment                   Office of Government Ethics to                        capacity, as officers, directors or
                                                  Trusts                                                  promulgate regulations describing                     trustees. The proposed rule also would
                                                                                                          financial interests that are too remote or            clarify that the existing regulatory
                                                  AGENCY:    Office of Government Ethics                                                                        exception for certain interests in sector
                                                  (OGE).                                                  inconsequential to warrant
                                                                                                          disqualification pursuant to section                  mutual funds, at section 2640.201(b),
                                                  ACTION:   Proposed rule.                                208(a).                                               also covers interests in sector unit
                                                                                                             On August 28, 1995, the Office of                  investment trusts.
                                                  SUMMARY:    The Office of Government
                                                  Ethics is issuing a proposed rule                       Government Ethics published its first                 A. Proposed Section 2640.203(m)—
                                                  amendment that would permit                             interim rule, with request for comments,              Official Participation in Nonprofit
                                                  Government employees to participate in                  promulgating certain miscellaneous                    Organizations
                                                  particular matters affecting the financial              exemptions under 18 U.S.C. 208(b)(2).                   Proposed section 2640.203(m)
                                                  interests of nonprofit organizations in                 60 FR 44705 (August 28, 1995). On                     addresses a situation that was not
                                                  which they serve in an official capacity,               December 18, 1996, the Office of                      generally thought to be covered by 18
                                                  notwithstanding the employees’                          Government Ethics published a                         U.S.C. 208 until the mid-1990s. Until
                                                  imputed financial interest. This                        comprehensive final rule,                             that time, a number of agencies had a
                                                  document also proposes an amendment                     ‘‘Interpretation, Exemptions and Waiver               practice of assigning employees to
                                                  that would clarify that the existing                    Guidance Concerning 18 U.S.C. 208                     participate on the boards of directors of
                                                  exemptions for interests in the holdings                (Acts Affecting a Personal Financial                  certain outside nonprofit organizations,
                                                  of sector mutual funds also apply to                    Interest),’’ codified at 5 CFR part 2640,             where such service was deemed to
                                                  interests in the holdings of sector unit                which promulgated several additional                  further the statutory mission and/or
                                                  investment trusts.                                      exemptions and also adopted as final,                 personnel development interests of the
                                                                                                          with some modifications, the                          agency. The nonprofit organizations
                                                  DATES: Comments are invited and must
                                                                                                          exemptions promulgated in the earlier                 included such entities as professional
                                                  be received on or before July 5, 2011.                  interim rule. 61 FR 66829 (December 18,               associations, scientific societies, and
                                                  ADDRESSES: You may submit comments,                     1996) (final rule); 60 FR 47207                       health information promotion
                                                  in writing, to OGE on this proposed                     (September 11, 1995) (proposed rule).                 organizations. At the time, neither the
                                                  rule, identified by RIN 3209–AA09, by                   OGE subsequently has added and                        agencies involved nor the Office of
                                                  any of the following methods:                           amended exemptions by interim rule,                   Government Ethics viewed such official
                                                    E-Mail: usoge@oge.gov. Include the                    with request for comment, 65 FR 16511                 participation in nonprofit organizations
                                                  reference ‘‘Proposed Rule Exemption                     (March 29, 2000) (adopted as final, 65                as being prohibited by 18 U.S.C. 208.
                                                  and Amendment Under 18 U.S.C.                           FR 47830 (August 4, 2000)), by final rule               However, in 1996, the Office of Legal
                                                  208(b)(2)’’ in the subject line of the                  (after a proposed rule, 65 FR 53942                   Counsel (OLC) at the Department of
                                                  message.                                                (September 6, 2000)), 67 FR 12443                     Justice issued an opinion concluding
                                                    Fax: 202–482–9237.                                    (March 19, 2002), and by interim rule,                that section 208 generally prohibits an
                                                    Mail/Hand Delivery/Courier: Office of                 with request for comment, 70 FR 69041                 employee from serving, in an official
                                                  Government Ethics, Suite 500, 1201                      (November 14, 2005).                                  capacity, as an officer, director or
                                                  New York Avenue, NW., Washington,                          The Office of Government Ethics is                 trustee of a private nonprofit
                                                  DC 20005–3917, Attention: Richard M.
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                                                                                                          proposing to amend part 2640 by adding                organization. Memorandum of Deputy
                                                  Thomas, Associate General Counsel.                      a new regulatory exemption and                        Assistant Attorney General, OLC, for
                                                    Instructions: All submissions must                    clarifying the scope of an existing                   General Counsel, Federal Bureau of
                                                  include OGE’s agency name and the                       exemption, as explained below. This                   Investigation, November 19, 1996,
                                                  Regulation Identifier Number (RIN),                     proposed rule is being published after                http://www.justice.gov/olc/
                                                  3209–AA09, for this rulemaking.                         obtaining the concurrence of the                      fbimem.2.htm. This conclusion was
                                                  FOR FURTHER INFORMATION CONTACT:                        Department of Justice pursuant to                     premised in large part on the fact that
                                                  Richard M. Thomas, Associate General                    section 201(c) of Executive Order 12674.              officers, directors and trustees of an
                                                  Counsel, Office of Government Ethics;                   Also, as provided in section 402 of the               outside organization owe certain


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                                                                            Federal Register / Vol. 76, No. 85 / Tuesday, May 3, 2011 / Proposed Rules                                                 24817

                                                  fiduciary duties to the organization                    confusion no doubt could be reduced by                response, the Director of OSTP issued a
                                                  under state law, which may conflict                     clearer agency instructions concerning                memorandum urging all agencies to
                                                  with the primary duty of loyalty that all               such matters as excused absence and                   establish policies that promote and
                                                  Federal employees owe to the United                     limited use of agency resources in                    facilitate the professional development
                                                  States. As a consequence of this                        support of outside professional and                   of Government scientists and engineers.
                                                  interpretation, employees are no longer                 other organizations. See 5 CFR 251.202.               John P. Holdren, Director, OSTP,
                                                  permitted to serve in their official                    Nevertheless, the fact remains that                   ‘‘Scientific Integrity,’’ Memorandum for
                                                  capacity as officer, director or trustee of             sometimes there is considerable                       the Heads of Executive Departments and
                                                  an outside nonprofit organization,                      continuity in subject matter between an               Agencies, at 3, December 17, 2010. The
                                                  absent an individual waiver under 18                    employee’s official duties and the                    OSTP memorandum specifically calls
                                                  U.S.C. 208(b) or some specific statutory                employee’s activities in an outside                   for policies to ‘‘[a]llow full participation
                                                  authority permitting such service.1                     nonprofit organization, and some                      in professional or scholarly societies,
                                                     Since the 1996 OLC opinion, some                     agencies believe it would be clearer to               committees, task forces and other
                                                  agencies have continued to assign                       permit the latter to occur while the                  specialized bodies of professional
                                                  employees to serve on such outside                      employee is on official duty, without                 societies, including removing barriers
                                                  boards by granting the employees                        the impediment of section 208.2                       for serving as officers or on governing
                                                  individual waivers under 18 U.S.C.                         For all of the above reasons, the Office           boards of such societies.’’ Id. at 4
                                                  208(b)(1). Other agencies have declined                 of Government Ethics in 2006                          (emphasis added).
                                                  to issue individual waivers (or have                    recommended to the President and                         In response to parallel initiatives, in
                                                  done so rarely), often because of                       Congress that section 208 be amended                  August of 2010, the Director of the
                                                  discomfort about waiving the                            ‘‘to specify that the financial interests of          Office of Personnel Management (OPM)
                                                  application of a criminal statute. OGE                  an organization are not imputed to an                 wrote to OGE to express several
                                                  has fielded numerous inquiries and has                  employee who serves as an officer or                  concerns about the application of
                                                  held many meetings with agencies and                    director of such organization in his or               section 208 to employees serving in
                                                  nonprofit organizations, mostly                         her official capacity.’’ OGE, Report to the           their official capacity as officers and
                                                  professional and scientific societies,                  President and to Congressional                        directors of scientific and professional
                                                  concerning the application of section                   Committees on the Conflict of Interest                organizations. Letter of John Berry,
                                                  208 to prevent official participation on                Laws Relating to Executive Branch                     Director, OPM, to Robert I. Cusick,
                                                  outside boards. Several of the agencies                 Employment 33 (2006) (2006 Report),                   Director, Office of Government Ethics,
                                                  and nonprofit organizations have argued                 http://www.usoge.gov/ethics_docs/                     August 16, 2010 (OPM Letter). Among
                                                  that the application of section 208 has                 publications/reports_plans.aspx.3 In the              other things, the Director of OPM wrote:
                                                  created unfortunate barriers to                         2006 Report, OGE recognized that it had
                                                  professional development and                            ‘‘regulatory authority to exempt                        Policies restricting Federal scientists’ and
                                                  meaningful exchange between Federal                                                                           professionals’ involvement in professional
                                                                                                          financial interests arising from official
                                                                                                                                                                organizations negatively impact the agencies
                                                  and non-Federal experts in certain                      service on boards of directors,’’ but OGE             employing such individuals. Restrictions act
                                                  professions and areas of expertise.                     opted at that time to place the issue                 as a barrier to employees achieving
                                                  Moreover, some of the organizations                     before Congress first. No legislative                 professional stature in their respective fields,
                                                  have pointed out that there is a lack of                changes to section 208 were enacted in                which may discourage scientists and
                                                  uniformity within the Executive Branch,                 response to the report, however, and                  professionals from considering Federal
                                                  owing to the willingness of some                        OGE has continued to receive                          employment. Restrictions also serve to isolate
                                                  agencies to grant waivers and the                       expressions of concern about this                     scientists and professionals from the full
                                                  unwillingness of other agencies to do so,               matter, both from agencies and from                   exchange of knowledge and ideas necessary
                                                  often with respect to participation in the              nonprofit organizations.                              to stay current and participate fully as
                                                                                                             Then, on March 9, 2009 President                   members of the greater scientific community.
                                                  same organization.
                                                                                                                                                                As a result, Federal scientists and
                                                     Additionally, the Office of                          Obama issued a Memorandum for the
                                                                                                                                                                professionals are hampered in their ability to
                                                  Government Ethics has noted the                         Heads of Executive Departments and                    provide the best possible advice and service
                                                  potential for confusion in some                         Agencies on the topic of scientific                   to their respective agencies. These
                                                  instances when employees are                            integrity. 74 FR 10671, 3 CFR, 2009                   restrictions are particularly burdensome for
                                                  permitted to serve only in a private,                   Comp., p. 354. In this memorandum, he                 the ‘‘research-grade’’ scientists whose
                                                  rather than official, capacity. Especially              specifically requested that the Office of             retention and promotion evaluations depend
                                                  where the agency has policy interests                   Science and Technology Policy (OSTP)                  in part on the recognition of stature by one’s
                                                  that overlap with those of the nonprofit                provide recommendations to address,                   scientific peers. U. S. Office of Personnel
                                                  organization, it can be very difficult for              among other things, the retention of staff            Management’s Research Grade Evaluation
                                                                                                          in scientific and technical positions                 Guide, Factor 4; Contributions, Impact, and
                                                  the employee to avoid the mistaken
                                                                                                                                                                Stature, September, 2006; http://
                                                  impression that he or she is acting in an               within the Executive branch. In
                                                                                                                                                                www.opm.gov/Fedclass/gsresch.pdf.
                                                  official capacity when participating in
                                                  the organization. Employees may be                        2 Nothing in the proposed rule limits the ability   OPM Letter at 2. The Director of OPM
                                                                                                          of an employee to serve as officer, director or       asked OGE to consider exercising its
                                                  uncertain about the extent to which they                trustee of a nonprofit organization as a personal
                                                  are permitted to make reference to their                outside activity, where the agency has not assigned
                                                                                                                                                                authority under 18 U.S.C. 208(b)(2) to
                                                  official position or to use official time or            the employee to serve in an official capacity.        exempt the financial interests of
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                                                  agency resources. See 5 CFR                             Moreover, nothing in the proposed rule is intended    organizations in which employees serve
                                                                                                          to affect the current ability of agencies to assign   in their official capacity, on the ground
                                                  2635.702(b); 2635.704; 2635.705. Such                   employees to serve as official liaisons or to serve
                                                                                                          in similar nonfiduciary positions that do not
                                                                                                                                                                that such interests are ‘‘too remote and
                                                    1 In rare instances, an employee also may be able     implicate 18 U.S.C. 208. See OGE Informal             inconsequential to warrant
                                                  to serve pursuant to a waiver of fiduciary duties by    Advisory Letter 95 x 8.                               disqualification pursuant to section
                                                  the organization, if such a waiver is permitted by        3 OGE was required to issue this report, in
                                                                                                                                                                208.’’ Id. at 3. In response, the Director
                                                  state law. See Memorandum of Deputy Assistant           consultation with the Department of Justice, by
                                                  Attorney General, OLC, to General Counsel, General      section 8403(d) of the Intelligence Reform and
                                                                                                                                                                of OGE wrote that OGE takes ‘‘very
                                                  Services Administration, August 7, 1998, http://        Terrorism Prevention Act of 2004, Public Law 108–     seriously’’ OPM’s ‘‘concerns about the
                                                  www.justice.gov/olc/gsa208fn.htm.                       458 (December 17, 2004).                              impact that the current bar has on the


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                                                  24818                     Federal Register / Vol. 76, No. 85 / Tuesday, May 3, 2011 / Proposed Rules

                                                  professional development of                             considerations, such as: the degree to                 participation, including professional
                                                  employees.’’ Letter of Robert I. Cusick,                which the activity will further the                    and other nonprofit groups focused on
                                                  Director, OGE, to John Berry, Director,                 agency’s statutory mission; the                        issues pertaining to legal practice, law
                                                  OPM, September 23, 2010.                                availability of agency funds and other                 enforcement, various social sciences,
                                                     To address OPM’s concerns, as well                   resources to support such activities; the              and other disciplines and public policy
                                                  as the concerns raised by other agencies                degree to which the agency is able and                 areas.
                                                  and outside organizations since 1996,                   willing to assign employees to serve in
                                                                                                                                                                 B. Proposed Clarifying Amendment to
                                                  and consistent with Administration                      other, similar organizations without
                                                                                                                                                                 Section 2640.201(b)—Sector Unit
                                                  efforts designed to ensure scientific                   appearing to single out one organization
                                                                                                                                                                 Investment Trusts
                                                  integrity, OGE has concluded that it is                 unreasonably; and the demands of the
                                                  now appropriate to exercise its authority               agency’s workload and the particular                      Among the regulatory exemptions
                                                  under 18 U.S.C. 208(b)(2) to exempt the                 employee’s other assignments.4 Even                    currently found in subpart B of part
                                                  imputed financial interests of nonprofit                where an agency does permit an                         2640 are several that exempt certain
                                                  organizations in which employees serve                  employee to serve as officer, director or              financial interests in mutual funds and
                                                  as officers, directors or trustees in their             trustee of a nonprofit organization, the               unit investment trusts. The Office of
                                                  official capacity. OGE has determined                   agency has discretion to limit or                      Government Ethics has promulgated
                                                  that such financial interests are too                   condition the official duty activity in a              exemptions for interests in the holdings
                                                  remote or inconsequential to affect the                 manner consistent with the needs and                   of diversified mutual funds and
                                                  integrity of employees’ services, for                   interests of the agency. This may                      diversified unit investment trusts (5
                                                  several reasons. As explained in OGE’s                  include limits on participation in                     CFR 2640.201(a)), in the non-sector
                                                  2006 Report, which was issued after                     lobbying, fundraising, regulatory,                     holdings of sector mutual funds (5 CFR
                                                  consultation with the Department of                     investigational, or representational                   2640.201(b)(1)), and in the sector
                                                  Justice:                                                activities, as determined by the agency.               holdings of sector mutual funds when
                                                                                                          For example, where agencies have                       the aggregate market value of the
                                                     OGE believes that the conflict identified by                                                                employee’s interest in the sector fund or
                                                  OLC [between the employee’s duty of loyalty             granted individual waivers in the past,
                                                                                                          under section 208(b)(1), some agencies                 funds does not exceed $50,000 (5 CFR
                                                  to the Government and the employee’s
                                                  fiduciary duties to the outside organization]           have required employees to refrain from                2640.201(b)(2)). Most recently, the
                                                  may be more theoretical than real,                      participating in the fundraising                       Office of Government Ethics has
                                                  particularly because employees assigned to              activities of the outside organization or              promulgated one for interests in mutual
                                                  serve on outside boards remain subject to               from participating in agency decisions                 funds and unit investment trusts other
                                                  important Federal controls, such as the                 to award grants or contracts to the                    than interests arising from the holdings
                                                  authority to review and approve (or deny) the           organization; agencies will remain free                of such vehicles (5 CFR 2640.201(d)).
                                                  official activity in the first place, and the                                                                  This exemption is limited to particular
                                                  authority to order the individual to limit the
                                                                                                          to impose similar limits as they deem
                                                                                                          appropriate in the future.5 See OGE                    matters of general applicability, as
                                                  activity, or even resign the position, in the                                                                  defined in 5 CFR 2640.102(m).
                                                  event of a true conflict with Federal interests.        Memorandum DO–07–006, http://
                                                                                                          www.usoge.gov/ethics_guidance/                            In promulgating these exemptions, the
                                                  In addition, an agency generally approves
                                                  such activities only where the organization’s           daeograms/dgr_files/2007/do07006.html                  Office of Government Ethics recognized
                                                  interests are in consonance with the agency’s           In other words, nothing in the proposed                that pooled investment vehicles such as
                                                  own interests. In an era when ‘public/private                                                                  mutual funds and unit investment trusts
                                                                                                          regulatory exemption is intended to
                                                  partnerships’ are promoted as a positive way                                                                   generally pose fewer concerns that the
                                                                                                          interfere with the discretion of agencies
                                                  for Government to achieve its objectives more                                                                  financial interests will affect the
                                                                                                          to assign duties and describe the limits
                                                  efficiently, ethics officials find it difficult to                                                             integrity of the services of Government
                                                  explain and justify to agency employees why
                                                                                                          of official assignments, including
                                                                                                                                                                 employees. The Office of Government
                                                  a waiver is required for official board services        assignments that involve outside
                                                                                                                                                                 Ethics has noted that usually ‘‘only a
                                                  that have been determined by the agency to              nonprofit organizations.
                                                                                                            Finally, OGE notes that the proposed                 limited portion of the fund’s assets [are]
                                                  be proper. 2006 Report at 33.                                                                                  placed in the securities of any single
                                                                                                          rule refers generally to ‘‘nonprofit’’
                                                    In short, the potential for a real                                                                           issuer’’ and that ‘‘an employee’s interest
                                                                                                          organizations. See, e.g. ‘‘Black’s Law
                                                  conflict of interest is too remote or                                                                          in any one fund is only a small portion
                                                                                                          Dictionary’’ 1080 (1999) (‘‘group
                                                  inconsequential to affect the integrity of                                                                     of the fund’s total assets.’’ 60 FR 47211
                                                                                                          organized for a purpose other than to
                                                  an employee’s services under these                                                                             (September 11, 1995) (preamble to
                                                                                                          generate income or profit’’). The
                                                  circumstances.                                                                                                 proposed rule).
                                                                                                          exemption thus is not limited to                          The Office of Government Ethics is
                                                    That is not to say, however, that
                                                                                                          scientific organizations, but rather is                proposing to amend the language of the
                                                  agencies would be precluded from
                                                                                                          intended to provide agencies with                      exemptions for the interests in sector
                                                  imposing meaningful controls and
                                                                                                          discretion to determine which nonprofit                mutual funds to include explicitly the
                                                  limits on employees serving in
                                                                                                          entities would further agency interests                interests of sector unit investment
                                                  nonprofit organizations. As made clear
                                                                                                          and would be appropriate for employee                  trusts. The current regulation, 5 CFR
                                                  in the Note following proposed section
                                                  2640.203(m), agencies must satisfy                         4 Even prior to the 1996 OLC opinion, some
                                                                                                                                                                 2640.201(b), does not include the
                                                  themselves that they have authority to                  agencies rarely if ever permitted employees to serve   language ‘‘sector unit investment trusts.’’
                                                  assign employees to serve in such                       as officers, directors or trustees of outside          At the time that the sector fund
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                                                  organizations in the first place; the                   organizations in an official capacity, because of      exemptions were promulgated, the
                                                  proposed exemption does not itself                      fiscal, policy or managerial concerns.                 Office of Government Ethics
                                                                                                          Notwithstanding the proposed regulatory
                                                  constitute such authority, but simply                   exemption, some agencies may continue to decline       contemplated that the exemptions
                                                  removes the bar of the conflict of                      to assign employees to serve in an official capacity   would also extend to those investment
                                                  interest law. Moreover, agency decisions                for similar reasons.                                   vehicles organized as sector unit
                                                                                                             5 In any event, agency decisions to permit an
                                                  to permit (or not permit) official                                                                             investment trusts. In practice, the Office
                                                                                                          employee to engage in official fundraising for a
                                                  participation in any particular outside                 nonprofit organization must take into account the
                                                                                                                                                                 of Government Ethics has permitted
                                                  organization will be informed by                        requirements of 5 CFR 2635.808(b) and 5 CFR part       executive branch employees to apply
                                                  numerous legal, policy, and managerial                  950.                                                   the exemptions for interests in sector


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                                                                            Federal Register / Vol. 76, No. 85 / Tuesday, May 3, 2011 / Proposed Rules                                              24819

                                                  mutual funds to interests in sector unit                accordance with section 6(a)(3)(B) of                 Subpart B—Exemptions Pursuant to 18
                                                  investment trusts.                                      E.O. 12866, the preamble to this                      U.S.C. 208(b)(2)
                                                    Therefore, OGE is proposing to add                    proposed amendment notes the legal
                                                  specific references to sector unit                      basis and benefits of, as well as the need              3. In § 2640.201, paragraphs (b)(1) and
                                                  investment trusts to 5 CFR 2640.201(b)                  for, the regulatory action. There should              (2) are revised to read as follows:
                                                  in order to clarify that the exemptions                 be no appreciable increase in costs to                § 2640.201 Exemptions for interests in
                                                  for interests in the holdings of sector                 OGE or the executive branch of the                    mutual funds, unit investments trusts, and
                                                  mutual funds also apply to the interests                Federal Government in administering                   employee benefit plans.
                                                  in the holdings of sector unit investment               this proposed regulation, since it only               *       *    *    *     *
                                                  trusts. OGE also is proposing                           adds to OGE’s financial interests                        (b) Sector mutual funds and sector
                                                  conforming amendments to the                            regulation a new regulatory exemption                 unit investment trusts. (1) An employee
                                                  definition in § 2640.102(q), which                      and a clarification of an existing                    may participate in any particular matter
                                                  would define both sector mutual fund                    exemption. Finally, this rulemaking is                affecting one or more holdings of a
                                                  and sector unit investment trust.                       not economically significant under the                sector mutual fund or a sector unit
                                                  III. Matters of Regulatory Procedure                    Executive order and would not interfere               investment trust where the affected
                                                                                                          with State, local or tribal governments.              holding is not invested in the sector in
                                                  Regulatory Flexibility Act                                                                                    which the fund or trust concentrates,
                                                                                                          Executive Order 12988
                                                    As Director of the Office of                                                                                and where the disqualifying financial
                                                  Government Ethics, I certify under the                    As Director of the Office of                        interest in the matter arises because of
                                                  Regulatory Flexibility Act (5 U.S.C.                    Government Ethics, I have reviewed this               ownership of an interest in the fund or
                                                  chapter 6) that this proposed rule would                proposed amendatory regulation in light               unit investment trust.
                                                  not have a significant economic impact                  of section 3 of Executive Order 12988,                   (2)(i) An employee may participate in
                                                  on a substantial number of small entities               Civil Justice Reform, and certify that it             a particular matter affecting one or more
                                                  because it primarily affects Federal                    meets the applicable standards provided               holdings of a sector mutual fund or a
                                                  executive branch employees.                             therein.                                              sector unit investment trust where the
                                                  Paperwork Reduction Act                                                                                       disqualifying financial interest in the
                                                                                                          List of Subjects in 5 CFR Part 2640                   matter arises because of ownership of an
                                                    The Paperwork Reduction Act (44                                                                             interest in the fund or the unit
                                                  U.S.C. chapter 35) does not apply                         Conflict of interests, Government
                                                                                                          employees.                                            investment trust and the aggregate
                                                  because this proposed regulation would                                                                        market value of interests in any sector
                                                  not contain information collection                        Approved: April 21, 2011.                           fund or funds and any sector unit
                                                  requirements that require approval of                   Robert I. Cusick,                                     investment trust or trusts does not
                                                  the Office of Management and Budget.                                                                          exceed $50,000.
                                                                                                          Director, Office of Government Ethics.
                                                  Unfunded Mandates Reform Act                                                                                     (ii) For purposes of calculating the
                                                                                                            Accordingly, for the reasons set forth              $50,000 de minimis amount in
                                                     For purposes of the Unfunded                         in the preamble, the Office of                        paragraph (b)(2)(i) of this section, an
                                                  Mandates Reform Act of 1995 (2 U.S.C.                   Government Ethics proposes to amend 5                 employee must aggregate the market
                                                  chapter 25, subchapter II), this proposed               CFR part 2640 as follows:                             value of all sector mutual funds and
                                                  rule would not significantly or uniquely
                                                                                                                                                                sector unit investment trusts in which
                                                  affect small governments and will not                   PART 2640—INTERPRETATION,                             he has a disqualifying financial interest
                                                  result in increased expenditures by                     EXEMPTIONS AND WAIVER                                 and that concentrate in the same sector
                                                  State, local, and tribal governments, in                GUIDANCE CONCERNING 18 U.S.C.                         and have one or more holdings that may
                                                  the aggregate, or by the private sector, of             208 (ACTS AFFECTING A PERSONAL                        be affected by the particular matter.
                                                  $100 million or more (as adjusted for                   FINANCIAL INTEREST)
                                                  inflation) in any one year.                                                                                   *       *    *    *     *
                                                                                                                                                                   4. Section 2640.203 is amended by
                                                  Congressional Review Act                                  1. The authority citation for part 2640
                                                                                                                                                                adding paragraph (m) to read as follows:
                                                                                                          continues to read as follows:
                                                    The Office of Government Ethics has
                                                                                                            Authority: 5 U.S.C. App. (Ethics in                 § 2640.203   Miscellaneous exemptions.
                                                  determined that this proposed involves
                                                  rulemaking involves a nonmajor rule                     Government Act of 1978); 18 U.S.C. 208; E.O.          *     *      *     *    *
                                                  under the Congressional Review Act (5                   12674, 54 FR 15159, 3 CFR, 1989 Comp., p.               (m) Official participation in nonprofit
                                                  U.S.C. chapter 8) and will, before the                  215, as modified by E.O. 12731, 55 FR 42547,          organizations. An employee may
                                                                                                          3 CFR, 1990 Comp., p. 306.                            participate in any particular matter
                                                  future final rule takes effect, submit a
                                                  report thereon to the U.S. Senate, House                                                                      where the disqualifying financial
                                                                                                          Subpart A—General Provisions                          interest is that of a nonprofit
                                                  of Representatives and General
                                                  Accounting Office in accordance with                                                                          organization in which the employee
                                                                                                            2. In § 2640.102, paragraph (q) is                  serves, solely in an official capacity, as
                                                  that.                                                   revised to read as follows:                           an officer, director or trustee.
                                                  Executive Order 12866                                                                                           Note to paragraph (m): Nothing in this
                                                                                                          § 2640.102    Definitions.
                                                    In proposing this rule amendment, the                 *      *    *    *      *                             paragraph shall be deemed independent
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                                                  Office of Government Ethics has                                                                               authority for an agency to assign an employee
                                                  adhered to the regulatory philosophy                       (q) Sector mutual fund or sector unit              to serve in an official capacity with a
                                                  and the applicable principles of                        investment trust means a mutual fund or               particular nonprofit organization. Agencies
                                                  regulation set forth in section 1 of                    unit investment trust that concentrates               will make such determinations based on an
                                                                                                          its investments in an industry, business,             evaluation of their own statutory authorities
                                                  Executive Order 12866, Regulatory                                                                             and missions. Individual agency decisions to
                                                  Planning and Review. This proposed                      single country other than the United
                                                                                                                                                                permit (or not permit) an employee to serve
                                                  rule has also been reviewed by the                      States, or bonds of a single State within
                                                                                                                                                                in an official capacity necessarily involve a
                                                  Office of Management and Budget under                   the United States.                                    range of legal, policy, and managerial
                                                  that Executive order. Moreover, in                      *      *    *    *      *                             considerations, and nothing in this paragraph



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                                                  24820                     Federal Register / Vol. 76, No. 85 / Tuesday, May 3, 2011 / Proposed Rules

                                                  is intended to interfere with an agency’s               ADDRESSES:   The Food and Nutrition                   action,’’ although not economically
                                                  discretion to assign official duties and limit          Service (FNS) invites interested persons              significant, under section 3(f) of
                                                  such assignments as the agency deems                    to submit comments on this proposed                   Executive Order 12866. Accordingly,
                                                  appropriate.                                            rule. Comments may be submitted by                    the rule has been reviewed by the Office
                                                  [FR Doc. 2011–10629 Filed 5–2–11; 8:45 am]              any of the following methods:                         of Management and Budget.
                                                  BILLING CODE 6345–03–P
                                                                                                             Federal eRulemaking Portal: Preferred
                                                                                                          method. Go to http://www.regulations.                 Regulatory Impact Analysis Summary
                                                                                                          gov; follow the online instructions for               Need for Action
                                                                                                          submitting comments on Docket FNS–
                                                  DEPARTMENT OF AGRICULTURE                               2011–0035.                                               This action is needed to implement
                                                                                                             Fax: Submit comments by facsimile                  section 4116 of the Farm Bill (Pub. L.
                                                  Food and Nutrition Service                              transmission to (703) 305–2486,                       110–234). Section 4116, Review of Major
                                                                                                          attention: Moira Johnston.                            Changes in Program Design, amends
                                                  7 CFR Parts 271, 272, and 275                              Mail: Send comments to Moira                       Section 11 of the Food and Nutrition
                                                                                                          Johnston, Branch Chief, Program Design                Act of 2008 (the Act) (7 U.S.C. 2020). It
                                                  RIN 0584–AD86
                                                                                                          Branch, Program Development Division,                 requires the Department to develop
                                                  Supplemental Nutrition Assistance                       Supplemental Nutrition Assistance                     standards for identifying major changes
                                                  Program: Review of Major Changes in                     Program, Food and Nutrition Service,                  in the operations of State agencies that
                                                  Program Design and Management                           3101 Park Center Drive, Room 810,                     administer SNAP; State agencies to
                                                  Evaluation Systems                                      Alexandria, Virginia 22302, (703) 305–                notify the Department upon
                                                                                                          2501.                                                 implementing a major change in
                                                  AGENCY: Food and Nutrition Service,                        Hand Delivery or Courier: Deliver                  operations; and State agencies to collect
                                                  USDA.                                                   comments to Ms. Johnston at the above                 any information required by the
                                                  ACTION: Notice of Proposed Rulemaking.                  address. All comments on this proposed                Department to identify and correct any
                                                                                                          rule will be included in the record and               adverse effects on program integrity or
                                                  SUMMARY:    This Notice of Proposed                     will be made available to the public.                 access, including access by vulnerable
                                                  Rulemaking (NPRM) proposes to amend                     Please be advised that the substance of               households. The provision identifies
                                                  the Supplemental Nutrition Assistance                   the comments and the identity of the                  four major changes in operations:
                                                  Program (SNAP) (formerly the Food                       individuals or entities submitting the                (1) Large or substantially-increased
                                                  Stamp Program) regulations to                           comments will be subject to public
                                                  implement Section 4116 of the Food,                                                                           numbers of low-income households that
                                                                                                          disclosure. FNS will make the                         do not live in reasonable proximity to a
                                                  Conservation, and Energy Act of 2008                    comments publicly available on the
                                                  (the Farm Bill). Section 4116 of the                                                                          SNAP office; (2) substantial increases in
                                                                                                          Internet via http://www.regulations.gov.
                                                  Farm Bill, Review of Major Changes in                                                                         reliance on automated systems for the
                                                                                                             All submissions will be available for
                                                  Program Design, requires the United                                                                           performance of responsibilities
                                                                                                          public inspection at the office of FNS
                                                  States Department of Agriculture (the                                                                         previously performed by merit pay
                                                                                                          during regular business hours (8:30 a.m.
                                                  Department) to identify standards for                                                                         personnel; (3) changes that potentially
                                                                                                          to 5 p.m., Monday through Friday) at
                                                  major changes in operations of State                    3101 Park Center Drive, Room 810,                     increase the households’ difficulty in
                                                  agencies’ administration of SNAP. The                   Alexandria, Virginia 22302–1594.                      reporting information to the State; and
                                                  provision also requires State agencies to                                                                     (4) changes that may disproportionately
                                                                                                          FOR FURTHER INFORMATION CONTACT: For
                                                  notify the Department if they implement                                                                       increase the burdens on specific
                                                                                                          further information concerning this                   vulnerable households. In addition, the
                                                  a major change in operations and to                     NPRM you may contact Moira Johnston,
                                                  collect data that can be used to identify                                                                     provision gives the Department the
                                                                                                          Branch Chief, Program Development
                                                  and correct problems relating to                                                                              discretion to identify other major
                                                                                                          Division, Supplemental Nutrition
                                                  integrity and access, particularly by                                                                         changes that a State agency would be
                                                                                                          Assistance Program, 3101 Park Center
                                                  certain vulnerable households.                                                                                required to report as well as to identify
                                                                                                          Drive, Room 800, Alexandria, Virginia
                                                     This NPRM proposes criteria for                                                                            the types of data the State agencies
                                                                                                          22302, (703) 305–2501, or by e-mail at
                                                  changes that would be considered                                                                              would have to collect to identify and
                                                                                                          Moira.Johnston@fns.usda.gov.
                                                  ‘‘major changes’’ in program operations                                                                       correct adverse effects on integrity and
                                                                                                          SUPPLEMENTARY INFORMATION:
                                                  and identifies the types of data State                                                                        access.
                                                  agencies must collect in order to                       Executive Order 12866 and Executive                      In addition, the Department proposes
                                                  identify problems relating to integrity                 Order 13563                                           to modify the requirements for Federal
                                                  and access. It also proposes when and                      Executive Orders 12866 and 13563                   and State reviews of State agency
                                                  how State agencies must report on                       direct agencies to assess all costs and               operations, which will result in the
                                                  implementation of a major change.                       benefits of available regulatory                      more efficient use of staff and resources.
                                                     This NPRM proposes to amend the                      alternatives and, if regulation is                    This rule proposes several changes to
                                                  Management Evaluation (ME) Review                       necessary, to select regulatory                       the ME review regulations: (1) Remove
                                                  regulations by modifying the                            approaches that maximize net benefits                 the requirements that FNS conduct an
                                                  requirements for Federal and State                      (including potential economic,                        annual review of a State agency’s
                                                  reviews of State agency operations. It
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                                                                                                          environmental, public health and safety               operation of SNAP and a biennial
                                                  also proposes to revise the definitions of              effects, distributive impacts, and                    review of a State agency’s ME system;
                                                  large, medium and small project areas.                  equity). Executive Order 13563                        (2) modify the regulations to reflect the
                                                  Finally, it proposes to remove sections                 emphasizes the importance of                          elimination of the use of paper coupons
                                                  of the regulations pertaining to coupons                quantifying both costs and benefits, of               and the nationwide implementation of
                                                  and coupon storage since they are                       reducing costs, of harmonizing rules,                 the Electronic Benefit Transfer System
                                                  obsolete.                                               and of promoting flexibility.                         (EBT); (3) redefine the terms, large
                                                  DATES: Comments must be received on                        This proposed rule has been                        project area, medium project area, and
                                                  or before July 5, 2011.                                 designated a ‘‘significant regulatory                 small project area.


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