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# \S) UNITEDSTATESENVIRONMENTALPROTECTION AGENCY 

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# 2 1978**~CltM** GENERAi.COUNHL MEMORANDUM SUBJECT: FROM: Guidance to States for Meeting Conflict of Interest Requirements.°!&'28 David

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# ~ Deputy General Counsel·(A-130) TO: Regional Air Directors The Clean Air Act Amendments of 1977 created new · conflict of interest requirements for members of certain state boards and executive agencies which are to be incorporated into State Implementation Plans by August 7, 1978. Section 128 of the Act as amended provides that all SIPs shall, at a minimum, require that a majority of the members of any state board orbody approving permits or enforcement orders under the Act represent the public interest and not derive any significantportion of their incomes from persons subject to permits or enforcement orders. Also, all such members and heads of executive agencies with similar powers must be required to adequately disclose any potential conflicts of interest. The enclosed letter and the suggested definitions attached to it are intended to provide guidance to the States concerning the requirements of §128. Insofar as possible, given the differences between the statutes, the suqgested definitions are consistentwith the conflict of interestregulations under §304 of the FWPCA (40 CFR §124.94). Inview of the fact thatmany state legislatures are meeting now, youmay want to expedite distribution of the letter and suggested definitions to the appropriate state author
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### Several issues have arisen which are not included in the letter for direct communication to the States, but which you may need to be aware of in counseling States on compliance. · Timini: Section 128 requires that all**SI~s** 

### include conflict o interestprovisions by Auqust 7, 1978. 

### There is some question whether EPA will be prepared to promulgate requlations by that date for all States which havenot adopted approvable SIP revisions on time. The Agencywill, however, require adequate conflictof interestprovision in the 1979 

### SIP revisions. Permits and enforcement orders issued b boards: 

### T e question has een raisedwhether permits and orders will be approvable by·EPA and enforceable in the courts if they are issued by state boards the members of which do notmeet the requirements of Section 128. In the absence of any specific provision to the contrary in 

### the Act, the Agency may eventually take the position that such permits and enforcement orders would be both approvable and enforceable. However, youmight want to alert States to the possibility that permits or enforcementorders issued by non-complying state boards afterAugust 7, 1978, may be subject to challenqe in 

### the courts. Representing the public interest: The suggested criteria for determiningwhether boardmembers represent the public interest are all phrased in neqa-cive terms. While we believe the suggested standards meet the minimum level of stringency required by Section 128, the States are authorized to adoptmore stringent regulations. Some States may want to consider adopting additional provisions for selection of some number of boardmembers from lists submitted by state conservation leagues, by a panel of representatives of environmentally concerned public interest groups, or by some similar mechanism. If, 

### other problems arise which are not addressed in this guidance, please contact Roberta Baruch of my 

### staff (FTS 755-0788). 

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# ,,--.... Model**~etter** _rem 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 FederalWater 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· significantportion of their incomes from persons subject to such permits or orders. In addition, the SIPs must require that all members of suchboards 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. 

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## ..2 In many States the composition of state boards affected by Section 128 is determined by statute, and legislative actionmay be required to comply with the new requirements. Executive orders may also be necessary in some cases. In viewof the fact thatmany state legislatures are meeting now, EPA is providing this guidance so that state agencies and legislatures canbeginwork 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

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--·"' 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)

. (0) 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**~** 

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._/. 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 adoptmore stringentconflict of interestprovisions 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 tighterrather 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. 

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# .. (a) "Board or body" includes any individual, agency, board, committee, council, department, or other state,

·1ocal, or regional instrumentality authorized to approve permits or enforcement orders under the Clean Air Act, in the first instance or on appeal.**(~)** "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 singlemember
.) where individual permits or orders are consideredby 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 ormore of gross personal income for a calendaryear, including retirement benefits, consultant fees, and stock dividends, or 'ff\ON:-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 portionpursuant to retirement, pension, or similar arrangement. For purposes of this section, income 

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## ·-**~**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 frompersons 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 associationwho holds, is an applicant for, or is subject to any permit, orwho is or may become subject to any enforcement order under the Clean Air Act, except that itdoes not include (1) an individual who is ormay become subject to an enforcement order solelyby 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 Cl) 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 from being 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. 

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