82 FR 30966 - Indemnification of Federal Trade Commission Employees

FEDERAL TRADE COMMISSION

Federal Register Volume 82, Issue 127 (July 5, 2017)

The Federal Trade Commission is publishing a policy that permits indemnification of FTC employees in appropriate circumstances, as determined by the Commission or the Commission's designee, for claims made against them as a result of actions taken by them in the scope of their employment.

[Federal Register Volume 82, Number 127 (Wednesday, July 5, 2017)]
[Rules and Regulations]
[Pages 30966-30967]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-14008]



[[Page 30966]]

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FEDERAL TRADE COMMISSION

16 CFR Part 1


Indemnification of Federal Trade Commission Employees

AGENCY: Federal Trade Commission (``FTC'' or ``Commission'').

ACTION: Final rule.

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SUMMARY: The Federal Trade Commission is publishing a policy that 
permits indemnification of FTC employees in appropriate circumstances, 
as determined by the Commission or the Commission's designee, for 
claims made against them as a result of actions taken by them in the 
scope of their employment.

DATES: These amendments are effective July 5, 2017.

FOR FURTHER INFORMATION CONTACT: David C. Shonka, Acting General 
Counsel, (202) 326-2222, Office of the General Counsel, Federal Trade 
Commission, 600 Pennsylvania Avenue NW., Washington, DC 20580.

SUPPLEMENTARY INFORMATION: Presently, the FTC does not have a policy to 
indemnify its employees who are sued in their individual capacities and 
who suffer an adverse judgment as a result of conduct taken within the 
scope of their employment; nor does the FTC have a policy to settle 
these claims with agency funds. Lawsuits against federal employees in 
their personal capacities have proliferated since the Supreme Court's 
decision in Bivens v. Six Unknown Named Agents of the Federal Bureau of 
Narcotics, 403 U.S. 388 (1971). This decision held that personal damage 
awards against a federal employee are permitted when, in the course of 
his or her employment, the federal employee is found to have violated 
an individual's constitutional rights. Although the Federal Liability 
Reform and Tort Compensation Act of 1988, Public Law 100-694, prohibits 
personal actions against Federal employees for common law torts 
committed while acting within the scope of their employment, that Act 
does not apply to suits against federal employees for violation of the 
Constitution or federal statutes.
    The FTC believes that actions against its employees in their 
personal capacities and the potential for a judgment against agency 
employees hinder the agency's effectiveness as a law enforcement 
agency. The FTC's ability to effectively protect consumers and promote 
competition depends upon the willingness of its employees to pursue 
investigations and litigation. Uncertainty regarding what conduct may 
lead to a personal liability claim resulting in a monetary judgment 
tends to intimidate employees, stifle creativity and initiative, and 
limit decisive action. Thus, the threat of personal liability against 
an employee for a decision made or action taken as part of official 
duties can adversely affect the FTC's achievement of its mission. The 
adoption of a policy to permit indemnification would help alleviate 
these problems and afford FTC employees the same protection now given 
to other federal employees in several other government agencies, 
including the Agency for International Development, Commodity Futures 
Trading Commission, Department of Commerce, Department of Education, 
Department of Health and Human Services, Department of the Interior, 
and the Department of Justice.
    The FTC's policy permits, but does not require, the agency to 
indemnify a FTC employee who suffers an adverse verdict, judgment, or 
other monetary award, provided that the actions giving rise to the 
judgment were taken within the scope of employment, and that such 
indemnification is in the interest of the FTC, as determined by the 
Commission or the Commission's designee. The policy also allows the 
agency to settle a claim brought against an employee in his or her 
individual capacity by the payment of funds, upon a similar 
determination by the Commission or the Commission's designee. 
Generally, the FTC will not entertain a request either to indemnify or 
to pay to settle a personal damage claim against an employee before 
entry of an adverse verdict, judgment, or monetary award. However, in 
certain cases, the Commission or its designee, may determine that 
exceptional circumstances justify the earlier indemnification or 
payment of a settlement amount. This policy is applicable to actions 
pending against FTC employees as of its effective date, as well as to 
actions commenced after that date.

Regulatory Flexibility Act

    The Commission certifies that these new regulations, which deal 
solely with internal policies governing FTC personnel, do not require 
an initial or final regulatory analysis under the Regulatory 
Flexibility Act because they will not have a significant economic 
impact on a substantial number of small entities. See 5 U.S.C. 605(b).

Paperwork Reduction Act

    The regulations adopted herein do not contain information 
collection requirements within the meaning of the Paperwork Reduction 
Act, 44 U.S.C. 3501-3520.

Administrative Procedure Act

    The indemnification policy is published in final form without the 
opportunity for public notice and comment because it is a general 
statement of policy relating to FTC management and personnel. See 5 
U.S.C. 553(a)(2),(b).

List of Subjects in 16 CFR Part 1

    Administrative practice and procedure, Government employees, 
Indemnity payments.

    For the reasons set forth in the preamble, the Federal Trade 
Commission amends part 1, title 16, of the Code of Federal Regulations, 
as follows:

PART 1--GENERAL PROCEDURES

0
1. The authority citation for part 1 continues to read as follows:

    Authority:  Sec. 6, 38 Stat. 721 (15 U.S.C. 46), unless 
otherwise noted.


Sec. Sec.  1.125 through 1.129  [Added and Reserved]

0
2. In subpart Q, add and reserve Sec. Sec.  1.125 through 1.129.

0
3. Add subpart R to read as follows:

Subpart R--Policy With Regard to Indemnification of FTC Employees

    Authority:  15 U.S.C. 46.


Sec.  1.130  Policy on employee indemnification.

    (a) The Commission may indemnify, in whole or in part, its 
employees (which for the purpose of this regulation includes former 
employees) for any verdict, judgment, or other monetary award which is 
rendered against any such employee, provided that the conduct giving 
rise to the verdict, judgment, or award was taken within the scope of 
his or her employment with the Federal Trade Commission and that such 
indemnification is in the interest of the Federal Trade Commission, as 
determined as a matter of discretion by the Commission, or its 
designee.
    (b) The Commission may settle or compromise a personal damage claim 
against its employee by the payment of available funds, at any time, 
provided the alleged conduct giving rise to the personal damage claim 
was taken within the scope of employment and that such settlement or 
compromise is in the interest of the Federal Trade Commission, as 
determined as a matter of discretion by the Commission, or its 
designee.

[[Page 30967]]

    (c) Absent exceptional circumstances, as determined by the 
Commission or its designee, the Commission will not entertain a request 
either to agree to indemnify or to settle a personal damage claim 
before entry of an adverse verdict, judgment, or monetary award.
    (d) When an employee of the Federal Trade Commission becomes aware 
that an action may be or has been filed against the employee in his or 
her individual capacity as a result of conduct taken within the scope 
of his or her employment, the employee shall immediately notify his or 
her supervisor that such an action is pending or threatened. The 
supervisor shall promptly thereafter notify the Office of the General 
Counsel. Employees may be authorized to receive legal representation by 
the Department of Justice in accordance with 28 CFR 50.15.
    (e)(1) The employee may, thereafter, request either:
    (i) Indemnification to satisfy a verdict, judgment or award entered 
against the employee; or
    (ii) Payment to satisfy the requirements of a settlement proposal.
    (2) The employee shall submit a written request, with documentation 
including copies of the verdict, judgment, award, or settlement 
proposal, as appropriate, to the head of his or her division or office, 
who thereupon shall submit to the General Counsel, in a timely manner, 
a recommended disposition of the request. The General Counsel may also 
seek the views of the Department of Justice. The failure of an employee 
to provide notification under paragraph (d) of this section or make a 
request under this paragraph (e) shall not impair the agency's ability 
to provide indemnification or payment under this section if it 
determines it is appropriate to do so.
    (f) Any amount paid under this section either to indemnify a 
Federal Trade Commission employee or to settle a personal damage claim 
shall be contingent upon the availability of appropriated funds of the 
Federal Trade Commission.

    By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 2017-14008 Filed 7-3-17; 8:45 am]
 BILLING CODE 6750-01-P