[Senate Report 104-244]
[From the U.S. Government Publishing Office]



104th Congress                                                   Report
                                 SENATE                
  2d session                                                    104-244
_______________________________________________________________________


                                                       Calendar No. 349


 
         OFFICE OF GOVERNMENT ETHICS AUTHORIZATION ACT OF 1996

                               __________

                               R E P O R T

                                 of the

         COMMITTEE ON GOVERNMENTAL AFFAIRS UNITED STATES SENATE

                              to accompany

                                 S. 699

     TO AMEND THE ETHICS IN GOVERNMENT ACT OF 1978, TO EXTEND THE 
AUTHORIZATION OF APPROPRIATIONS FOR THE OFFICE OF GOVERNMENT ETHICS FOR 
                    7 YEARS, AND FOR OTHER PURPOSES




   March 27 (legislative day, March 26), 1996.--Ordered to be printed
                   COMMITTEE ON GOVERNMENTAL AFFAIRS

   TED STEVENS, Alaska, Chairman
JOHN GLENN, Ohio                     WILLIAM V. ROTH, Jr, Delaware
SAM NUNN, Georgia                    WILLIAM S. COHEN, Maine
CARL LEVIN, Michigan                 FRED THOMPSON, Tennessee
DAVID PRYOR, Arkansas                THAD COCHRAN, Mississippi
JOSEPH I. LIEBERMAN, Connecticut     JOHN McCAIN, Arizona
DANIEL K. AKAKA, Hawaii              BOB SMITH, New Hampshire
BYRON L. DORGAN, North Dakota        HANK BROWN, Colorado
    Albert L. McDermott, Staff 
             Director
  Leonard Weiss, Minority Staff 
             Director
  Michal Sue Prosser, Chief Clerk
                                 ------                                

SUBCOMMITTEE ON OVERSIGHT OF GOVERNMENT MANAGEMENT AND THE DISTRICT OF 
                                COLUMBIA

 WILLIAM S. COHEN, Maine, Chairman
CARL LEVIN, Michigan                 FRED THOMPSON, Tennessee
DAVID PRYOR, Arkansas                THAD COCHRAN, Mississippi
JOSEPH I. LIEBERMAN, Connecticut     JOHN McCAIN, Arizona
DANIEL K. AKAKA, Hawaii              HANK BROWN, Colorado
   Kim Corthell, Staff Director
    Paulina McCarter Collins, 
     Professional Staff Member
Linda J. Gustitus, Minority Staff 
Director and Chief Counsel to the 
             Minority
  Frankie de Vergie, Chief Clerk


                            C O N T E N T S

                              ----------                              
                                                                   Page
  I. Summary and Purpose..............................................1
 II. Background.......................................................1
III. Legislative History..............................................4
 IV. Major Issues in S. 699...........................................5
  V. Section-by-Section Analysis......................................6
 VI. Estimated Cost of Legislation....................................7
VII. Evaluation of Regulatory Impact..................................8
VIII.Changes in Existing Law..........................................9

                                                       Calendar No. 349
104th Congress                                                   Report
                                 SENATE

 2d Session                                                     104-244
_______________________________________________________________________


         OFFICE OF GOVERNMENT ETHICS AUTHORIZATION ACT OF 1996

                                _______


  March 27, (legislative day, March 26), 1996.--Ordered to be printed

_______________________________________________________________________


Mr. Stevens, from the Committee on Governmental Affairs, submitted the 
                               following

                              R E P O R T

                         [To accompany S. 699]

    The Committee on Governmental Affairs, to which was 
referred the bill (S. 699) to extend the authorization for the 
Office of Government Ethics (OGE) for seven years, and for 
other purposes, having considered the same, reports favorably 
on the bill and recommends that the bill do pass.

                         I. Summary and Purpose

    The purpose of S. 699, is to ensure an effective system 
throughout the Executive Branch by extending the Office of 
Government Ethics authorization for seven years. The bill also 
provides OGE with gift-acceptance authority and makes certain 
technical changes to the ethics laws.

                             II. Background

             A. Creation of the Office of Government Ethics

    The Office of Government Ethics was created by Title IV of 
the Ethics in Government Act of 1978 (Ethics Act). In response 
to a 1976 General Accounting Office report to Congress 
identifying a number of problems with the federal government's 
ethics system, President Carter submitted draft legislation in 
1977 proposing the creation of OGE. Later in 1977, the Senate 
Committee on Governmental Affairs reported S. 555, the Public 
Officials Integrity Act. The basic concepts of S. 555 were 
incorporated into the Ethics Act, which was signed into law on 
October 26, 1978, as Public Law 95-521.
    The Ethics Act created OGE within the Office of Personnel 
Management (OPM) to provide ``overall direction of executive 
branch policies related to preventing conflicts of interest on 
the part of officers and employees of any executive agency.'' 
OGE was originally authorized for five years, through September 
30, 1983.

                   B. 1983 and 1988 reauthorizations

    OGE was reauthorized for another five years in 1983 by 
passage of S. 461, which was signed into law as Public law 98-
150. S. 461 was reported by the Senate Governmental Affairs 
Committee, passed by the Senate, and amended by the House 
Committee on the Judiciary and the House Committee on Post 
Office and Civil Service. As finally passed, the law extended 
OGE's authorization through September 30, 1988, and clarified 
the agency's authority and independence. Specifically, the 1983 
reauthorization:
          Established a five-year term for the OGE Director;
          Gave OGE greater independence from OPM, allowing OGE 
        to operate ``in consultation with'' rather than ``under 
        the general supervision of'' OPM;
          Required a separate budget line for OGE;
          Permitted the OGE Director to request assistance from 
        the Inspector General of an agency in conducting 
        investigations involving financial disclosures; and
          Required OGE to review the financial disclosure 
        reports of high-level White House aides.
    OGE was again reauthorized in 1988, this time for six 
years, through September 30, 1994. S. 2344, as reported by the 
Senate Committee on Governmental Affairs, made a number of 
important changes in OGE's structure, including establishing 
OGE as a free-standing agency independent of OPM (effective 
October 1, 1989). In addition, the 1988 reauthorization, signed 
into law as Public Law 100-598:
          Upgraded the Director's position to Level III from 
        Level V of the Executive Schedule;
          Clarified the Director's power to recommend and order 
        ``corrective action'' on the part of other agencies;
          Expanded the Director's authority to request 
        Inspector General assistance to include any 
        investigation pursuant to the agency's statutory 
        responsibilities; and
          Increased OGE's authorized appropriations to $2.5 
        million for fiscal year 1989 and to $3 million for each 
        of the five years thereafter.

            C. Developments since OGE's last reauthorization

    Since OGE was last reauthorized in 1988, the ethics laws 
have undergone a dramatic restructuring by virtue of the Ethics 
Reform Act of 1989 (Reform Act), Public Law 101-194. The Reform 
Act consolidated the ethics laws applicable to all three 
branches of government; expanded the post-employment 
restrictions for employees of the Executive Branch and extended 
such restrictions to the legislative branch; revamped the 
financial disclosure rules for senior government officials; 
changed certain aspects of the laws pertaining to the 
acceptance of gifts, outside earned income, and outside 
employment; authorized ``certificates of divestiture'' for 
incoming political appointees who sell assets in order to avoid 
conflicts of interest; banned the receipt of Honoraria by 
Federal employees; \1\ and added civil penalties to the range 
of potential sanctions for violations of the criminal ethics 
laws, among other changes. As the agency responsible for 
coordinating the Executive Branch's ethics program, these 
changes added substantially to OGE's workload, calling for 
increased employee education and counseling, the issuance of 
regulations, the development of new forms, and other related 
tasks.
    \1\ The U.S. Supreme Court on February 22, 1995, held that the 
total Honoraria ban violates the First Amendment rights of the persons 
on whose behalf the case was brought in U.S. v. National Treasury 
Employees Union (federal employees below grade GS-16). However, the 
decision leaves some question as to how the description of employees 
below GS-16 should be applied to employees who are not in GS-15 
positions or below or who were not among the respondents in the case. 
At the time this report was filed, no final injunction had been issued 
by the District Court on this matter.
---------------------------------------------------------------------------
    Also since OGE was last reauthorized, two presidential 
Executive Orders have added to OGE's responsibilities. 
President Bush issued Executive Order 12674 on April 12, 1989, 
requiring OGE to issue new regulations, including comprehensive 
Standards of Conduct for the Executive Branch, and to review 
agency requests for supplemental regulations. President Clinton 
issued Executive Order 12834 on January 20, 1993, creating new 
post-employment rules for top political appointees and 
requiring OGE to assist in its implementation.
    In June 1990, the Subcommittee on Oversight of Government 
Management (OGM) held a hearing on OGE's agency review program 
and found significant problems. The OGM Subcommittee found that 
OGE never audited certain agencies; the intervals between 
audits at other agencies were too long; and while OGE did a 
good job of identifying weaknesses and making recommendations 
when it conducted audits, it did not follow up effectively to 
make sure that its recommendations were implemented by 
agencies. Both OGE and the General Accounting Office (GAO) 
testified that the main reason for these deficiencies was that 
OGE lacked sufficient staff to do a better job.

                      D. OGE's budget and staffing

    In light of OGE's expanded duties under law and Executive 
Order and the findings of the OGM Subcommittee hearing, it 
became apparent that OGE's resources were not sufficient to 
accomplish its mission. Accordingly, the Congress acted twice 
to ensure that OGE had the tools it needed, enacting Public Law 
101-334, to increase OGE's appropriations cap to $5 million, 
and Public Law 102-506, to remove OGE's appropriations cap. 
OGE's budget and staff levels since its last reauthorization 
are as follows:

------------------------------------------------------------------------
                                                             Authorized 
                                                 Funding        staff   
                                                              levels\1\ 
------------------------------------------------------------------------
Fiscal year:                                                            
    1989....................................    $1,822,000            35
    1990....................................     3,414,000            53
    1991....................................     3,500,000            53
    1992....................................     6,303,000            70
    1993....................................     8,265,000           101
    1994....................................     8,313,000            93
    1995....................................     8,154,000            93
    1996....................................     7,776,000            91
------------------------------------------------------------------------
\1\ The actual number of staff years used each year has been less than  
  the authorized level.                                                 

    The Committee believes that the significant increase in 
OGE's funding and staffing since it was last reauthorized is 
justified because of its status as a free-standing agency with 
responsibility for many administrative matters formerly handled 
by OPM and its increased workload under statute and Executive 
Order. Significantly, the growth in OGE's budget leveled off in 
FY93-FY96, once it had the opportunity to respond to its 
changed environment.

                       e. presidential transition

    OGE has a variety of responsibilities in connection with 
presidential transitions. The 1992 transition, which involved a 
change of political parties, not just a new President, drew 
heavily on OGE's resources.
    Before the election, OGE briefed the candidates' staffs on 
the ethics laws applicable to high-level appointees and OGE's 
role in the appointments process. This information assisted an 
incoming administration in making its initial personnel 
decisions. Immediately after the election, OGE advised 
transition team staff and agency personnel with respect to 
permissible activities during the transition period.
    The high level of turnover among top-level Executive Branch 
employees placed significant demands on OGE's resources. In 
addition to providing ethics to individuals who entered or 
considered entering government service as a result of the 
transition, OGE provided advice to outgoing government 
employees about negotiating for new jobs and post-employment 
restrictions. One indication of OGE's increased workload is the 
number of financial disclosure statements reviewed by the 
agency for individuals nominated by the President for positions 
requiring Senate confirmation. In 1992 OGE reviewed, certified, 
and forwarded to the Senate 256 public financial disclosure 
statements for such presidential nominees. In 1993, that number 
grew to 547, with on average over 100 draft reports pending at 
OGE at any given time. In 1994, OGE handled 415 financial 
disclosure reports.
    OGE is also responsible for issuing certificates of 
divestiture, which allow nominees who meet statutory criteria 
to defer taxes on capital gains if they dispose of assets in 
order to avoid conflicts of interest; assisting in the 
establishment of qualifying blind trusts; and monitoring 
compliance with any ethics agreements made by appointees during 
the confirmation process. Presidential transitions increase the 
level of activity in all of these areas.
    OGE informed the OGM Subcommittee that, from its program 
perspective, it had no recommendations for administrative or 
legislative changes with respect to future presidential 
transitions.

                        III. Legislative History

    S. 699 was introduced by Senators Cohen and Levin on April 
6, 1995, and referred to the Subcommittee on Oversight of 
Government Management and the District of Columbia of the 
Committee on Governmental Affairs. S. 699 is nearly identical 
to legislation (S. 1413) introduced by Senators Levin and Cohen 
and passed by the Senate in the 103d Congress. On April 20, 
1994, the OGM Subcommittee held a hearing on S. 1413. Stephen 
D. Potts, the Director of OGE, was the only witness. Mr. Potts 
testified in favor of reauthorizing OGE and granting the agency 
gift acceptance authority. He also described OGE's agency 
review program, the presidential transition process, and OGE's 
budget and personnel resources. Since the Subcommittee held a 
hearing so recently on the issues surrounding the OGE 
reauthorization bill, the Subcommittee did not hold a hearing 
on S. 699. The Subcommittee polled out S. 699 with no 
amendments and reported it to the full Committee for 
consideration on August 1, 1995. The Committee met on August 10 
and approved S. 699 by voice vote.
    President Clinton nominated Mr. Potts on July 12, 1995 to 
serve a second five year term as Director of OGE. The 
Governmental Affairs Committee approved his nomination on 
August 10, 1995 by voice vote and the full Senate confirmed his 
nominated on August 11.

                       IV. Major Issues in S. 699

                      a. length of reauthorization

    S. 699 reauthorizes OGE for seven years, which is one year 
longer than its last reauthorization. The Committee agreed with 
OGE's request that the period be extended to seven years in 
order to avoid having reauthorization occur during a 
presidential election year or the year immediately thereafter, 
when the large turnover in high-level executive branch 
employees places great demands on OGE's resources.

                      b. gift acceptance authority

    Federal agencies are not permitted to accept gifts unless 
they have specific statutory authority to do so. While OGE has 
not had this authority in the past, twenty-three agencies and 
departments do have some type of gift acceptance authority. 
Based on OGE's testimony, the Committee determined that gift 
acceptance authority would assist OGE in performing its duties.
    OGE intends to use its gift acceptance authority primarily 
in connection with its training and education function. OGE 
regularly conducts multi-agency training sessions for federal 
employees around the country, and sometimes there is no federal 
facility available that can provide adequate space and 
services. The gift acceptance authority in S. 699 will allow 
OGE to accept donated non-federal facilities, for example, an 
auditorium and related services such as projectionists and 
custodians, which might be offered free-of-charge by a state or 
local government or a university.
    OGE has asked for broad authority, as other agencies have, 
but coupled its request with a requirement that the agency 
establish written rules governing the acceptance of gifts to 
ensure that the authority is used as intended and guard against 
abuse. S. 699 requires the Director of OGE to establish written 
rules to govern the exercise of this authority to safeguard 
against conflicts of interest or the appearance of conflicts in 
the acceptance of gifts.
    Currently, other agencies that have gift acceptance 
authority do not have to prescribe regulations governing its 
use. While other agencies would not be required to follow the 
example of OGE's regulations in making their own determinations 
about their gift acceptance authority, OGE believes that its 
regulations would provide useful guidance to agencies. OGE also 
believes it would place the agency in a better position to 
recommend more strongly to agencies that they too consider such 
limiting regulations so as not to bring their programs and 
employees' conduct into question.

                  C. repeal and conforming amendments

    S. 699 also repeals, corrects, and modifies various 
provisions of current law. Two of the changes amend the Ethics 
in Government Act: (i) correcting the heading of Section 401 to 
reflect the fact that OGE was made independent of OPM in 1988, 
and (ii) moving the date of OGE's biennial report to Congress 
back by one month, from March 31 to April 30, in order to give 
OGE more time to collect and analyze calendar year-end-data. S. 
699 also repeals a requirement dating from 1980 that requires a 
poster entitled ``Code of Ethics for Government Service'' to be 
displayed in all federal facilities employing 20 or more 
people. Display of the poster is no longer appropriate since it 
does not incorporate the current Standards of Conduct 
applicable to Executive Branch employees, and OGE has developed 
new educational materials for employees. Finally, S. 699 amends 
the Federal Deposit Insurance Act to delete a requirement that 
was added in 1993 (Public Law 103-204) that requires OGE to 
consult with the Board of Directors of the Federal Deposit 
Insurance Corporation with respect to ethics regulations 
applicable to independent contractors working for the FDIC. 
Because OGE's responsibilities and expertise pertain to the 
conduct of Executive Branch employees, and because these FDIC 
contractors are not government employees, the consultative role 
imposed by the Act is not consistent with OGE's mission.

                     V. Section-by-Section Analysis

    Section 1 states the short title of the Act.
    Section 2 authorizes the Director of OGE to accept and 
utilize, on behalf of the United States, any gifts or donations 
for the purpose of aiding or facilitating the work of OGE. The 
section also places certain limits on the use of this authority 
and requires the Director to establish written rules governing 
its use to avoid conflicts of interest or the appearance of 
conflicts.
    Section 3 extends OGE's authorization for seven years, 
authorizing the appropriation of such sums as may be necessary 
to carry out OGE's duties for fiscal years 1996 through 2002.
    Section 4 contains repealing and conforming amendments:
          It repeals a requirement that a specific ethics 
        poster be displayed in all federal facilities with 20 
        or more employees;
          It deletes a requirement in the Federal Deposit 
        Insurance Act that requires OGE to consult with the 
        Board of Directors of the Federal Deposit Insurance 
        Corporation with respect to ethics regulations 
        applicable to independent contractors working for the 
        FDIC;
          It corrects a heading in the Ethics in Government Act 
        to reflect the fact that OGE was made independent of 
        OPM in 1988; and
          It extends by one month, from March 31 to April 30, 
        the date on which OGE is required to file its biennial 
        reports to Congress.

                   VI. Estimated Cost of Legislation

                                     U.S. Congress,
                               Congressional Budget Office,
                                  Washington, DC, October 30, 1995.
Hon. Ted Stevens,
Chairman, Committee on Governmental Affairs, U.S. Senate, Washington, 
        DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for S. 699, the Office of 
Government Ethics Authorization Act of 1995.
    Because enactment of this legislation could affect direct 
spending, pay-as-you-go procedures would apply to the bill.
    If you wish further details on this estimate, we will be 
pleased to provide them.
            Sincerely,
                                         June E. O'Neill, Director.
    Enclosure.

               congressional budget office cost estimate

    1. Bill number: S. 699.
    2. Bill title: Office of Government Ethics Authorization 
Act of 1995.
    3. Bill status: As ordered reported by the Senate Committee 
on Governmental Affairs on August 10, 1995.
    4. Bill purpose: S. 699 would authorize the appropriation 
of such sums as may be necessary to fund the Office of 
Government Ethics from fiscal year 1996 through fiscal year 
2002. The office's authorization expired at the end of fiscal 
year 1994. The 1995 appropriation for the Office of Government 
Ethics was $8.1 million.
    The bill also would allow the director of the Office of 
Government Ethics to accept and use certain types of gifts to 
further the work of the office.
    5. Estimated cost to the Federal Government: Enacting S. 
699 would affect discretionary spending, subject to 
appropriations of the necessary funds, as shown in the 
following table. The table provides two alternative spending 
paths: one assuming no annual adjustment for inflation, and one 
including such an adjustment.

----------------------------------------------------------------------------------------------------------------
                                                              1995     1996     1997     1998     1999     2000 
----------------------------------------------------------------------------------------------------------------
Spending under current law:                                                                                     
    Budget authority \1\..................................      8.1  .......  .......  .......  .......  .......
    Estimated outlays.....................................      8.1      0.4  .......  .......  .......  .......
                                                                                                                
                                        WITHOUT ADJUSTMENT FOR INFLATION                                        
Proposed changes:                                                                                               
    Estimated authorization...............................  .......      8.1      8.1      8.1      8.1      8.1
    Estimated outlays.....................................  .......      7.7      8.1      8.1      8.1      8.1
Projected spending under S. 699:                                                                                
    Estimated authorization \1\...........................      8.1      8.1      8.1      8.1      8.1      8.1
    Estimated outlays.....................................      8.1      8.1      8.1      8.1      8.1      8.1
                                                                                                                
                                          WITH ADJUSTMENT FOR INFLATION                                         
Proposed changes:                                                                                               
    Estimated authorization...............................  .......      8.5      8.8      9.2      9.5      9.9
    Estimated outlays.....................................  .......      8.1      8.8      9.2      9.5      9.9
Projected spending under S. 699:                                                                                
    Estimated authorization \1\...........................      8.1      8.5      8.8      9.2      9.5      9.9
    Estimated outlays.....................................      8.1      8.1      8.5      9.2      9.5      9.9
----------------------------------------------------------------------------------------------------------------
\1\ The 1995 level is the amount appropriated for that year.                                                    

    The costs of this bill fall within budget function 800.
    6. Basis of estimate: This estimate assumes that all funds 
authorized will be appropriated and that spending will occur at 
historical rates. The estimated authorization amounts in the 
above table are alternative projections for this program: the 
1995 appropriation without any adjustment for inflation, and 
the 1995 level plus annual adjustments for inflation. The 1996 
appropriation, however, is likely to be lower than both of the 
alternative authorization estimates ($8.1 million and $8.5 
million). The House-Senate conference version of the Treasury, 
Postal Service, and General Government Appropriation Bill for 
1996 includes $7.8 million for the Office of Government Ethics.
    7. Pay-as-you-go considerations: The Balanced Budget and 
Emergency Deficit Control Act of 1985 sets up pay-as-you-go 
procedures for legislation affecting direct spending or 
receipts through 1998. CBO estimates that enacting S. 699 could 
affect direct spending. Thus, pay-as-you-go procedures would 
apply to the bill.
    Direct spending could result from the provision that would 
allow the director to accept donations to further the work of 
the office. CBO expects that any contributions would be used in 
the same year. Therefore, we estimate that the net change in 
direct spending would be negligible in all years. The following 
table summarizes CBO's estimate of the pay-as-you-go impact of 
S. 699.

------------------------------------------------------------------------
                                              1996      1997      1998  
------------------------------------------------------------------------
Change in outlays.........................         0         0         0
Change in receipts........................     (\1\)     (\1\)     (\1\)
------------------------------------------------------------------------
\1\ Not applicable.                                                     

    8. Estimated cost to State and local governments: None.
    9. Estimate comparison: None.
    10. Previous CBO estimate: None.
    11. Estimate prepared by: Mark Grabowicz.
    12. Estimate approved by: Robert A. Sunshine, for Paul N. 
Van de Water, Assistant Director for Budget Analysis.

                  VII. Evaluation of Regulatory Impact

    Pursuant to the requirements of paragraph 11(b) of rule 
XXVI of the Standing Rules of the Senate, the Committee has 
considered the regulatory and paperwork impact of S. 699, as 
well as the impact of the bill on personal privacy. The bill 
creates a limited regulator responsibility on the part of the 
Director to establish rules governing internal government 
operations, but imposes no additional regulatory burden on 
private sector individuals or businesses. The bill will have no 
significant impact on paperwork and no impact on personal 
privacy beyond those imposed by existing law.

                     VIII. Changes in Existing Law

    In compliance with paragraph 12 of rule XXVI of the 
Standing rules of the Senate, changes in existing law made by 
S. 699 are shown as follows (existing law proposed to be 
omitted is enclosed in black brackets, new matter is printed in 
italic, and existing law in which no changes are proposed is 
shown in roman):

                      OFFICE OF GOVERNMENT ETHICS

          * * * * * * *
Sec.
401. Office of Government Ethics.
402. Authority and functions.
403. Administrative provisions.
404. Rules and regulations.
405. Authorization of appropriations.
406. Annual pay.
407. Annual pay of Director.
408. Reports to Congress.

    401. [Office of Government Ethics] Establishment; 
Appointment of Director
    (a) There is established an executive agency to be known as 
the Office of Government Ethics.
    (b) There shall be at the head of the Office of Government 
Ethics a Director (hereinafter referred to as the 
``Director''), who shall be appointed by the President, by and 
with the advice and consent of the Senate. Effective with 
respect to any individual appointed or reappointed by the 
President as Director on or after October 1, 1983, the term of 
service of the Director shall be five years.
    (c) The Director may--
          (1) appoint officers and employees, including 
        attorneys, in accordance with chapter 51 and subchapter 
        III of chapter 53 of title 5, United States Code; and
          (2) contract for financial and administrative 
        services (including those related to budget and 
        accounting, financial reporting, personnel, and 
        procurement) with the General Services Administration, 
        or such other Federal agency as the Director determines 
        appropriate, for which payment shall be made in 
        advance, or by reimbursement, from funds of the Office 
        of Government Ethics in such amounts as may be agreed 
        upon by the Director and the head of the agency 
        providing such services.
    Contract authority under paragraph (2) shall be effective 
for any fiscal year only to the extent that appropriations are 
available for that purpose.
    402. Authority and Functions
    (a) The Director shall provide, in consultation with the 
Office of Personnel Management, overall direction of executive 
branch policies related to preventing conflicts of interest on 
the part of officers and employees of any executive agency, as 
defined in section 105 of Title 5.
    (b) The responsibilities of the Director shall include--
          (1) developing, in consultation with the Attorney 
        General and the Office of Personnel Management, rules 
        and regulations to be promulgated by the President or 
        the Director pertaining to conflicts of interest and 
        ethics in the executive branch, including rules and 
        regulations establishing procedures for the filing, 
        review, and public availability of financial statements 
        filed by officers and employees in the executive branch 
        as required by title II of this Act;
          (2) developing, in consultation with the Attorney 
        General and the Office of Personnel Management, rules 
        and regulations to be promulgated by the President or 
        the Director pertaining to the identification and 
        resolution of conflicts of interest;
          (3) monitoring and investigating compliance with the 
        public financial disclosure requirements of title II of 
        this Act by officers and employees of the executive 
        branch and executive agency officials responsible for 
        receiving, reviewing, and making available financial 
        statements filed pursuant to such title;
          (4) conducting a review of financial statements to 
        determine whether such statements reveal possible 
        violations of applicable conflict of interest laws or 
        regulations and recommending appropriate action to 
        correct any conflict of interest or ethical problems 
        revealed by such review;
          (5) monitoring and investigating individual and 
        agency compliance with any additional financial 
        reporting and internal review requirements established 
        by law for the executive branch.
          (6) interpreting rules and regulations issued by the 
        President or the Director governing conflict of 
        interest and ethical problems and the filing of 
        financial statements;
          (7) consulting, when requested, with agency ethics 
        counselors and other responsible officials regarding 
        the resolution of conflict of interest problems in 
        individual cases;
          (8) establishing a formal advisory opinion service 
        whereby advisory opinions are rendered on matters of 
        general applicability or on important matters of first 
        impression after, to the extent practicable, providing 
        interested parties with an opportunity to transmit 
        written comments with respect to the request for such 
        advisory opinion, and whereby such advisory opinions 
        are compiled, published, and made available to agency 
        ethics counselors and the public;
          (9) ordering corrective action on the part of 
        agencies and employees which the Director deems 
        necessary;
          (10) requiring such reports from executive agencies 
        as the Director deems necessary;
          (11) assisting the Attorney General in evaluating the 
        effectiveness of the conflict of interest laws and in 
        recommending appropriate amendments;
          (12) evaluating, with the assistance of the Attorney 
        General and the Office of Personnel Management, the 
        need for changes in rules and regulations issued by the 
        Director and the agencies regarding conflict of 
        interest and ethical problems, with a view toward 
        making such rules and regulations consistent with and 
        an effective supplement to the conflict of interest 
        laws;
          (13) cooperating with the Attorney General in 
        developing an effective system for reporting 
        allegations of violations of the conflict of interest 
        laws to the Attorney General, as required by section 
        535 of title 28, United States Code;
          (14) providing information on and promoting 
        understanding of ethical standards in executive 
        agencies; and
          (15) developing, in consultation with the Office of 
        Personnel Management, and promulgating such rules and 
        regulations as the Director determines necessary or 
        desirable with respect to the evaluation of any item 
        required to be reported by title II of this Act.
    (c) In the development of policies, rules, regulations, 
procedures, and forms to be recommended, authorized, or 
prescribed by him, the Director shall consult when appropriate 
with the executive agencies affected and with the Attorney 
General.
    (d)(1) The Director shall, by the exercise of any authority 
otherwise available to the Director under this title, ensure 
that each executive agency has established written procedures 
relating to how the agency is to collect, review, evaluate, and 
if applicable, make publicly available, financial disclosure 
statements filed by any of its officers or employees.
    (2) In carrying out paragraph (1), the Director shall 
ensure that each agency's procedures are in conformance with 
all applicable requirements, whether established by law, rule, 
regulation, or Executive order.
    (e) In carrying out subsection (b)(10), the Director shall 
prescribe regulations under which--
          (1) each executive agency shall be required to submit 
        to the Office an annual report containing--
                  (A) a description and evaluation of the 
                agency's ethics program, including any 
                educational, counseling, or other services 
                provided to officers and employees, in effect 
                during the period covered by the report; and
                  (B) the position title and duties of--
                          (i) each official who was designated 
                        by the agency head to have primary 
                        responsibility for the administration, 
                        coordination, and management of the 
                        agency's ethics program during any 
                        portion of the period covered by the 
                        report; and
                          (ii) each officer or employee who was 
                        designated to serve as an alternate to 
                        the official having primary 
                        responsibility during any portion of 
                        such period; and
                  (C) any other information that the Director 
                may require in order to carry out the 
                responsibilities of the Director under this 
                title; and
          (2) each executive agency shall be required to inform 
        the Director upon referral of any alleged violation of 
        Federal conflict of interest law to the Attorney 
        General pursuant to section 535 of title 28, United 
        States Code, except that nothing under this paragraph 
        shall require any notification or disclosure which 
        would otherwise be prohibited by law.
    (f)(1) In carrying out subsection (b)(9) with respect to 
executive agencies, the Director--
          (A) may--
                  (i) order specific corrective action on the 
                part of an agency based on the failure of such 
                agency to establish a system for the 
                collection, filing, review, and, when 
                applicable, public inspection of financial 
                disclosure statements, in accordance with 
                applicable requirements, or to modify an 
                existing system in order to meet applicable 
                requirements; or
                  (ii) order specific corrective action 
                involving the establishment or modification of 
                an agency ethics program (other than with 
                respect to any matter under clause (i)) in 
                accordance with applicable requirements; and
          (B) shall, if an agency has not complied with an 
        order under subparagraph (A) within a reasonable period 
        of time, notify the President and the Congress of the 
        agency's noncompliance in writing (including, with the 
        notification, any written comments which the agency may 
        provide).
    (2)(A) In carrying out subsection (b)(9) with respect to 
individual officers and employees--
          (i) the Director may make such recommendations and 
        provide such advice to such officers and employees as 
        the Director considers necessary to ensure compliance 
        with rules, regulations, and Executive orders relating 
        to conflicts of interest or standards of conduct;
          (ii) if the Director has reason to believe that an 
        officer or employee is violating, or has violated, any 
        rule, regulation, or Executive order relating to 
        conflicts of interest or standards of conduct, the 
        Director--
                  (I) may recommend to the head of the 
                officer's or employee's agency that such agency 
                head investigate the possible violation and, if 
                the agency head finds such a violation, that 
                such agency head take any appropriate 
                disciplinary action (such as reprimand, 
                suspension, demotion, or dismissal) against the 
                officer or employee, except that, if the 
                officer or employee involved is the agency 
                head, any such recommendation shall instead be 
                submitted to the President; and
                  (II) shall notify the President in writing if 
                the Director determines that the head of an 
                agency has not conducted an investigation 
                pursuant to subclause (I) within a reasonable 
                time after the Director recommends such action;
          (iii) if the Director finds that an officer or 
        employee is violating any rule, regulation, or 
        Executive order relating to conflicts of interest or 
        standards of conduct, the Director--
                  (I) may order the officer or employee to take 
                specific action (such as divestiture, recusal, 
                or the establishment of a blind trust) to end 
                such violation; and
                  (II) shall, if the officer or employee has 
                not complied with the order under subclause (I) 
                within a reasonable period of time, notify, in 
                writing, the head of the officer's or 
                employee's agency of the officer's or 
                employee's noncompliance, except that, if the 
                officer or employee involved is the agency 
                head, the notification shall instead be 
                submitted to the President; and
          (iv) if the Director finds that an officer or 
        employee is violating, or has violated, any rule, 
        regulation, or Executive order relating to conflicts of 
        interest or standards of conduct, the Director--
                  (I) may recommend to the head of the 
                officer's or employee's agency that appropriate 
                disciplinary action (such as reprimand, 
                suspension, demotion, or dismissal) be brought 
                against the officer or employee, except that if 
                the officer or employee involved is the agency 
                head, any such recommendations shall instead be 
                submitted to the President; and
                  (II) may notify the President in writing if 
                the Director determines that the head of an 
                agency has not taken appropriate disciplinary 
                action within a reasonable period of time after 
                the Director recommends such action.
    (B)(i) In order to carry out the Director's duties and 
responsibilities under subparagraph (A) (iii) or (iv) with 
respect to individual officers and employees, the Director may 
conduct investigations and make findings concerning possible 
violations of any rule, regulation, or Executive order relating 
to conflicts of interest or standards of conduct applicable to 
officers and employees of the executive branch.
    (ii)(I) Subject to clause (iv) of this subparagraph, before 
any finding is made under subparagraphs (A) (iii) or (iv), the 
officer or employee involved shall be afforded notification of 
the alleged violation, and an opportunity to comment, either 
orally or in writing, on the alleged violation.
    (II) The Director shall, in accordance with section 553 of 
title 5, United States Code, establish procedures for such 
notification and comment.
    (iii) Subject to clause (iv) of this subparagraph, before 
any action is ordered under subparagraph (A)(iii), the officer 
or employee involved shall be afforded an opportunity for a 
hearing, if requested by such officer or employee, except that 
any such hearing shall be conducted on the record.
    (iv) The procedures described in clauses (ii) and (iii) of 
this subparagraph do not apply to findings or orders for action 
made to obtain compliance with the financial disclosure 
requirements in title 2 of this Act. For those findings and 
orders, the procedures in section 206 of this Act shall apply.
    (3) The Director shall send a copy of any order under 
paragraph (2)(A)(iii) to--
          (A) the officer or employee who is the subject of 
        such order; and
          (B) the head of officer's or employee's agency or, if 
        such officer or employee is the agency head, to the 
        President.
    (4) For purposes of paragraphs (2)(A) (ii), (iii), (iv), 
and (3)(B), in the case of an officer or employee within an 
agency which is headed by a board, committee, or other group of 
individuals (rather than by a single individual), any 
notification, recommendation, or other matter which would 
otherwise be sent to an agency head shall instead be sent to 
the officers or employees appointing authority.
    (5) Nothing in this title shall be considered to allow the 
Director (or any designee) to make any finding that a provision 
of title 18, United States Code, or any criminal law of the 
United States outside of such title, has been or is being 
violated.
    (6) Notwithstanding any other provision of law, no record 
developed pursuant to the authority of this section concerning 
an investigation of an individual for a violation of any rule, 
regulation, or Executive order relating to a conflict of 
interest shall be made available pursuant to section 552(a)(3) 
of title 5, United States Code, unless the request for such 
information identifies the individual to whom such records 
relate and the subject matter of any alleged violation to which 
such records relate, except that nothing in this subsection 
shall affect the application of the provisions of section 
552(b) of title 5, United States Code, to any record so 
identified.
    403. Administrative Provisions
    (a) Upon the request of the Director, each executive agency 
is directed to
          (1) make its services, personnel, and facilities 
        available to the Director to the greatest practicable 
        extent for the performance of functions under this Act; 
        and
          (2) except when prohibited by law, furnish to the 
        Director all information and records in its possession 
        which the Director may determine to be necessary for 
        the performance of his duties.
    The authority of the Director under this section includes 
the authority to request assistance from the inspector general 
of an agency in conducting investigations pursuant to the 
Office of Government Ethnics responsibilities under this Act. 
The head of any agency may detail such personnel and furnish 
such services, with or without reimbursement, as the Director 
may request to carry out the provisions of this Act.
    (b)(1) The Director is authorized to accept and utilize on 
behalf of the United States, any gift, donation, bequest, or 
devise of money, use of facilities, personal property, or 
services for the purpose of aiding or facilitating the work of 
the Office of Government Ethics.
    (2) No gift may be accepted--
          (A) that attaches conditions inconsistent with 
        applicable laws or regulations; or
          (B) that is conditioned upon or will require the 
        expenditure of appropriated funds that are not 
        available to the Office of Government Ethics.
    (3) The Director shall establish written rules setting 
forth the criteria to be used in determining whether the 
acceptance of contributions of money, services, use of 
facilities, or personal property under this subsection would 
reflect unfavorably upon the ability of the Office of 
Government Ethics, or any employee of such Office, to carry out 
its responsibilities or official duties in a fair and objective 
manner, or would compromise the integrity or the appearance of 
the integrity of its programs or any official involved in those 
programs.
    404. Rules and Regulations
    In promulgating rules and regulations pertaining to 
financial disclosure, conflict of interest, and ethics in the 
executive branch, the Director shall issue rules and 
regulations in accordance with chapter 5 of title 5, United 
States Code. Any person may seek judicial review of any such 
rule or regulation.
    405. Authorization of Appropriations
    There are authorized to be appropriated to carry out [the 
provisions of] this title [and for no other purpose--
          [(1) not to exceed $2.5 million for the fiscal year 
        ending September 30, 1989;
          [(2) not to exceed $5 million for the fiscal year 
        ending September 30, 1990; and
          [(3)] such sums as may be necessary for [each of the 
        4 fiscal years thereafter.] the fiscal years beginning 
        with fiscal year 1996 and ending with fiscal year 2002.
    406. Annual Pay
    [Section amended section 5316 of Title 5, Government 
Organization and Employees, by adding ``Director of the Office 
of Government Ethics'' to the list of positions at Level V of 
the Executive Schedule.]
    407. Annual Pay of Director
    [Section amended section 5316 of Title 5, Government 
Organization and Employees, by striking out ``Director of the 
Office of Government Ethics'' from the list of positions at 
Level V of the Executive Schedule, and amended section 5314 of 
Title 5, Government Organization and Employees, by adding 
``Director of the Office of Government Ethics'' to the list of 
positions at Level III of the Executive Schedule.]
    408. Reports to Congress
    The Director shall, no later than [March 31] April 30 of 
each year in which the second session of a Congress begins, 
submit to the Congress a report containing
          (1) a summary of the actions taken by the Director 
        during a 2-year period ending on December 31 of the 
        preceding year in order to carry out the Directors 
        functions and responsibilities under this title; and
          (2) such other information as the Director may 
        consider appropriate.
          * * * * * * *
                              ----------                              


                             12 U.S.C. 1822

    (f) Conflict of Interest.--(1) Applicability of other 
provisions.--(A) Clarification of status of corporation.--The 
Corporation is, and has been since its creation, an agency for 
purposes of title 18.
    (B) Treatment of contractors.--Any individual who, pursuant 
to a contract or any other arrangement, performs functions or 
activities of the Corporation under the direct supervision of 
an officer or employee of the Corporation, shall be deemed to 
be an employee of the Corporation for purposes of title 18, and 
this chapter. Any individual who, pursuant to a contract or any 
other agreement, acts for or on behalf of the Corporation, and 
who is not otherwise treated as an officer or employee of the 
United States for purposes of title 18, shall be deemed to be a 
public official for purposes of section 201 of title 18.
    (2) Regulations concerning employee conduct.--The officers 
and employees of the Corporation and those individuals under 
contract to the Corporation who are deemed, under paragraph 
(1)(B), to be employees of the Corporation for purposes of 
title 18 shall be subject to the ethics and conflict of 
interest rules and regulations issued by the Office of 
Government Ethics, including those concerning employee conduct, 
financial disclosure, and post-employment activities. The Board 
of Directors may prescribe regulations that supplement such 
rules and regulations only with the concurrence of that Office.
    (3) Regulations concerning independent contractors.--The 
Board of Directors[, with the concurrence of the Office of 
Government Ethics,] shall prescribe regulations applicable to 
those independent contractors who are not deemed, under 
paragraph (1)(B), to be employees of the Corporation for 
purposes of title 18 governing conflicts of interest, ethical 
responsibilities, and the use of confidential information 
consistent with the goals and purposes of titles 18 and 41. Any 
such regulations shall be in addition to, and not in lieu of, 
any other statute or regulation which may apply to the conduct 
of such independent contractors.
                              ----------                              


             CODE OF ETHICS FOR GOVERNMENT SERVICE--DISPLAY

              Public Law 96-303, [H.R. 5997]; July 3, 1980

          * * * * * * *
    [An Act to provide for the display of the Code of Ethics 
for Government Service.
    [Be it enacted by the Senate and House of Representatives 
of the United States of America in Congress assembled, That, 
under such regulations as the Administrator shall prescribe, 
each agency shall display in appropriate areas of Federal 
buildings copies of the Code of Ethics for Government Service.
    [Sec. 2. (a) The Administrator shall provide for the 
publication of copies of such Code of Ethics and for their 
distribution to agencies for use under the first section of 
this Act.
    [(b) The Administrator may accept on behalf of the United 
States any unconditional gift made for purposes of this Act.
    [Sec. 3. For purposes of this Act--
          [(1) the term ``agency'' means an Executive agency 
        (as defined by section 105 of title 5, United States 
        Code), the United States Postal Service, and the Postal 
        Rate Commission;
          [(2) the term ``Administrator'' means the 
        Administrator of the General Services Administration;
          [(3) the Code of Ethics for Government Service shall 
        read as follows--
          [Code of Ethics for Government Service
          [Any person in Government service should:
                  [I. Put loyalty to the highest moral 
                principles and to country above loyalty to 
                persons, party, or Government department.
                  [II. Uphold the Constitution, laws, and 
                regulations of the United States and of all 
                governments therein and never be a party to 
                their evasion.
                  [III. Give a full day's labor for a full 
                day's pay; giving earnest effort and best 
                thought to the performance of duties.
                  [IV. Seek to find and employ more efficient 
                and economical ways of getting tasks 
                accomplished.
                  [V. Never discriminate unfairly by the 
                dispensing of special favors or privileges to 
                anyone, whether for remuneration or not; and 
                never accept, for himself or herself or for 
                family members, favors or benefits under 
                circumstances which might be construed by 
                reasonable persons as influencing the 
                performance of governmental duties.
                  [VI. Make no private promises of any kind 
                binding upon the duties of office since a 
                Government employee has no private word which 
                can be binding on public duty.
                  [VII. Engage in no business with the 
                Government, either directly or indirectly, 
                which is inconsistent with the conscientious 
                performance of government duties.
                  [VIII. Never use any information gained 
                confidentially in the performance of 
                governmental duties as means of making private 
                profit.
                  [IX. Expose corruption wherever discovered.
                  [X. Uphold these principles, ever conscious 
                that public office is a public trust.
          [Your agency ethics official and the Office of 
        Government Ethics are available to answer questions on 
        conflicts of interest; and
          [(4) the term ``Federal building'' means any building 
        in which at least 20 individuals are regularly employed 
        by an agency as civilian employees.
    [Sec. 4. The provisions of this Act shall take effect 
October 1, 1980. There shall be no costs imposed on the Federal 
Government for the printing, framing or other preparation of 
the Code of Ethics for Government Service under this Act.]

                                
