Supplemental Standards of Ethical Conduct for Employees of the Office of Personnel Management

SUMMARY: The Office of Personnel Management, with the concurrence of

the Office of Government Ethics (OGE), is issuing an interim rule for

employees of OPM that supplements the executive branch-wide Standards

of Ethical Conduct (Standards) issued by OGE. The interim rule contains

a notice requirement designed to ensure that OPM employees do not use

their official positions or nonpublic information to obtain an

advantage for themselves or for certain other persons on competitive

and other examinations relating to Federal service, and a requirement

for OPM employees to obtain prior approval before engaging in certain

types of outside activities. The Office of Personnel Management is also

repealing that portion of its internal standards of conduct regulations

that was retained on an interim basis pending issuance of its

supplemental regulations, and those portions of its internal standards

of conduct regulations that were superseded by the new Standards or by

the executive branch financial disclosure regulations issued by OGE.

The Office of Personnel Management is retaining in its internal

standards of conduct regulation a separate Privacy Act conduct code and

adding a cross-reference to ethics and other conduct-related statutes

and regulations.

DATES: Interim rule effective July 16, 1996. Comments must be received

on or before August 15, 1996.

ADDRESSES: Send comments to: Lorraine Lewis, General Counsel, Office of

Personnel Management, Room 7353, Theodore Roosevelt Building, 1900 E

Street, NW., Washington, DC 20415.

FOR FURTHER INFORMATION CONTACT: Nancy Lee Gregg, Alternate Designated

Agency Ethics Official, Office of the General Counsel, Office of

Personnel Management, (202) 606-1701.

SUPPLEMENTARY INFORMATION:

I. Background

On August 7, 1992, OGE published new Standards of Ethical Conduct

for Employees of the Executive Branch. See 57 FR 35006-35067, as

corrected at 57 FR 48557, 57 FR 52583, and 60 FR 51667, with additional

grace period extensions for certain existing provisions at 59 FR 4779-

4780, 60 FR 6390-6391, and 60 FR 66857-66858. The Standards, codified

at 5 CFR part 2635 and effective February 3, 1993, established uniform

standards of ethical conduct that apply to all executive branch

personnel. With the concurrence of OGE, 5 CFR 2635.105 authorizes

executive branch agencies to publish agency-specific supplemental

regulations necessary to implement their respective ethics programs.

The Office of Personnel Management, with OGE's concurrence, has

determined that the following supplemental regulations, being codified

in new 5 CFR chapter XXXV, consisting of part 4501, are necessary in

light of OPM's unique programs and operations for the successful

implementation of OPM's ethics program.

The Office of Personnel Management is simultaneously repealing the

provisions of its internal employee responsibilities and conduct

regulations in 5 CFR part 1001 which have already been superseded or

which will be superseded upon issuance of these supplemental

regulations, and is replacing those provisions with a new section that

provides cross-references to 5 CFR part 2635 and other precepts that

pertain to employee conduct. A Privacy Act conduct code is also being

retained.

II. Analysis of the Regulations

Section 4501.101 General

Section 4501.101 explains that the regulations apply to all OPM

employees and supplement the executive branch-wide Standards in 5 CFR

part 2635. Section 4501.101 also provides a cross-reference to the

executive branch employee responsibilities and conduct regulations

contained in 5 CFR part 735, the OPM employee responsibilities and

conduct regulations in 5 CFR part 1001, the executive branch-wide

financial disclosure regulations contained in 5 CFR part 2634, and the

executive branch-wide regulation regarding outside employment at 5 CFR

part 2636.

Section 4501.102 Examination Information

Section 4501.102 supplements the prohibitions on use of public

office for private gain at 5 CFR 2635.702 and the prohibitions on use

of nonpublic information at 5 CFR 2635.703.

Under Sec. 4501.102(a), an OPM employee who takes part in the

construction of written tests or other assessment devices, has access

to such material, or is involved in the examination rating process must

notify his or her supervisor before filing to take a competitive

examination, an internal competitive examination or an Armed Services

entrance examination. Supervisory notification is also required when an

employee knows that the employee's spouse, minor child, or business

general partner intends to take such an examination.

As indicated by the supervisory responsibilities set forth in

paragraph (b) of Sec. 4501.102, the purpose of the notification

requirement is to ensure, either by the assignment of official duties

that will not place the employee in contact with information relating

to the examination to be taken or by substituting an examination about

which the employee does not have information, that the employee does

not have knowledge of questions on, answers to, or methods of scoring

the test or other assessment device in issue. Proper exercise of these

supervisory responsibilities will foreclose the possibility of any

suggestion that an OPM employee who has a role in devising tests or

other assessment devices has profited unfairly, or that the employee's

spouse, minor child, or general partner has profited unfairly,

[[Page 36994]]

from possible use of nonpublic information or other knowledge gained in

the course of the employee's official duties. It also protects the

integrity of the examination process and ensures that the prospects of

others subject to that process are not diminished by any OPM employee's

use of nonpublic information or use of public office for private gain.

The examination information provisions of Sec. 4501.102 are similar

to, but more specific than, those which had been in effect under OPM's

employee responsibilities and conduct regulations at 5 CFR 1001.735-

206, which is now being repealed (see below). Whereas Sec. 1001.735-206

had imposed the notice requirement on all OPM employees, Sec. 4501.102

applies only to those OPM employees who have some direct connection

with the examination process.

Section 4501.103 Prior Approval for Certain Outside Activities

Under 5 CFR 2635.803, agencies may, by supplemental regulations,

require employees to obtain approval before engaging in outside

employment and activities. Under 5 CFR 1001-735.203, which is now being

revoked, OPM employees have long been required to provide notice of, or

obtain approval for, proposed outside employment and activity under a

variety of circumstances. OPM has found this requirement useful in

ensuring that the outside employment activities of employees conform

with all applicable laws and regulations. In accordance with 5 CFR

2635.803, OPM has determined that it is necessary to the administration

of its ethics program to continue to require prior approval for certain

types of outside employment and activities that pose a potential for

employees to engage in conduct that might violate applicable laws and

regulations.

As compared to the requirement that has been imposed by 5 CFR 1001-

735.203, Sec. 4501.103(a) has been changed to clarify the requirement,

and to narrow its scope, consistent with the Standards. Section 1001-

735.203 has required OPM employees, other than special Government

employees, who engage in any kind of outside paid employment on a

substantially regular basis to provide notice of such employment to

their supervisors. In addition, Sec. 1001-735.203 has required OPM

employees to obtain approval before serving as members of committees or

boards which plan or advise on training courses or programs offered by

non-Government organizations; before accepting appointments as faculty

members for after-hours teaching; and in order to hold elective office

in the employee's local community government. In contrast to

Sec. 1001.735.203, Sec. 4501.-103(a) requires prior approval for four

types of outside activities on the part of OPM employees (again

excluding special Government employees).

Under Sec. 4501.103(a)(1), the first type of outside activity for

which OPM employees must obtain prior approval is the provision of

professional services that involve the application of the same

specialized skills or the same educational background as performance of

the employee's official duties. Such outside activities may raise a

strong possibility of a violation of the Standards. For purposes of

this section, ``professional services'' is defined in

Sec. 4501.103(d)(3) on the basis of the definition of ``profession''

established by OGE in its executive branch-wide regulations at 5 CFR

2636.305(b)(1), and means the provision of personal services by an

employee, including the rendering of advice or consultation, which

involves application of the skills of a profession. Secretarial and

clerical positions are not, for purposes of this requirement,

considered to provide ``professional services.''

Under Sec. 4501.103(a)(2), the second type of outside activity for

which OPM employees must obtain prior approval is teaching, speaking,

or writing that relates to the employee's official duties. Unlike the

requirement in 5 CFR 1001.735-203 for prior approval of after hours

teaching, this section requires prior approval of outside speaking and

writing, as well as outside teaching, but only if it ``relates to the

employee's official duties.'' Consistent with the Standards, the term

``relates to the employee's official duties'' is defined in

Sec. 4501.103(d)(5) as having the meaning given in 5 CFR 2635.-

807(a)(2)(i)(B) through (a)(2)(i)(E). Under that definition, teaching,

speaking, or writing relates to the employee's official duties if the

invitation to teach, speak, or write is extended primarily because of

the employee's official position; if the invitation or the offer of

compensation (when the employee is to be compensated for the activity)

is extended by a person whose interests may be affected substantially

by the employee's performance or nonperformance of his or her official

duties; if the activity draws substantially on ``nonpublic

information,'' a term which Sec. 4501.103(d)(2) defines as having the

meaning set forth in Sec. 2635.703(b) of the Standards and which

therefore includes information that the employee gains by reason of

Federal employment and that the employee knows or reasonably should

know has not been made available to the general public; if the subject

of the activity deals in significant part with OPM programs, operations

or policies or with the employee's current or recent assignments; or,

in the case of a noncareer employee as defined in 5 CFR 2636.303(a), if

the subject of the activity deals in significant part with the general

subject matter area, industry, or economic sector primarily affected by

the programs and operations of OPM.

Under Sec. 4501.103(a)(3), the third type of outside activity for

which OPM employees must obtain prior approval is certain service for a

``prohibited source.'' The term ``prohibited source'' is defined in

Sec. 4501.103(d)(4) as having the meaning set forth in Sec. 2635.203(d)

of the Standards, and therefore means any person who is (and also any

organization more than half of whose members are) seeking official

action by OPM, doing or seeking to do business with OPM, regulated by

OPM, or substantially affected by the performance or nonperformance of

the employee's duties. The kind of services for a prohibited source for

which Sec. 4501.103(a)(3) requires prior approval are those which could

raise a question of conflicting financial interests under subpart D of

the Standards or a question of loss of impartiality in performing

official duties under subpart E of the Standards. Those services

include service as an officer, director, trustee, general partner,

employee, agent, attorney, consultant, contractor, or ``active

participant.'' The term ``active participant'' is defined in

Sec. 4501.103(d)(1) as having the meaning set forth in subpart E of the

Standards, at 5 CFR 2635.502(b)(1)(v). In accordance with that

definition, payment of dues to an organization, or the donation or

solicitation of financial support, alone does not constitute active

participation.

An exception to the prior approval requirement in Sec. 4501.-

103(a)(3) excludes from the prior approval requirement therein a number

of uncompensated and volunteer activities that are unlikely to raise

issues under the Standards. Specifically, employees do not have to

obtain approval before providing the services listed in

Sec. 4501.103(a)(3), if the service is without compensation (other than

reimbursement of expenses) and the prohibited source for which the

service is to be provided is a nonprofit charitable, religious,

professional, social, fraternal, educational, recreational, public

service, or civic

[[Page 36995]]

organization. However, prior approval for such an activity is required

if the activity is covered by another of the prior approval

requirements in this section. In addition, because OPM exercises

general supervision over all operations of the Combined Federal

Campaign (CFC), through which nonprofit organizations receive or seek

to receive charitable fundraising support in the Federal workplace,

prior approval is required by Sec. 4501.103(a)(3) if the organization

that is a prohibited source receives or seeks to receive fundraising

support through the CFC, and the employee's official duties would

involve him in administration of the CFC program.

Under Sec. 4501.103(a)(4), the fourth type of outside activity for

which OPM employees must obtain prior approval is the provision of

services, other than clerical services or service as a fact witness, on

behalf of any other person in connection with a particular matter in

which the United States is a party, or in which the United States has a

direct and substantial interest, or if the provision of services

involves the preparation of materials for submission to, or

representation before, a Federal court or executive branch agency.

Under 5 CFR 2635.805, employees are required to obtain authorization

before acting as expert witnesses, other than on behalf of the United

States, in any proceeding before a Federal court or agency in a matter

in which the United States is a party or has a direct and substantial

interest. Paragraph (a)(4) of Sec. 4501.103 is intended to cover such

testimony as an outside activity, thus eliminating the need to create a

separate procedure for the required authorization. In addition,

requiring prior approval under these circumstances will help employees

to avoid violating the representational bars in 18 U.S.C. 203 and 205.

Consistent with the Federal Service Labor Management Relations Statute

(5 U.S.C. chapter 71) and the ``personnel administration proceedings''

exception at 18 U.S.C. 205(d), an exception in Sec. 4501.103(a)(4)

provides that prior approval is not required for OPM employees acting

on behalf of the labor organization that is the exclusive

representative of the OPM employees in the unit it represents to

represent an employee who is the subject of disciplinary, loyalty, or

other personnel administration proceedings in connection with those

proceedings.

Section 4501.103(b) sets forth the procedures for submitting a

request for approval of an outside activity, specifying the information

to be included in the employee's request, and the contents of a

certification the employee is to submit with the request for approval.

Section 4501.103(c) specifies the standard for granting approval.

Approval shall be granted only upon a determination by the agency

official designated authority to make such a determination that the

outside employment is not expected to involve conduct prohibited by

statute or Federal regulation.

Section 4501.103(d) defines the terms ``active participant,''

``nonpublic information,'' ''professional services,'' ``prohibited

source,'' and ``relates to the employee's official duties,'' for

purposes of the section, as explained above, consistent with the

Standards and other regulations issued by OGE.

Requiring prior approval will give OPM managers the opportunity to

review the proposed employment or activity in light of the employee's

official duties and to consult with an agency ethics official

concerning the applicability of Federal conflict of interest statutes

and ethics regulations to the proposed activity. The executive branch-

wide Standards, at 5 CFR 2635.802, explain that an activity conflicts

with an employee's official duties if it is prohibited by statute or by

an agency supplemental regulation, or if, under the standards set forth

in Secs. 2635.402 and 2635.502 of the Standards, it would require the

employee's disqualification from matters so central or critical to the

performance of the employee's official duties that the employee's

ability to perform the duties of his or her position would be

materially impaired. Even where prior approval is not required,

conflict of interest statutes and the Standards may restrict the

actions of employees in connection with participation in such

activities or organizations.

III. Repeal of Portions of OPM's Internal Regulations Regarding

Employee Conduct and Related Modifications

The interim rule repeals those portions of the regulations at 5 CFR

part 1001 governing OPM employees' responsibilities and conduct that

were superseded by the executive branch-wide Standards of Ethical

Conduct at 5 CFR part 2635, or by the financial disclosure regulations

at 5 CFR part 2634, the requirement for prior approval of outside

employment at 5 CFR 1001.735-203 (which now appears, in revised form,

at 5 CFR 4501.103), and 5 CFR 1001.735-208, which was in the nature of

a directive to OPM procurement personnel. It also repeals portions of

part 1001 that duplicate the employee responsibilities and conduct

regulations contained in 5 CFR part 735.

These actions leave in 5 CFR part 1001 only the code of conduct

required by the Privacy Act of 1974, at 5 U.S.C. 552a(e)(9). The

Privacy Act code of conduct for OPM employees, previously contained at

5 CFR 1001.735-206a, is redesignated as Sec. 1001.102 and follows a new

Sec. 1001.101 which provides a cross-reference to ethics and other

conduct-related statutes and regulations.

IV. Matters of Regulatory Procedure

Administrative Procedure Act

Under 5 U.S.C. 1103(b)(1) and 1105, these regulations are not

subject to the rulemaking requirements of the Administrative Procedure

Act, at 5 U.S.C. 553 (b), (c), and (d), because they apply solely to

OPM or its employees. Furthermore, OPM finds good cause that it is in

the public interest that these internal regulations take effect as an

interim rule upon the date of publication of this Federal Register

rulemaking document.

Executive Order 12866

In promulgating these interim regulations, OPM has adhered to the

regulatory philosophy and the applicable principles of regulation set

forth in section 1 of Executive Order 12866, Regulatory Planning and

Review. These regulations have not been reviewed by the Office of

Management and Budget under that Executive order, as they deal with

agency management and personnel matters and are not, in any event,

``significant'' thereunder.

Regulatory Flexibility Act

As Director of OPM, I certify that this regulation will not have

significant economic impact on a substantial number of small entities

within the meaning of the Regulatory Flexibility Act (5 U.S.C. chapter

6).

Paperwork Reduction Act

As Director of OPM, I have determined that the Paperwork Reduction

Act (44 U.S.C. chapter 35) does not apply because this regulation does

not contain any information collection requirements that require the

approval of the Office of Management and Budget.

List of Subjects

5 CFR Part 1001

Conflict of interests, Government employees.

5 CFR Part 4501

Conflict of interests, Government employees.

[[Page 36996]]

Dated: July 2, 1996.

James B. King,

Director, Office of Personnel Management.

Approved: July 5, 1996.

F. Gary Davis,

Deputy Director, Office of Government Ethics.

For the reasons set forth in the preamble, the Office of Personnel

Management, with the concurrence of the Office of Government Ethics, is

amending title 5 of the Code of Federal Regulations as follows:

CHAPTER I--OFFICE OF PERSONNEL MANAGEMENT

PART 1001--EMPLOYEE RESPONSIBILITIES AND CONDUCT

1. The authority citation for part 1001 is revised to read as

follows:

Authority: 5 U.S.C. 552a, 7301.

Subparts A, B, C and D [Amended]

2. Subpart A, consisting of Secs. 1001.735-101 through 1001.735-

103; Secs. 1001.735-201 through 1001.735-206 and 1001.735-207 through

1001.735-214 of subpart B; and subparts C and D, consisting of

Secs. 1001.735-301 through 1001.735-304 and 1001.735-401 through

1001.735-412, respectively, of part 1001 are removed.

3. A new Sec. 1001.101 is added to read as follows:

Sec. 1001.101 Cross-reference to financial disclosure requirements and

other conduct rules.

In addition to the regulations contained in this part, employees of

the Office of Personnel Management (OPM) should refer to:

(a) The Standards for Ethical Conduct for Employees of the

Executive Branch at 5 CFR part 2635;

(b) The OPM regulations at 5 CFR part 4501, which supplement the

executive branch-wide standards;

(c) The Employee Responsibilities and Conduct regulations at 5 CFR

part 735;

(d) The executive branch financial disclosure regulations at 5 CFR

part 2634;

(e) The executive branch outside employment regulations at 5 CFR

part 2636; and

(f) The restrictions upon use of political referrals in employment

matters at 5 U.S.C. 3303.

4. Section 1001.735-206a is redesignated as Sec. 1001.102, and the

heading is revised to read ``Privacy Act rules of conduct.''

5. A new chapter XXXV, consisting of part 4501, is added to read as

follows:

CHAPTER XXXV--OFFICE OF PERSONNEL MANAGEMENT

PART 4501--SUPPLEMENTAL STANDARDS OF ETHICAL CONDUCT FOR EMPLOYEES

OF THE OFFICE OF PERSONNEL MANAGEMENT

Sec.

4501.101 General.

4501.102 Examination information.

4501.103 Prior approval for certain outside activities.

Authority: 5 U.S.C. 7301; 5 U.S.C. App. (Ethics in Government

Act of 1978); 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, 2635.702, 2635.703, 2635.-802, 2635.803, 2635.805.

Sec. 4501.101 General.

In accordance with 5 CFR 2635.105, the regulations in this part

apply to employees of the Office of Personnel Management (OPM) and

supplement the Standards of Ethical Conduct for Employees of the

Executive Branch contained in 5 CFR part 2635. In addition to the

regulations in 5 CFR part 2635 and this part, OPM employees are subject

to the responsibilities and conduct regulations contained in 5 CFR

parts 735 and 1001, the executive branch-wide financial disclosure

regulations contained in 5 CFR part 2634, and the executive branch

regulations regarding outside employment at 5 CFR part 2636.

Sec. 4501.102 Examination information.

(a) An employee of OPM who takes part in the construction of

written tests or any other assessment device, has access to such

material, or is involved in the examination rating process, shall

notify his supervisor, in writing, when he intends to file for a

competitive examination, an internal competitive examination, or an

Armed Services entrance examination. The employee also must give such

notice if he knows that his spouse, minor child, or business general

partner intends to take any of these examinations.

(b) The employee's supervisor or other appropriate authority will

arrange the employee's duty assignments to prevent his contact with

materials related to the examination or examinations that will be

taken. If the test material involved in the forthcoming examination has

already been exposed to the employee, arrangements will be made for the

employee or other person concerned to be given an alternate test.

(c) The employee's supervisor is responsible for seeing that

notifications given by employees under this section are transmitted

promptly to the Test Security Officer in OPM's Employment Service.

Sec. 4501.103 Prior approval for certain outside activities.

(a) Prior approval requirement. An employee, other than a special

Government employee, shall obtain written approval before engaging--

with or without compensation--in the following outside activities:

(1) Providing professional services involving the application of

the same specialized skills or the same educational background as

performance of the employee's official duties;

(2) Teaching, speaking, or writing that relates to the employee's

official duties;

(3) Serving as an officer, director, trustee, general partner,

employee, agent, attorney, consultant, contractor, or active

participant for a prohibited source, except that prior approval is not

required by this paragraph (a)(3) to provide such service without

compensation (other than reimbursement of expenses) for a prohibited

source that is a nonprofit charitable, religious, professional, social,

fraternal, educational, recreational, public service, or civic

organization, unless prior approval for the activity is required by

paragraph (a)(1), (a)(2), or (a)(4) of this section, or unless the

organization receives or seeks to receive fundraising support through

the Combined Federal Campaign (CFC) under 5 CFR part 950 and the

employee's official duties involve the administration of the CFR

program; or

(4)(i) Except as provided in paragraph (a)(4)(ii) of this section,

providing services, other than clerical services or service as a fact

witness, on behalf of any other person in connection with a particular

matter:

(A) In which the United States is a party;

(B) In which the United States has a direct and substantial

interest; or

(C) If the provision of services involves the preparation of

materials for submission to, or representation before, a Federal court

or executive branch agency.

(ii) Prior approval is not required by paragraph (a)(4)(i) of this

section for OPM employees acting on behalf of the labor organization

that is the exclusive representative of the OPM employees in the unit

it represents to provide services as an agent or attorney for, or

otherwise to represent, such an OPM employee who is the subject of

disciplinary, loyalty, or other personnel administration proceedings in

connection with those proceedings.

(b) Submission of requests for approval. (1) Requests for approval

shall

[[Page 36997]]

be submitted in writing to the agency designee, through normal

supervisory channels. Such requests shall include, at a minimum, the

following:

(i) The employee's name and position title;

(ii) The name and address of the person or organization for whom

the outside activity is to be performed;

(iii) A description of the proposed outside activity, including the

duties and services to be performed while engaged in the activity; and

(iv) The proposed hours that the employee will engage in the

outside activity, and the approximate dates of the activity.

(2) Together with his request for approval, the employee shall

provide a certification that:

(i) The outside activity will not depend in any way on nonpublic

information;

(ii) No official duty time or Government property, resources, or

facilities not available to the general public will be used in

connection with the outside activity; and

(iii) The employee has read subpart H (``Outside Activities'') of 5

CFR part 2635.

(3) Upon a significant change in the nature or scope of the outside

activity or in the employee's official position, the employee shall

submit a revised request for approval.

(c) Approval of requests. Approval shall be granted only upon a

determination by the agency designee, in consultation with an agency

ethics official when such consultation is deemed necessary by the

agency designee, that the outside activity is not expected to involve

conduct prohibited by statute or Federal regulation, including 5 CFR

part 2635.

(d) Definitions. For purposes of this section:

(1) Active participant has the meaning set forth in 5 CFR

2635.502(b)(1)(v).

(2) Nonpublic information has the meaning set forth in 5 CFR

2635.703(b).

(3) Professional services means the provision of personal services

by an employee, including the rendering of advice or consultation,

which involves application of the skills of a profession as defined in

5 CFR 2636.305(b)(1).

(4) Prohibited source has the meaning set forth in 5 CFR

2635.203(d).

(5) Relates to the employee's official duties has the meaning set

forth in 5 CFR 2635.807(a)(2)(i)(B) through (a)(2)(i)(E).

[FR Doc. 96-18020 Filed 7-15-96; 8:45 am]

BILLING CODE 6325-01-M