.;/'\1\0 #,.,,.., 

; ·.A\ 

\S.~f UNITED STATES ENVIRONMENTAL PROTECTION AGENCY 

(,_ .... \~..,.,.,~.,c."" WASHINGTON, O.C. 20460 

\. 

MAR 2 1978 ~CEM 

OIENIERAI. COUNHL 

MEMORANDUM 

SUBJECT: 

FROM: 

Guidance to States for Meeting Conflict of Interest Requiremen~s.~28 

Deputy 

David 0. 

General Bickad) 

Counsel ~ · (A-130) 

TO: Regional Air Directors 

conflict 

The Clean Air Act Amendments of 1977 created new · of interest requirements for members of certain state boards and executive agencies which are to be incorporated 

1978. Section 

into State Implementation Plans by August 7, 

all 128 of the Act as amended provides that SIPs shall, at a minimum, require that a majority of the members of any state board or body approving permit;s or enforcement orders under the Act represent the public interest and not derive any significant portion of their incomes from persons subject to permits or enforcement orders. Also, all such members and heads of executive 

disclose 

agencies with similar powers must be required to adequately any potential conflicts of interest. 

The enclosed letter and the suggested definitions 

States 

attached to it are intended to provide guidance to the 

possible, concerning the requirements of §128. Insofar as 

suqgested given the differences between the statutes, the definitions are consistent with the conflict of interest regulations under §304 of the FWPCA (40 CFR §124.94). 

now, 

In view of the fact that many state legislatures are meeting 

suggested you may want to expedite distribution of the letter and definitions to the appropriate state author.iti..es. . - ...... , 

. .. -. - ..... 

: • ... . 

~ .• ~- ... 

-

-

-

--· 
!""'. I 

./ 

2 

the letter 

Several 

for 

issues 

direct 

have arisen which are not included in communication which you may to the States, but 

compliance. · need to be aware of in counseling States on 

conflict Timini: 

o 

Section 128 requires that all SI~s include 

is some question 

interest 

whether provisions by August 7, 1978. There 

regulations EPA will be prepared to promulgate 

adopted approvable by that date for all States which have not 

however, require SIP revisions on time. The Agency will, 

in adequate conflict of interest provision the 1979 SIP r$visions. 

boards: Permits 

T 

and enforcement orders issued b 

orders will 

e 

be 

quest~on 

approvable 

has een ra~sed whether permits and by ·EPA and enforceable courts if in the 

which do not 

they 

meet 

are issued by state boards the members of 

absence of any specific 

the requirements of Section 128. In the provision to the contrary Act, the Agency may in the eventually permits and enforcement take the position that such 

enforceable. However, orders would be both approvable and 

possibility you might want to alert States to the 

non-complying that 

state permits or enforcement orders issued by 

subject to challenqe boards after August 7, 1978, may be in the courts. 

Representing criteria the public interest: The suggested 

the public 

for determining whether board members represent interest are all phrased in neqa-t:ive While we believe terms. 

level of stringency 

the suggested standards meet the minimum 

are authorized required by Section 128, the States 

States may want 

to adopt more stringent regulations. Some 

for selection to consider adopting additional provisions 

submitted by state 

of some number of board members from lists conservation representatives leagues, by a panel of of environmentally groups, or by concerned public interest some similar mechanism. 

If, other problems arise which are not addressed this guidance, please in 

(FTS 755-0788). 

contact Roberta Baruch of my staff 

-

.~~· .... ~,. 

.. 

"" ... 

-

··-:. 

. =-·· 

-

.... 

-

t.: ~ 

-

..... 
(', ; 

Model ~etter _rom Regional Offices to w~ates . 

Re: Conflict of Interest Requirements for Certain State Soards and Executive Agencies 

The Clean Air Act Amendments of 1977 added to the Act 

Section 128, which sets out new conflict of interest requirements for certain state boards and executive agencies. 

Section 128 is somewhat simiJ.ar to §304(i) (2) (0) of the 

Federal Water Pollution Control Act (FWPCA, as amended 

December 28, 1977) and is generally aimed at assuring that 

decisions to issue permits or enforcement orders neither be 

nor appear to be influenced by the private interests of 

individual decision makers. 

More specifically, Section 128 provides that by 

August 7, 1978, all State Implementation Plans (SIPs) shall 

require that a majority of the members of any state body 

issuinq permits or enforcement orders under the Clean Air 

Act (l) represent the public interest and (2) not derive any· 

significant portion of their incomes from persons subject to 

such permits or orders. In addition, the SIPs must require 

that all members of such boards and the heads of executive 

agencies with similar powers disclose any potential conflicts 

of interest. Finally, Section 128 provides that States may 

adopt more stringent conflict of interest requirements if 

they wish, and that EPA shall approve any such requirements 

if submitted as part of a SIP. 

.. 

. 

· .. 

........ 

-

-

· .. 
2 

In many States the composition of state boards affected 

by Section 128 is determined by statute, and legislative 

action may be required to comply with the new requirements. 

Executive orders may also be necessary in some cases. In 

view of the fact that many state legislatures are meeting 

now, EPA is providing this guidance so that state agencies 

and legislatures can begin work immediately on any legislative or other actions necessary to implement Section 128. 

Attached to this letter is a set of suggested definitions for key phrases appearing in Section 128. The 

suggested definitions a;-e offered for two purposes: (l) to 

.. assist the States in identifying the principal issues that 

must be addressed in proposed SIP revisions, and {2) to 

,.,. ......... suggest provisions that EPA would view as approvable 

--·" elements of a SIP revision. To the extent possible, the 

suggested definitions are consistent with those appearing in 

the conflict of interest regulations issued under §304(i) (2) 

. (D) of the FWPCA (40 CFR §124.94). Differences between the 

two sets of definitions ref~ect statutory differences, 

including the more stringent eligibility requirements of the 

Water Act and the inclusion of disclosure requirements in 

the Air A<:t. 

The Agency recognizes that States have a variety of 

procedures and special concerns that may warrant differing 

approaches to implementation of Section 128. Accordingly, 

this guidance is not intended to suggest that all SIPs must 

~ .. .. 

-

-

.... 

. . ! 

-
r ·. __ ..,' 

---· 

._/. 

3 

include the suggested definitions verbatim, or even that 

definitions per se must be included in the SIPs. In general, 

however, EPA views the substance of the suggested definitions 

as representing the minimum level of stringency necessary to 

meet the requirements of Section 128. 

As indicated above, any State is free to adopt more 

stringent conflict of interest provisions than those 

required by Section 128. If you are in doubt as to the 

appropri.ate standards 'called for by your State's particular 

scheme, erring on the side of tighter rather than looser 

controls may avoid the necessity of SIP 4isapproval an~ the 

imposition of federal requirements that may not be best 

suited to the needs of your program. 

If you have questions not answered by this letter, 

please do not hesitate to contact or Roberta Baruch 

(202-755-0788), Office of the General Counsel at EPA Headquarters in Washington, D.C. 

.. 

.... 

'· ' 

-

r •• 

-

-

-

-

.. 

-
~ jgested Definitions .. 

(a) "Board or body" includes any individual, agency, 

board, committee, council, department, or other state, 

·local, or regional instrumentality authorized to approve 

permits or enforcement orders under the Clean Air Act, in 

the first instance or on appeal. 

(b) "Majority of members" means a majority of all 

members of a board or body having or sharing authority to 

approve permits or enforcement orders under the Clean Air 

Act, and a majority of members making up any panel of fewer 

than all members (including panels of a single member.) where 

individual permits or orders are considered by such a panel. 

(c) "Represent the public interest" means does not 

own a controlling interest in, have 5% or more of his or 

her capital invested in, serve as attorney for, act as 

consultant for, serve as officer or director of, or hold 

any other official or contractual relationship with any 

person subject to permits or enforcement orders under the 

. Clean·Air Act or any trade or business association of which 

such a person is a member. 

(d) "Significant portion of income" means 10 percent 

or more of gross personal income for a calendar year, including 

retirement benefits, consultant fees, and stock dividends, 

or rf\Orf:- 7 except that it shall mean SO percentAof gross personal income 

for a calendar year if the recipient is over 60 years of age 

and is receiving such portion pursuant to retirement, pension, 

or similar arrangement. For purposes of this section, income 

--

'·"' ·! -

... ..... f'·~ · 1111 ••• 

-··'-" 

-

~ .· ... 

-...... 

~ ·~.:. 

... ,. ... ~c- . .. · ... .. )...· : ·. ..__ 
-.. . .. _. 

.J 

-----....... 

.. , 2 

·- ~ derived from mutual~fund. payments, or from other diversified 

investments as to which the recipient does not know the 

identity of the primary sources of income, shall be considered 

part of the recipient's gross personal income but shall not be 

. treated as income derived from persons subject to permits 

or enforcement orders under the Clean Air Act. 

(e) "Persons subject to permits or enforcement orders 

under this Act" includes any individual, corporation, 

partnership, or association who holds, is an applicant for, 

or is subject to any permit, or who is or may become subject 

to any enforcement order under the Clean Air Act, except 

that it does not include (l) an individual who is or may 

become subject to an enforcement order solely by reason of 

his or her ownership or operation of a motor vehicle, or (2} 

any department or agency of a state, local, or regional 

government. 

(f) "Potential conflict of interest" includes (1) any 

income from persons subject to permits or enforcement orders 

under this Act, and (2) any interest or relationship that 

would preclude the individual having the interest or 

relationship frombeing considered one who represents the 

public interest. 

(g) "Adequately d·isclosed" means explained in detail 

in a signed written statement prepared at least annually 

and available for public inspection. 

-

... 

-. 

-

--

I 

--

....