Standards of Ethical Conduct for Employees of the Executive Branch

Proposed Rules

Federal Register

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Proposed Rules

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OFFICE OF GOVERNMENT ETHICS

5 CFR Part 2635

RIN 3209-AA04

Standards of Ethical Conduct for Employees of the Executive

Branch

AGENCY: Office of Government Ethics (OGE).

ACTION: Proposed rule amendments.

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SUMMARY: The Office of Government Ethics is proposing minor amendments

to the sections on seeking other employment and outside activities in

the regulation governing standards of ethical conduct for executive

branch employees, to conform with interpretive advice and to improve

clarity.

DATES: Comments are invited and must be received before October 26,

1998.

ADDRESSES: Send comments to the Office of Government Ethics, Suite 500,

1201 New York Avenue, NW., Washington, DC 20005-3917, Attention: G. Sid

Smith.

FOR FURTHER INFORMATION CONTACT: G. Sid Smith, Senior Associate General

Counsel, Office of Government Ethics; telephone: 202-208-8000; TDD:

202-208-8025; FAX: 202-208-8037; Internet E-mail address: [email protected]

(for E-mail messages, the subject line should include the following

sentence--Rulemaking to amend standards of ethical conduct sections on

seeking employment and outside activities).

SUPPLEMENTARY INFORMATION:

I. Background

Senior Associate General

Counsel, Office of Government Ethics; telephone: 202-208-8000; TDD:

202-208-8025; FAX: 202-208-8037; Internet E-mail address: [email protected]

(for E-mail messages, the subject line should include the following

sentence--Rulemaking to amend standards of ethical conduct sections on

seeking employment and outside activities).

SUPPLEMENTARY INFORMATION:

I. Background

Some six years ago, the Office of Government Ethics (OGE) issued a

final rule establishing the executive branch standards of ethical

conduct, pursuant to section 201(a) of Executive Order 12674 (57 FR

35006-35067, August 7, 1992). These standards and the examples therein,

as amended and codified at 5 CFR part 2635, are the primary source of

guidance for ethics officials and employees throughout the executive

branch in applying the fourteen fundamental principles of ethical

conduct contained in the Executive order. In a final rule published at

62 FR 48746-48748 (September 17, 1997), OGE amended the standards of

ethical conduct regulation, by removing superseded references to the

former honorarium bar, reflecting statutory changes on procurement

integrity, adding references to a recent regulation on conflicts of

interest (5 CFR part 2640), and making other minor corrections and

updates.

Based on feedback from the executive branch ethics community, OGE

believes that the standards of ethical conduct are generally fulfilling

the intended goals of the Executive order in establishing useful,

practical guidelines for employees. Over the past six years, OGE has

provided interpretive advice to department and agency ethics officials

on the application of these standards, as specific fact patterns have

arisen. As a result, OGE has determined that selected provisions in the

standards should now be amended, in order to codify some of that advice

and to clarify the intended meaning of the regulatory language

for employees. Over the past six years, OGE has

provided interpretive advice to department and agency ethics officials

on the application of these standards, as specific fact patterns have

arisen. As a result, OGE has determined that selected provisions in the

standards should now be amended, in order to codify some of that advice

and to clarify the intended meaning of the regulatory language. In a

separate rulemaking, OGE published a proposed rule to accomplish that

with respect to certain provisions in subpart B (Gifts From Outside

Sources). By this current rulemaking, OGE is proposing similarly minor

amendments to provisions of the standards of ethical conduct in subpart

F (Seeking Other Employment) and subpart H (Outside Activities), in

order to further codify interpretive advice and to improve clarity.

II. Analysis of Proposed Amendments

Subpart F

Subpart F of the standards of ethical conduct regulation (5 CFR

part 2635) implemented certain provisions of a criminal statute and an

Executive order, specifically: (1) 18 U.S.C. 208, restricting

employees' official participation in matters wherein a person or

organization with whom they are negotiating for or have an arrangement

concerning prospective employment has a financial interest, and (2)

sections 101(h) and 101(j) of Executive Order 12674, directing

employees to act impartially in official matters and not to engage in

seeking or negotiating for outside employment that conflicts with

official duties and responsibilities. See references to these

implementation goals in the preamble to OGE's proposed rule on

standards of ethical conduct (56 FR 33786, July 23, 1991), and in

Sec. 2635.601 of the final rule

nterest will be direct and predictable.

This variation among sections of the regulation was an unintended

result of the process by which provisions on prospective employment in

the criminal statute and Executive order were implemented jointly. As

questions from ethics officials have arisen concerning these apparent

discrepancies, OGE has advised that the requirements of 18 U.S.C. 208

control. In order to more clearly align the provisions of subpart F

with that advice and the criminal statute, OGE proposes to amend

Sec. 2635.601 and Sec. 2635.602 accordingly.

Additionally, OGE proposes to amend Sec. 2635.601, Sec. 2635.602,

Sec. 2635.604, Sec. 2635.605, and Sec. 2635.606, to clarify initially

in each section that the restrictions apply only when the employee

would be ``participating personally and substantially'' in a particular

matter. These modifications will further ensure that subpart F is

consistent with 18 U.S.C. 208 and in conformance with OGE advice.

Subpart H

Section 2635.807(a) in subpart H of the standards of ethical

conduct regulation directs that employees shall not receive

compensation from any source other than the Government for teaching,

speaking or writing that relates to their official duties. This section

implemented several principles of Executive Order 12674, primarily the

prohibitions in sections 101(c) and 101(g) against employee misuse of

nonpublic information and use of public office for private gain, as

well as the principle in section 101(n) that an employee shall endeavor

to avoid actions creating even the appearance of such violations. See

references to these implementation goals in the preamble to OGE's

proposed rule on standards of ethical conduct (56 FR 33790, July 23,

1991) and in the preamble to the final regulation (57 FR 35036, August

7, 1992). Section 2635.807(a) also embodies the criminal prohibition at

18 U.S.C. 209 on receipt of any supplementation of Government salary as

compensation for services as a Government employee

ences to these implementation goals in the preamble to OGE's

proposed rule on standards of ethical conduct (56 FR 33790, July 23,

1991) and in the preamble to the final regulation (57 FR 35036, August

7, 1992). Section 2635.807(a) also embodies the criminal prohibition at

18 U.S.C. 209 on receipt of any supplementation of Government salary as

compensation for services as a Government employee.

Essential to the understanding and meaning of this section of the

regulation is a clear definition of the term ``receive.'' Paragraph

(a)(2)(iv) thereof defines ``receive'' to include actual or

constructive receipt of compensation, such that the employee has the

right to exercise dominion and control over the compensation and to

direct its subsequent use, and it includes certain indirect payments to

charitable organizations, relatives, and others. When the standards of

ethical conduct regulation was issued in 1992, OGE believed that this

definition would adequately apprise employees of the extent of the

restrictions on receipt of compensation in Sec. 2635.807(a). It has

become apparent, however, that there may be some confusion about when

receipt occurs for compensation that is deferred or made in advance.

For example, some departing employees have negotiated contracts to

undertake speaking, teaching or writing activities that may be related

to official duties, whereby compensation will be: (1) deferred until

after leaving Government service, for activities performed during

Government service, or (2) paid while the individual is still a

Government employee, as an advance for activities to be performed after

leaving Government service. In response to employees and agency ethics

officials who have raised these issues, OGE has advised that in both

circumstances described above, compensation would be viewed as

received, in violation of Sec. 2635.807(a).

In order to codify this interpretive advice and intent with regard

to these issues, OGE proposes to amend the definition of ``receive'' in

Sec

ter

leaving Government service. In response to employees and agency ethics

officials who have raised these issues, OGE has advised that in both

circumstances described above, compensation would be viewed as

received, in violation of Sec. 2635.807(a).

In order to codify this interpretive advice and intent with regard

to these issues, OGE proposes to amend the definition of ``receive'' in

Sec. 2635.807(a). To the extent possible, this will also promote

consistency with a related regulation and OGE advice concerning the

term ``receive'' as it pertains to the statutory 15% limit on outside

earned income and restrictions on compensation for outside employment

that apply to certain senior noncareer officials (see 5 CFR

2636.303(c)).

III. Matters of Regulatory Procedure

Executive Order 12866

In promulgating these proposed rule amendments, OGE 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 proposed amendments have also been reviewed by the

Office of Management and Budget under that Executive order.

Regulatory Flexibility Act

As Director of the Office of Government Ethics, I certify under the

Regulatory Flexibility Act (5 U.S.C. chapter 6) that this rulemaking

will not have a significant economic impact on a substantial number of

small entities because it primarily affects Federal executive branch

agencies and their employees.

Paperwork Reduction Act

The Paperwork Reduction Act (44 U.S.C. chapter 35) does not apply

because these proposed amendments do not contain any information

collection requirements that require the approval of the Office of

Management and Budget.

List of Subjects in Part 2635

Conflict of interests, Executive branch standards of ethical

conduct, Government employees.

Approved: April 1, 1998.

Stephen D. Potts,

Director, Office of Government Ethics.

.S.C. chapter 35) does not apply

because these proposed amendments do not contain any information

collection requirements that require the approval of the Office of

Management and Budget.

List of Subjects in Part 2635

Conflict of interests, Executive branch standards of ethical

conduct, Government employees.

Approved: April 1, 1998.

Stephen D. Potts,

Director, Office of Government Ethics.

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

Ethics proposes to amend part 2635 of subchapter B of chapter XVI of

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

PART 2635--[AMENDED]

1. The authority citation for part 2635 continues to read as

follows:

Authority: 5 U.S.C. 7301, 7351, 7353; 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.

Sec. 2635.601 [Amended]

2. Section 2635.601 is amended by removing the words ``who

otherwise would be affected by the performance or nonperformance of the

employees' official duties.'' from the end of the first sentence and

adding the words ``whose financial interests would be directly and

predictably affected by particular matters in which the employees

participate personally and substantially.'' in their place, and by

adding the new sentence ``See Sec. 2635.402 and Sec. 2640.103 of this

chapter.'' between the second and third sentences.

Sec. 2635.602 [Amended]

duties.'' from the end of the first sentence and

adding the words ``whose financial interests would be directly and

predictably affected by particular matters in which the employees

participate personally and substantially.'' in their place, and by

adding the new sentence ``See Sec. 2635.402 and Sec. 2640.103 of this

chapter.'' between the second and third sentences.

Sec. 2635.602 [Amended]

3. Section 2635.602 is amended by removing the words ``the

employee's official duties would affect'' from the first sentence of

the undesignated introductory text and adding the words ``particular

matters in which the employee will be participating personally and

substantially would directly and predictably affect'' in their place,

and by removing the words ``affected by the performance or

nonperformance of his official duties'' from the first sentence of the

note following the undesignated introductory text and adding the words

``affected directly and predictably by particular matters in which he

participates personally and substantially'' in their place.

4. Section 2635.603 is amended by revising paragraph (d) to read as

follows:

Sec. 2635.603 Definitions.

* * * * *

(d) Direct and predictable effect, particular matter, and personal

and substantial have the respective meanings set forth in

Sec. 2635.402(b)(1), (3), and (4).

Sec. 2635.604 [Amended]

5. Section 2635.604 is amended by adding the words ``personally and

substantially'' after the word ``participate'' in the first sentence of

paragraph (a).

Sec. 2635.605 [Amended]

6. Section 2635.605 is amended by adding the words ``personally and

substantially'' after the word ``participate'' in the first sentence of

paragraph (a), and by adding the words ``personally and substantially''

after the word ``participate'' in the first sentence of paragraph (b).

Sec. 2635.606 [Amended]

word ``participate'' in the first sentence of

paragraph (a).

Sec. 2635.605 [Amended]

6. Section 2635.605 is amended by adding the words ``personally and

substantially'' after the word ``participate'' in the first sentence of

paragraph (a), and by adding the words ``personally and substantially''

after the word ``participate'' in the first sentence of paragraph (b).

Sec. 2635.606 [Amended]

7. Section 2635.606 is amended by removing the words ``taking

official action'' from the first sentence of paragraph (a) and adding

the words ``participating personally and substantially'' in their

place.

Sec. 2635.807 [Amended]

8. Section 2635.807 is amended by adding the new sentence ``This

includes compensation paid in advance to an employee for activities to

be performed in the future, and compensation deferred to the future for

activities that are performed while an employee.'' after the first

sentence in paragraph (a)(2)(iv).

[FR Doc. 98-22864 Filed 8-25-98; 8:45 am]

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