September 16, 2002

MEMORANDUM

As you leave the Commission, I want to remind you of several restrictions that may limit your post-employment activities. Although most of these restrictions apply to all former Commission employees, they should be of particular note to Commission attorneys, economists, and other professionals who plan to represent private clients in government matters. Nonetheless, every departing employee should review and consider these restrictions carefully, since violating them could lead to criminal prosecution.

FEDERAL LAW

Following is a brief description of 18 U.S.C. sections 203 and 207 (for full text, see Attachments V and VI), the criminal statutes that affect post-employment activities. Attachment I is a chart that summarizes these statutes. Neither this memorandum nor the attached chart, however, is intended as a substitute for carefully reviewing the text of both statutes, as well as the regulations that implement them, 5 C.F.R. Parts 2637 and 2641.

Accepting Fees for Representation:

Both present and former federal employees are prohibited by 18 U.S.C. section 203 from accepting any fee for representational services rendered by themselves or another before the government during the employee's government service. This restriction should be of particular concern to employees who become partners in firms that appear before, or have business relationships with, government agencies. Such employees should take steps to ensure that their compensation does not include income that the firm earned by representing parties before the government during the time that the former employee was employed at the Commission.⁽¹⁾

Permanent Ban - Personal Participation:

The primary post-employment restriction, 18 U.S.C. section 207(a), prohibits a former government employee from "switching sides" and representing a private party in a particular matter in which the employee participated "personally and substantially" as a government employee. Specifically, section 207(a)(1) prohibits a former employee from knowingly making, with the intent to influence, any appearance before or communication to any officer or employee of any department, agency, court, or court-martial of the United States, on behalf of anyone other than the United States, in connection with a particular matter⁽²⁾ involving specific parties, where (1) the former employee participated in the matter⁽³⁾ personally and substantially as a government employee, and (2) the federal government is a party or has a direct and substantial interest in the matter.

Two Year Ban - Official Responsibility:

Similarly, section 207(a)(2) generally prohibits a former employee, for two years, from participating in a matter that was pending under his or her "official responsibility" during the year prior to leaving government service. Specifically, for a two-year period after leaving the government, a former employee is prohibited from knowingly making, with the intent to influence, an appearance before or communication to any officer or employee of any department, agency, court, or court-martial of the United States, on behalf of anyone other than the United States, in connection with a particular matter involving specific parties (1) that the former employee knew, or reasonably should have known, was actually pending under his or her official responsibility within one year before he or she left the government, and (2) in which the federal government is a party or has a direct and substantial interest.⁽⁴⁾

Senior Employees:

Section 207(c) imposes a one-year "cooling-off period" during which a former "senior" Commission employee⁽⁵⁾ is prohibited from knowingly making, with the intent to influence, any communication to or appearance before a Commission employee in order to seek official action on behalf of another.⁽⁶⁾ In addition, section 207(f) prohibits a former senior employee, for one year after leaving the government, from (1) representing certain foreign entities before any government employee or official, with the intent to influence the government employee or official, or (2) aiding or advising the government of a foreign country or a foreign political party, with the intent to influence a U.S. government employee or official.

STATE BAR RULES

Former Commission employees who are attorneys are also subject to bar rules governing their professional conduct. These rules may impose post-employment restrictions beyond the statutory restrictions discussed above. For example, Rule 1.11 of the District of Columbia Rules of Professional Conduct ("DCRPC") prohibits a lawyer from accepting employment in a matter that is the same as, or substantially similar to, a matter in which the lawyer was involved personally and substantially as a government employee. DCRPC 1.11 is more restrictive than is 18 U.S.C. 207(a), described above, in that it bars all types of representation, while section 207(a) bars only appearances and communications on behalf or a client. DCRPC 1.11 also imputes the former employee's disqualification to all the members of the firm, while section 207(a) does not.⁽⁷⁾ Because professional conduct rules may impose independent post-employment constraints, former Commission lawyers are urged to review the ethics rules applicable in their jurisdiction(s) of admission and to determine whether any additional restrictions apply.

THE FTC CLEARANCE RULE

Finally, a former Commission employee who wishes to communicate with or appear before the agency as attorney or counsel, or "otherwise assist or advise behind-the-scenes," with respect to a Commission matter that was pending during his Commission service, or that "directly resulted from" such a matter, must seek and receive clearance before doing so. 16 C.F.R. § 4.1(b)(2).⁽⁸⁾ A former employee will be denied clearance if: (1) the former employee participated personally and substantially on behalf of the Commission in the same matter⁽⁹⁾; (2) the application for clearance is made within two years after the employee left the Commission and, within one year before leaving, the matter had been pending under the former employee's official supervision (UNLESS the former employee seeks to participate only "behind-the-scenes"); or (3) nonpublic documents or information pertaining to the matter came to, or was likely to have come to, the former employee's attention in the course of his or her duties, and the employee left the Commission within the previous three years (unless Commission staff determines that the nature of the documents or information in question is such that no present advantage could thereby be derived.) 16 C.F.R. § 4.1(b)(1).

In addition, if a former Commission employee joins a firm, his firm cannot participate in any Commission matter from which the former employee is disqualified because of having personally and substantially participated, unless a member of the firm submits an affidavit describing the measures that the firm has taken to screen the former employee from the matter. 16 C.F.R. § 4.1(b)(8). Attachment III is a summary of Commission Rule 4.1(b), which was amended effective March 29, 1999, 64 Fed. Reg. 14829 (March 29, 1999), and effective March 7, 2001, 66 Fed. Reg. 13645 (March 7, 2001). Attachment IV is the text of this rule.

CONCLUSION

This summary and the attached materials are intended only to provide you with general information on post-employment restrictions. If you have further questions, you should review the referenced source materials and call a member of the ethics staff. See Attachment II.

Attachments

ATTACHMENT I

Summary of Statutory Post-Employment
Restrictions Applicable to Former Employees

ATTACHMENT II

Agency Ethics Officials

ATTACHMENT III

As amended on March 29, 1999, 64 Fed. Reg. 14829.

COMMISSION RULES 4.1(b) & (c)

(b) Restrictions as to former members and employees.

(1) General Prohibition. Except as provided in this section, or otherwise specifically authorized by the Commission, no former member or employee ("former employee" or "employee") of the Commission may communicate to or appear before the Commission, as attorney or counsel, or otherwise assist or advise behind-the-scenes, regarding a formal or informal proceeding or investigation⁽⁷⁾ (except that a former employee who is disqualified solely under paragraph (b)(1)(ii) or paragraph (b)(1)(iv) below, is not prohibited from assisting or advising behind-the-scenes) if:

 

(i) The former employee participated personally and substantially on behalf of the Commission in the same proceeding or investigation in which the employee now intends to participate;

 

(ii) The participation would begin within two years after the termination of the former employee's service and, within a period of one year prior to the employee's termination, the proceeding or investigation was pending under the employee's official responsibility;

 

(iii) Nonpublic documents or information pertaining to the proceeding or investigation in question, and of the kind delineated in § 4.10(a), came to, or would be likely to have come to, the former employee's attention in the course of the employee's duties (unless Commission staff determines that the nature of the documents or information is such that no present advantage could thereby be derived); or

 

(iv) The former employee's participation would begin within one year after the employee's termination and, at the time of termination, the employee was a member of the Commission or a "senior employee" as defined in 18 U.S.C. § 207(c). (NOTE: Former Commissioners and certain former "senior" employees who were appointed to those positions on or after January 20, 1993 may be subject to a five year ban on participation in Commission matters pursuant to Executive Order 12834. See 58 Fed. Reg. 5911-5916 (January 22, 1993).)

 

(2) Clearance Request Required. Any former employee, before participating in a Commission proceeding or investigation (see footnote 1), whether through an appearance before a Commission official or behind-the-scenes assistance, shall file with the Secretary a request for clearance to participate, containing the information listed in § 4.1(b)(4) below, if:

 

(i) The proceeding or investigation was pending in the Commission while the former employee served;

 

(ii) A proceeding or investigation from which such proceeding or investigation directly resulted was pending during the former employee's service; or

 

(iii) Nonpublic documents or information pertaining to the proceeding or investigation in question, and of the kind delineated in § 4.10(a), came to or would likely have come to the former employee's attention in the course of the employee's duties, and the employee left the Commission within the previous three years. (NOTE: This requirement applies even to a proceeding or investigation that had not yet been initiated formally when the former employee terminated employment, if the employee had learned nonpublic information relating to the subsequently initiated proceeding or investigation.)

 

(3) Exceptions.

 

(i) Paragraphs (b)(1) & (2) do not apply to:

 

(A) Making a pro se filing of any kind;

 

(B) Submitting a request or appeal under the Freedom of Information Act, the Privacy Act, or the Government in the Sunshine Act;

 

(C) Testifying under oath (except that a former employee who is subject to the restrictions contained in subsection (b)(1)(i) with respect to a particular matter may not, except pursuant to court order, serve as an expert witness for any person other than the United States in that same matter);

 

(D) Submitting a statement required to be made under penalty of perjury; or

 

(E) Appearing on behalf of the United States.

 

(ii) With the exception of subparagraph (b)(1)(iv), paragraphs (b)(1) & (2) do not apply to

participating in a Commission rulemaking proceeding, including submitting comments on a matter on which the Commission has invited public comment.

 

(iii) Paragraph (b)(1)(iv) does not apply to submitting a statement based on the former employee's own special knowledge in the particular area that is the subject of the statement, provided that no compensation is thereby received, other than that regularly provided by law or by § 4.5 for witnesses.

 

(iv) Paragraph (b)(2) does not apply to filing a premerger notification form or participating in subsequent events concerning compliance or noncompliance with § 7A of the Clayton Act, 15 U.S.C. § 18a, or any regulation issued under that section.

 

(4) Request Contents. Clearance requests filed pursuant to § 4.1(b)(2) shall contain:

 

(i) The name and matter number (if known) of the proceeding or investigation in question;

 

(ii) A description of the contemplated participation;

 

(iii) The name of the Commission office(s) or division(s) in which the former employee was employed and the position(s) the employee occupied;

 

(iv) A statement whether, while employed by the Commission, the former employee participated in any proceeding or investigation concerning the same company, individual, or industry currently involved in the matter in question;

 

(v) A certification that while employed by the Commission, the employee never participated personally and substantially in the same matter or proceeding;

 

(vi) If the employee's Commission employment terminated within the past two years, a certification that the matter was not pending under the employee's official responsibility during any part of the one year before the employee's termination;

 

(vii) If the employee's Commission employment terminated within the past three years, either a declaration that nonpublic documents or information pertaining to the proceeding or investigation in question, and of the kind delineated in § 4.10(a), never came to the employee's attention, or a description of why the employee believes that such nonpublic documents or information could not confer a present advantage to the employee or to the employee's client in the proceeding or investigation in question; and

 

(viii) A certification that the employee has read, and understands, both the criminal conflict of interest law on post-employment activities (18 U.S.C. § 207) and this Rule in their entirety.

 

(5) Definitions. The following definitions apply for purposes of this section:

 

(i) Behind-the-scenes participation includes any form of professional consultation, assistance, or advice to anyone about the proceeding or investigation in question, whether formal or informal, oral or written, direct or indirect.

 

(ii) Communicate to or appear before means making any oral or written communication to, or any formal or informal appearance before, the Commission or any of its members or employees on behalf of any person (except the United States) with the intent to influence.

 

(iii) Directly resulted from means that the proceeding or investigation in question emanated from an earlier phase of the same proceeding or investigation or from a directly linked, antecedent investigation. The existence of some attenuated connection between a proceeding or investigation that was pending during the requester's tenure and the proceeding or investigation in question does not constitute a direct result.

 

(iv) Pending under the employee's official responsibility means that the former employee had the direct administrative or operating authority to approve, disapprove, or otherwise direct official actions in the proceeding or investigation, irrespective of whether the employee's authority was intermediate or final, and whether it was exercisable alone or only in conjunction with others.

 

(v) Personal and substantial participation. A former employee participated in the proceeding or investigation personally if the employee either participated directly or directed a subordinate in doing so. The employee participated substantially if the involvement was significant to the matter or reasonably appeared to be significant. A series of peripheral involvements may be considered insubstantial, while a single act of approving or participating in a critical step may be considered substantial.

 

(vi) Present advantage. Whether exposure to nonpublic information about the proceeding or investigation could confer a present advantage to a former employee will be analyzed and determined on a case-by-case basis. Relevant factors include, inter alia, the nature and age of the information, its relation and current importance to the proceeding or investigation in question, and the amount of time that has passed since the employee left the Commission.

 

(vii) Proceeding or investigation shall be interpreted broadly and includes an adjudicative or other proceeding; the consideration of an application; a request for a ruling or other determination; a contract; a claim; a controversy; an investigation; or an interpretive ruling.

 

(6) Advice as to Whether Clearance Request is Required. A former employee may ask the General Counsel, either orally or in writing, whether the employee is required to file a request for clearance to participate in a Commission matter pursuant to paragraph (b)(2) of this section. The General Counsel, or the General Counsel's designee, will make any such determination within three business days.

 

(7) Deadline for Determining Clearance Requests. By the close of the tenth business day after the date on which the clearance request is filed, the General Counsel, or the General Counsel's designee, will notify the requester either that:

 

(i) the request for clearance has been granted;

 

(ii) the General Counsel or the General Counsel's designee has decided to recommend that the Commission prohibit the requester's participation; or

 

(iii) the General Counsel or the General Counsel's designee is, for good cause, extending the period for reaching a determination on the request by up to an additional ten business days.

 

(8) Participation of Partners or Associates of Former Employees.

 

(i) If a former employee is prohibited from participating in a proceeding or investigation by virtue of having worked on the matter personally and substantially while a Commission employee, no partner or legal or business associate of that individual may participate except after filing with the Secretary of the Commission an affidavit attesting that:

 

(A) The former employee will not participate in the proceeding or investigation in any way, directly or indirectly (and describing how the former employee will be screened from participating);

 

(B) The former employee will not share in any fees resulting from the participation;

 

(C) Everyone who intends to participate is aware of the requirement that the former employee be screened;

 

(D) The client(s) have been informed; and

 

(E) The matter was not brought to the participant(s) through the active solicitation of the former employee.

 

(ii) If the Commission finds that the screening measures being taken are unsatisfactory or that the matter was brought to the participant(s) through the active solicitation of the former employee, the Commission will notify the participant(s) to cease the representation immediately.

 

(9) Effect on Other Standards. The restrictions and procedures in this section are intended to apply in lieu of restrictions and procedures that may be adopted by any state or jurisdiction, insofar as such restrictions and procedures apply to appearances or participation in Commission proceedings or investigations. Nothing in this section supersedes other standards of conduct applicable under paragraph (e) of this section. Requests for advice about this section, or about any matter related to other applicable rules and standards of ethical conduct, shall be directed to the Office of the General Counsel.

(c) Public Disclosure. Any request for clearance filed by a former member or employee pursuant to this section, as well as any written response thereto, are part of the public records of the Commission, except for information exempt from disclosure under § 4.10(a) of this chapter. Information identifying the subject of a nonpublic Commission investigation will be redacted from any request for clearance or other document before it is placed on the public record.

1. Departing employees whose post-government employment compensation arrangements include anything other than a fixed salary should discuss the ramifications of section 203 with a member of the Commission's ethics staff. See Attachment II.

2. A "particular matter" may be an investigation, application, request for a ruling or a determination, rulemaking proceeding, contract, controversy, claim, charge, accusation, arrest, and judicial or other proceeding. 18 U.S.C. § 207(i)(3).

3. It is important to note that a new "proceeding or investigation" may be considered the same matter as a seemingly separate "proceeding or investigation" that was pending during the former employee's tenure. This is because a "proceeding or investigation" may continue in another form or in part. In determining whether two matters are actually the same, the Commission will consider: the extent to which the matters involve the same or related facts, issues, confidential information and parties; the time elapsed; and the continuing existence of an important Federal interest. See 5 C.F.R. § 2637.201(c)(4). For example, where a former employee intends to participate in an investigation of compliance with a Commission order, submission of a request to reopen an order, or a proceeding with respect to reopening an order, the matter will be considered the same as the adjudicative proceeding or investigation that resulted in the order. Thus, if there is any possibility that the matter in which the employee plans to participate could be considered the same as a matter in which he participated before leaving the Commission, he should seek advice from the General Counsel's office before participating.

4. See footnote 3.

5. At the FTC, "senior" employees are Commissioners and officials occupying positions classified at the SES V and SES VI levels.

6. Section 207(c) does not, however, prohibit communications or appearances made on behalf of a state or local government, or certain charitable institutions.

7. This imputed disqualification, however, may be eliminated through screening and affidavits. See DCRPC 1.11(c)-(e).

8. This rule also requires a former employee to seek and receive clearance before participating in a Commission matter (even if the matter had not yet been initiated formally) if nonpublic documents or information pertaining to that matter likely would have come to the former employee's attention during the course of his or her official duties, and the employee left the Commission within the previous three years.

9. See footnote 3.