[Federal Register Volume 59, Number 71 (Wednesday, April 13, 1994)]
[Unknown Section]
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From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-8691]
Federal Register / Vol. 59, No. 71 / Wednesday, April 13, 1994 /
[[Page Unknown]]
[Federal Register: April 13, 1994]
VOL. 59, NO. 71
Wednesday, April 13, 1994
NUCLEAR REGULATORY COMMISSION
5 CFR Chapter XLVIII
10 CFR Part 0
RINs 3209-AA15 and 3150-AE60
Supplemental Standards of Ethical Conduct for Employees of the
Nuclear Regulatory Commission
AGENCY: Nuclear Regulatory Commission.
ACTION: Final rule.
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SUMMARY: The Nuclear Regulatory Commission (NRC), with the concurrence
of the Office of Government Ethics (OGE), is issuing regulations for
employees of the Nuclear Regulatory Commission that supplement the
Standards of Ethical Conduct for Employees of the Executive Branch
issued by OGE. These supplemental regulations address outside
employment by NRC employees and ownership of securities by NRC
employees, their spouses, and minor children. The NRC is also repealing
its current regulations on those subjects, while adding a cross-
reference to the new provisions and preserving certain separable
financial interest exemptions.
EFFECTIVE DATE: Final rule effective July 12, 1994.
FOR FURTHER INFORMATION CONTACT: John Szabo, Office of the General
Counsel, U.S. Nuclear Regulatory Commission, Washington, DC 20555,
telephone: 301-504-1606.
SUPPLEMENTARY INFORMATION:
I. Background
On August 7, 1992, the Office of Government Ethics published the
Standards of Ethical Conduct for Employees of the Executive Branch
(Standards) for codiication at 5 CFR part 2635. See 57 FR 35006-35067,
as corrected at 57 FR 48557 and 57 FR 53583. These Standards, which
took effect on February 3, 1993, set uniform ethical conduct standards
applicable to all executive branch personnel.
5 CFR 2635.105 authorizes executive agencies, with concurrence from
OGE, to publish agency-specific supplemental regulations that are
necessary to implement their ethics programs. The Nuclear Regulatory
Commission, with OGE's concurrence, has determined that the following
supplemental regulations, being codified in new chapter XLVIII of 5
CFR, consisting of part 5801, are necessary for successful
implementation of the NRC's ethics program. By this notice, the Nuclear
Regulatory Commission is also repealing the parts of its regulations
which were preserved by 5 CFR part 2635 pending issuance of this
supplemental regulation (see the additional OGE grace period extension
at 59 FR 4779-4780).
II. Analysis of the Regulations
Section 5801.101 General
Section 5801.101 explains that the regulations contained in the
final rule apply to all NRC employees, including members of the
Commission, and are supplemental to the executive branch-wide
standards. Members and employees of the Nuclear Regulatory Commission
also are subject to the Standards of Ethical Conduct for Employees of
the Executive Branch at 5 CFR part 2635, the executive branch financial
disclosure regulations at 5 CFR part 2634, and additional regulations
regarding their conduct published by the agency in 10 CFR part 0.
Section 5801.102 Prohibited Securities
5 CFR 2635.403(a) authorizes agencies, by supplemental regulation,
to prohibit or restrict the acquisition or holding of a financial
interest or a class of financial interests by agency employees based on
a determination that the acquisition or holding of such interests would
cause reasonable persons to question the impartiality and objectivity
with which agency programs are administered. Where it is necessary to
the efficiency of the service, such prohibitions or restrictions may be
extended to employees' spouses and minor children.
By 10 CFR 0.735-29, the Commission has long prohibited most of its
employees, their spouses, minor children, and other members of their
households, from holding stocks, bonds, and other securities issued by
major entities in the commercial nuclear field. Section 5801.102
imposes very similar restrictions upon designated employees, their
spouses and minor children, based upon the Commission's determination
that these restrictions are necessary to maintain public confidence in
the impartiality and objectivity with which the NRC executes its
regulatory functions. The restrictions also will help to maintain
public confidence that sensitive information relating to agency
operations is not misused for private gain and will help accomplish the
NRC's mission by avoiding widespread disqualification of employees from
the performance of their official duties.
Section 5801.102 is narrower in scope than 10 CFR 0.735-29 in that
it does not apply to all members of the employee's household.
Consistent with 5 CFR 2635.403(a) and 2635.403(c)(1), it restricts only
the holdings of designated employees, their spouses, and minor
children. The Commission has determined that application of the
securities restrictions in Sec. 5801.102 to spouses and minor children
is necessary to the efficiency of the service. As evidenced by 10 CFR
0.735-29, the NRC believes it is important to the success of its
mission for regulated entities and others affected by agency decisions
to have this additional degree of assurance that agency decisions are
not influenced by considerations of personal gain on the part of NRC
personnel.
In addition to limiting the section's application to employees,
their spouses, and minor children, the Commission has made other minor
revisions to the restrictions as stated in 10 CFR 0.735-29. The
categories of prohibited securities set forth in Sec. 5801.102(b) have
been revised to reflect the new types of licenses established in 10 CFR
part 52 and to include securities issued by State or local governments
to finance low-level waste facilities. Section 5801.102(b)(8) also
prohibits employees for the first time from owning securities issued by
an energy or utility sector mutual fund that has invested more than 25
percent of the fund's assets in prohibited securities.
The time frames for complying with the security ownership
regulations have also been modified. Under 10 CFR 0.735-29, NRC
employees have had 30 days to comply after commencing employment or
being promoted to a position covered by the security ownership
prohibitions; one year to divest any security interest newly added to
the agency's prohibited security list; and a ``reasonable time'' to
dispose of securities inherited by gift. Consistent with 5 CFR
2635.403(d), the final rule provides a uniform 90-day period for
divestiture, with extension available in cases of undue hardship.
The criteria in Sec. 5801.102(e) for waiving the prohibition on
holding a specific security have been modified to provide greater
specificity. A criterion has been newly added to cover circumstances in
which legal constraints prevent divestiture. One example of such a
legal constraint would be the situation in which the prohibited
security is held as part of the assets of a trust of which the employee
is a beneficiary and where the trustee, who has sole authority to
purchase and sell the assets, refuses the employee's request to sell
the prohibited security.
The Commission has eliminated the requirement contained in 10 CFR
0.735-29 that employees who are subject to the security ownership
restrictions certify each year that they are in compliance. Because the
annual certifications have rarely revealed violations of the
substantive restrictions, there is inadequate justification for
continuing this requirement. However, to monitor compliance, the NRC
will continue to require employees holding designated positions to
certify compliance upon commencement of employment with the agency or
upon promotion for the first time to a position covered by the security
ownership restriction. Agency employees will also be required to report
to the Office of the General Counsel in writing any prohibited
securities obtained after the initial certification. This will permit
the Office of the General Counsel to track required divestitures.
On the effective date of this regulation, the NRC will issue
Management Directive 7.7 and its accompanying Handbook which lists
those agency positions covered by the security ownership restrictions.
The Handbook will also describe procedures for obtaining Certificates
of Divestiture and waivers from the security ownership restrictions.
Both the Management Directive and Handbook will be available at the NRC
Public Document Room, 2120 L Street, NW., Washington, DC 20555-0001.
Copies will also be available in each NRC Office.
Section 5801.103 Prior Approval for Outside Employment
5 CFR 2635.803 authorizes individual agencies, by supplemental
regulation, to require agency employees to obtain approval before
engaging in outside employment or other outside activities. The NRC has
long had the prior approval requirement, set forth in 10 CFR 0.735-40.
Section 5801.103 of the final rule retains the requirement that NRC
employees obtain prior written approval before engaging in outside
employment with entities that are regulated by or have business with
the Commission. The NRC policy has been, and will continue to be, to
encourage teaching, lecturing, or writing not prohibited by 5 CFR part
2635 or other applicable law.
The agency designees for approval of outside employment and
internal agency procedures for obtaining the necessary approvals will
be set forth in NRC Management Directive 7.8 and the accompanying
Handbook. This Directive and Handbook will be issued on the effective
date of this regulation and will be available in the NRC Public
Document Room and in each NRC Office.
III. Repeal of Superseded Portions of the NRC Conduct Regulations and
Related Modifications
The final rule repeals the NRC conduct regulations 10 CFR 0.735-8,
0.735-29, and 0.735-40, effective on the same day that this rule takes
effect. The information collection requirements of Sec. 0.735-8 are no
longer necessary. Section 0.735-29 will be superseded by the
prohibitions on securities contained in 5 CFR 5801.102 and Sec. 0.735-
40 will be superseded by the requirements for prior approval of outside
employment contained in 5 CFR 5801.103. These repeals, together with
those effected by 58 FR 3825 and 29951, leave in 10 CFR part 0 only the
waiver provisions of Secs. 735-21 (a) and (b) which are preserved by 5
CFR 2635.402(d)(1). These paragraphs are redesignated Sec. 0.735-2 (a)
and (b) to follow a new Sec. 0.735-1 which provides a cross-reference
to the NRC's supplemental regulation and to the executive branch-wide
financial disclosure and standards of ethical conduct regulations at 5
CFR parts 2634 and 2635.
IV. Matters of Regulatory Procedure
Administrative Procedure Act
Pursuant to 5 U.S.C. 553(b), the NRC finds good cause not to seek
public comment on this rule. Such comment is unnecessary because the
NRC is essentially repromulgating existing regulations in a different
form, and the regulations pertain wholly to internal agency personnel
matters that affect only NRC employees, their spouses, and minor
children. To increase the likelihood of a smooth transition from the
NRC's prior ethics rules to the new Government-wide standards of
ethical conduct regulations, these rulemaking actions should take place
as soon as possible. The rule and accompanying repeals will become
effective 90 days after the date of publication in the Federal
Register.
Environmental Impact: Categorical Exclusion
The NRC has determined that this final rule is the type of action
described in categorical exclusions 10 CFR 51.22(c) (1) and (2).
Therefore, neither an environmental assessment nor an environmental
impact statement has been prepared for this final regulation.
Paperwork Reduction Act Statement
This final rule contains no information collection requirements and
therefore is not subject to the requirements of the Paperwork Reduction
Act of 1980 (44 U.S.C. 3501 et seq.).
Regulatory Analysis
The NRC is promulgating a supplemental regulation to OGE's
Government-wide standards of conduct regulations in order to implement
effectively the NRC's ethics program. This rule has no significant
impact on health, safety or the environment. There is no substantial
cost to licensees, the NRC, OGE, or other Federal agencies.
Regulatory Flexibility Act
As required by the Regulatory Flexibility Act of 1980, 5 U.S.C.
605(b), the Commission certifies that this rule will not have a
significant economic impact on a substantial number of small entities
because it affects only NRC employees.
Backfit Analysis
The NRC has determined that the backfit rule, 10 CFR 50.109, does
not apply to this final rule and that a backfit analysis is not
required for this final rule because these supplemental regulations do
not involve any provisions which would impose backfits as defined in 10
CFR 50.109.
List of Subjects
5 CFR Part 5801
Conflict of interests, Government employees.
10 CFR Part 0
Conflict of interests, Criminal penalties.
Dated at Rockville, Maryland, this 23rd day of March, 1994.
For the Nuclear Regulatory Commission.
Samuel J. Chilk,
Secretary of the Commission.
Approved: March 31, 1994.
Stephen D. Potts,
Director, Office of Government Ethics.
For the reasons set forth in the preamble, the Nuclear Regulatory
Commission, with the concurrence of the Office of Government Ethics, is
amending title 5 of the Code of Federal Regulations and title 10,
chapter I, of the Code of Federal Regulations as follows:
TITLE 5--[AMENDED]
1. A new chapter XLVIII, consisting of part 5801, is added to title
5 of the Code of Federal Regulations to read as follows:
5 CFR CHAPTER XLVIII--NUCLEAR REGULATORY COMMISSION
PART 5801--SUPPLEMENTAL STANDARDS OF ETHICAL CONDUCT FOR EMPLOYEES
OF THE NUCLEAR REGULATORY COMMISSION
Sec.
5801.101 General.
5801.102 Prohibited securities.
5801.103 Prior approval for outside employment.
Authority: 5 U.S.C. 7301; 5 U.S.C. App. (Ethics in Government
Act of 1978); 42 U.S.C. 2201, 5841; E.O. 12674, 54 FR 15159, 3 CFR,
1989 Comp., p. 215, as modified by E.O. 12731, 55 FR 42547, 3 CFR,
1990 Comp., p. 306, 5 CFR 2635.105, 2635.403, 2635.803.
Sec. 5801.101 General.
In accordance with 5 CFR 2635.105, the regulations in this part
apply to members and other employees of the Nuclear Regulatory
Commission and supplement the Standards of Ethical Conduct for
Employees of the Executive Branch contained in 5 CFR part 2635. In
addition to the standards in 5 CFR part 2635 and this part, members and
other employees are subject to the executive branch financial
disclosure regulations contained in 5 CFR part 2634 and to additional
regulations regarding their conduct contained in 10 CFR part 0.
Sec. 5801.102 Prohibited securities.
(a) General prohibition. No covered employee, and no spouse or
minor child of a covered employee, shall own securities issued by an
entity on the list described in paragraph (b) of this section.
(b) Prohibited securities list. Once a year, or on a more frequent
basis, the Commission will publish and distribute to employees a list
of entities whose securities a covered employee or the spouse or minor
child of a covered employee may not own. The list shall consist of
entities which are:
(1) Applicants for or holders of early site permits, construction
permits, operating licenses, or combined construction permits and
operating licenses for facilities which generate electric energy by
means of a nuclear reactor;
(2) State or local governments, if the primary purpose of the
security is to finance the construction or operation of a nuclear
reactor or a low-level waste facility;
(3) Entities manufacturing or selling nuclear power or test
reactors;
(4) Architectural-engineering companies providing services relating
to a nuclear power reactor;
(5) Applicants for, or holders of, a certified standard design;
(6) Entities licensed or regulated by the Commission to mill,
convert, enrich, fabricate, store, or dispose of source, byproduct, or
special nuclear material, or applicants for such licenses that are
designated by the Commission because they are or will be substantially
engaged in such nuclear fuel cycle or disposal activities;
(7) The parent corporation of any subsidiary described in
paragraphs (b)(1)-(b)(6) of this section; and
(8) An energy or utility sector investment fund which has more than
25% of its assets invested in securities issued by entities described
in paragraphs (b)(1)-(b)(7) of this section.
(c) Definitions. For purposes of this section:
(1) A covered employee means:
(i) A member of the Commission;
(ii) The Inspector General of the NRC;
(iii) A member of the Senior Executive Service (SES);
(iv) An employee who holds a non-SES position above GG-15; and
(v) Any other employee, including a special Government employee,
whose duties and responsibilities, as determined by the Commission or
its designees, require application of the securities ownership
prohibition contained in this section to ensure public confidence that
NRC programs are conducted impartially and objectively. The positions
of these employees are specified in NRC Management Handbook 7.7, which
is available in the NRC Public Document Room; and
(2) The term ``securities'' includes all interests in debts or
equity instruments. The term includes, without limitation, secured and
unsecured bonds, debentures, notes, securitized assets and commercial
paper, as well as all types of preferred and common stock. The term
encompasses both current and contingent ownership interests, including
any beneficial or legal interest derived from a trust. It extends to
any right to acquire or dispose of any long or short position in such
securities and includes, without limitation, interests convertible into
such securities, as well as options, rights, warrants, puts, calls, and
straddles with respect thereto.
(d) Divestiture and reporting of prohibited securities.--(1) Newly
covered employees. Upon promotion or other appointment to a position
subject to the securities prohibition of this section, a covered
employee shall sign a certification:
(i) Identifying securities of an entity on the prohibited
securities list which the employee, or the spouse or minor child of the
employee, owns, or
(ii) Stating that the employee, or the spouse or minor child of the
employee, does not own any prohibited securities.
Except as provided in paragraph (d)(4) of this section, the newly
covered employee, or the spouse or minor child of the employee, shall
divest prohibited securities within 90 days after appointment to the
covered position.
(2) Newly prohibited securities. Within 30 days after publication
of the prohibited securities list to which an entity's name has been
added, a covered employee who owns, or whose spouse or minor child
owns, prohibited securities shall make a written report of that
ownership to the Office of the General Counsel. Except as provided in
paragraph (d)(4) of this section, the covered employee, or the spouse
or minor child of the covered employee, shall divest prohibited
securities within 90 days after publication of the prohibited
securities list.
(3) Securities acquired without specific intent. Within 30 days
after a covered employee, or the spouse or minor child of a covered
employee, acquires securities of an entity on the prohibited securities
list as a result of marriage, inheritance, gift or otherwise without
specific intent to acquire the securities, the covered employee shall
make a written report of the acquisition to the Office of the General
Counsel. Except as provided in paragraph (d)(4) of this section, a
covered employee, or the spouse or minor child of a covered employee,
shall divest prohibited securities within 90 days after the date of
acquisition.
(4) Extension of period to divest. Upon a showing of undue
hardship, the Chairman of the Nuclear Regulatory Commission may extend
the 90 day period for divestiture specified in paragraphs (d)(1)
through (d)(3) of this section.
(5) Disqualification pending divestiture. Pending divestiture of
prohibited securities, a covered employee must disqualify himself or
herself, in accordance with 5 CFR 2635.402, from participation in
particular matters which, as a result of continued ownership of the
prohibited securities, would affect the financial interests of the
employee, or those of the spouse or minor child of the employee.
Disqualification is not required where a waiver described in 5 CFR
2635.402(d) applies. Procedures for obtaining individual waivers are
contained in NRC Handbook 7.7, which is available in the NRC Public
Document Room.
(6) Tax treatment of gain on divested securities. Where divestiture
is required by this section, the covered employee (except a special
Government employee) may be eligible to defer the tax consequences of
divestiture under subpart J of 5 CFR part 2634, pursuant to procedures
in NRC Handbook 7.7, which is available in the NRC Public Document
Room.
(e) Waivers. (1) The Chairman may grant a waiver to permit a
covered employee, or the spouse or minor child of a covered employee,
to retain ownership of a security of an entity on the prohibited
securities list upon a determination that the holding of the security
is not inconsistent with 5 CFR part 2635 or otherwise prohibited by
law, and that:
(i) Under the circumstances, application of the prohibition is not
necessary to ensure confidence in the impartiality and objectivity with
which NRC programs are administered;
(ii) Legal constraints prevent divestiture; or
(iii) For a special Government employee, divestiture would result
in substantial financial hardship.
(2) Where a waiver has been granted under paragraph (e)(1) of this
section, the covered employee must disqualify himself or herself, in
accordance with 5 CFR 2635.402, from participation in particular
matters which, as a result of continued ownership of the prohibited
security, would affect the financial interests of the employee, or
those of the spouse or minor child of the employee unless the employee
has received a waiver described in 5 CFR 2635.402(d), pursuant to
procedures in NRC Handbook 7.9, which is available in the NRC Public
Document Room.
Sec. 5801.103 Prior approval for outside employment.
(a) An employee, other than a special Government employee, shall
obtain written authorization before engaging in compensated outside
employment with:
(1) A Commission licensee;
(2) An applicant for a Commission license;
(3) An organization directly engaged in activities in the
commercial nuclear field;
(4) A Commission contractor;
(5) A Commission supplier;
(6) An applicant for or holder of a license issued by a State
pursuant to an agreement between the Commission and the State;
(7) A trade association which represents clients concerning nuclear
matters; or
(8) A law firm or other organization which is participating in an
NRC proceeding or which regularly represents itself or clients before
the NRC.
(b) Requests for approval shall be submitted in writing to the
agency designee specified in NRC Management Directive 7.8, which is
available in the NRC Public Document Room, in accordance with
procedures set forth in the accompanying NRC Handbook.
(c) Approval of outside employment shall be granted in writing only
upon a determination by the agency designee that the proposed outside
employment would not violate a Federal statute or regulation, including
5 CFR 2635.
(d) For purposes of this section, ``outside employment'' means any
form of non-Federal employment, business relationship or activity,
involving the provision of personal services by the employee. It
includes, but is not limited to, personal services as an officer,
director, employee, agent, attorney, consultant, contractor, general
partner, trustee, teacher or speaker.
10 CFR CHAPTER I--NUCLEAR REGULATORY COMMISSION
PART 0--CONDUCT OF EMPLOYEES
2. The authority citation for part 0 is revised to read as follows:
Authority: Secs. 25, 161, 68 Stat. 9925, 948, as amended (42
U.S.C. 2035, 2201); sec. 201, 88 Stat. 1242, as amended (42 U.S.C.
5841); E.O. 12674, 54 FR 15159, 3 CFR, 1989 Comp., p. 215, as
modified by E.O. 12731, 55 FR 42547, 3 CFR, 1990 Comp., p. 306, 5
CFR 2635.105 and 2635.402(d)(1). Section 0.735-2, also issued under
5 U.S.C. 552, 553.
3. A new Sec. 0.735-1 is added to read as follows:
Sec. 0.735-1 Cross-reference to employee ethical conduct standards and
financial disclosure regulations.
Employees of the Nuclear Regulatory Commission (NRC) are subject to
the executive branch-wide Standards of Ethical Conduct at 5 CFR part
2635, the NRC regulation at 5 CFR part 5801 which supplements the
executive branch-wide standards, and the executive branch-wide
financial disclosure regulations at 5 CFR part 2634.
4. Section 0.735-21 is redesignated as Sec. 0.735-2 and the heading
is revised to read thereof, ``Exemptions for financial interests.''
Sec. 0.735-8, 0.735-29 and 0.735-40 [Removed]
5. Sections 0.735-8, 0.735-29 and 0.735-40 are removed.
[FR Doc. 94-8691 Filed 4-12-94; 8:45 am]
BILLING CODE 7590-10-P