[Federal Register Volume 60, Number 115 (Thursday, June 15, 1995)]
[Proposed Rules]
[Pages 31415-31418]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-14611]



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 Proposed Rules
                                                 Federal Register
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 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
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  Federal Register / Vol. 60, No. 115 / Thursday, June 15, 1995 / 
Proposed Rules  

[[Page 31415]]

OFFICE OF GOVERNMENT ETHICS

5 CFR Part 2635

RIN 3209-AA04


Widely Attended Gatherings Gifts Exception Under the Standards of 
Ethical Conduct for Employees of the Executive Branch

AGENCY: Office of Government Ethics (OGE).

ACTION: Proposed rule.

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SUMMARY: The Office of Government Ethics proposes to revise the gift 
exception contained in the Standards of Ethical Conduct for Employees 
of the Executive Branch to permit employees to accept invitations to 
certain widely attended gatherings from persons other than the sponsors 
of those events and to clarify that only those events attended by large 
number of persons qualify as widely attended gatherings. The Office of 
Government Ethics also proposes to permit authorization for a guest, 
other than the employee's spouse, to accompany the employee to a widely 
attended gathering or to an event at which the employee is assigned to 
participate as a speaker, panelist or other information presenter at 
which other guests will be in attendance. These proposed changes would 
provide more flexibility in attendance at such events while preserving 
agencies' ability to monitor compliance by their employees.

DATES: Comments by agencies and the public are invited and are due by 
August 14, 1995.

ADDRESSES: Office of Government Ethics, Suite 500, 1201 New York 
Avenue, NW., Washington, DC 20005-3917, Attention: Mr. Gressman.

FOR FURTHER INFORMATION CONTACT: William E. Gressman, Office of 
Government Ethics; telephone: 202-523-5757; FAX: 202-523-6325.

SUPPLEMENTARY INFORMATION:

I. Background

    On August 7, 1992, the Office of Government Ethics published the 
Standards of Ethical Conduct for Employees of the Executive Branch 
(Standards) for codification at 5 CFR part 2635. See 57 FR 35006-35067, 
as corrected at 57 FR 48557 and 57 FR 52583, with additional grace 
period extensions for certain existing agency provisions at 59 FR 4779-
4780 and 60 FR 6390-6391. The Standards, which took effect on February 
3, 1993, set uniform ethical conduct standards applicable to all 
executive branch personnel. They include regulations implementing the 
gift restrictions contained in 5 U.S.C. 7353 and section 101(d) of 
Executive Order 12674 as modified by Executive Order 12731. In 
accordance with those authorities, Sec. 2635.204 sets forth exceptions 
to Sec. 2635.202(a), which provides that, in the absence of an 
exception, an employee shall not directly or indirectly solicit or 
accept a gift from a prohibited source or a gift that is given because 
of the employee's official position.
    One of several exceptions set forth in Sec. 2635.204 is the 
exception at Sec. 2635.204(g)(2) by which an employee may accept a 
sponsor's unsolicited gift of free attendance at all or part of a 
widely attended gathering. Unlike the de minimis exception at 
Sec. 2635.204(a) for unsolicited gifts having a market value of $20 or 
less per occasion (with a calendar year aggregate limit of $50), 
Sec. 2635.204(g)(2) imposes no limitation on the market value of the 
gifts of free attendance that may be accepted. While the tickets or 
other fees for attendance at such gatherings ordinarily cost much less, 
this exception would permit acceptance of free attendance at events for 
which the ticket price exceeds even $1,000. In part to ensure that 
prohibited sources do not use this exception to provide lavish 
entertainment to employees of the agencies with which they do business 
or otherwise interact, Sec. 2635.204(g)(2) specifies that an invitation 
to a widely attended gathering can be accepted only if it is from the 
sponsor of the event.
    On March 9, 1993, shortly after the Standards first took effect, 
the White House declared a six-month suspension of application to press 
dinners of that portion of Sec. 2635.204(g)(2) that limits acceptance 
of invitations to widely attended gatherings to those issued by the 
sponsor of the event. During that six-month period, executive branch 
officials were authorized to attend press dinners as guests of 
individuals or organizations other than the sponsor of the event, if 
the event otherwise met the conditions of the widely attended gathering 
exception. On December 21, 1993, with another round of press 
association events in the offing, the White House issued a memorandum 
to all agency heads once again temporarily suspending administrative 
enforcement of the rule affecting widely attended gatherings solely as 
it relates to dinners sponsored by news associations for which 
admission for executive branch officials is paid by news organizations.
    In a letter of December 21, 1993 addressed to OGE, the White House 
asked OGE to consider a revision to Sec. 2635.204(g)(2) to provide that 
an employee may accept an invitation received directly from a news 
organization to attend a widely attended gathering sponsored by a news 
association where there has been a determination that the employee's 
attendance is in the interest of the agency. In the alternative, the 
White House suggested that OGE might wish to consider revising 
Sec. 2635.204(g)(2) to provide an exemption for invitations to a 
broader range of widely attended gatherings from persons other than the 
sponsors of those events. The White House specified in its memorandum 
of the same date that the suspension was to extend until August 1, 
1994, or until such later date as OGE responded to its request for 
revision of Sec. 2635.204(g)(2). This proposed rule is the first step 
in OGE's response to the White House request. Thus, the suspension 
effected by the White House's most recent memorandum of December 21, 
1993 will extend until OGE has issued an interim or final rule 
determination as to this matter after receiving and reviewing comments 
in response to this notice of proposed rulemaking.
    In asking that OGE treat the press differently than others for 
purposes of permitting employees to attend press association events, 
the White House expressed the view that the press is not like other 
individuals, organizations or entities. The press, it suggested, 
provides the public with access to the institution of Government and, 
thus, functions on behalf of the greater public [[Page 31416]] good in 
seeking to gather, record and disseminate information about current 
events. In the view of the White House, members of the press and press 
organizations do not seek to do business with, nor do they seek 
official action from, the Government officials about whom they report. 
The White House suggested that this provides a justification for 
treating invitations from press organizations differently than 
invitations from others who are prohibited sources or who invite 
Government employees because of their official positions.
    It may be true that members of the press, in some instances, do not 
seek to do business with or seek official action from the particular 
Government official about whom they are reporting. More often than not, 
however, those who report about the actions of Government officials or 
about Government programs do interview, or seek to interview, those who 
are the subject of their reporting or who have official knowledge about 
the subject. When that occurs they and the press organizations they 
represent often are seeking official information from Government 
officials and are seeking to occupy their official time. They are 
``prohibited sources'' within the meaning of 5 CFR 2635.203(d)(1) to 
the same extent as are others who seek official action from the 
employees of a Federal agency. How successful they are in obtaining 
that official information impacts upon their work product and redounds 
to their benefit or detriment and, ultimately, to the benefit or 
detriment of the news organizations they serve. Members of the press 
and press organizations have interests that may be substantially 
affected by the performance or nonperformance of the official duties of 
the Government officials of whom they seek information and, thus, also 
meet the definition of prohibited sources in 5 CFR 2635.203(d)(4). See 
OGE informal advisory memorandum 87x13 issued October 23, 1987, as 
published in the ``Informal Advisory Letters and Memoranda and Formal 
Opinions of the United States Office of Government Ethics'' (at pp. 
743-755 of the 1979-1988 bound volume), which is available from the 
U.S. Government Printing Office. We agree with the White House view 
that reporting by the press often serves the public good. Whether the 
product or service is a new cancer medication approved by the Food and 
Drug Administration or a blockbuster documentary on World War I funded, 
in part, by a grant from the National Endowment for the Humanities, the 
same can be said of the products or services of many others who are 
prohibited sources.
    For the reasons stated above, we cannot concur in the White House 
view that invitations from the press to widely attended gatherings 
should be treated differently than invitations from other prohibited 
sources or from others who invite Government officials because of their 
official positions. We do agree with the White House view, however, 
that Sec. 2635.204(g)(2) may be unnecessarily restrictive in 
prohibiting acceptance of invitations to all widely attended gatherings 
from a person other than the sponsor of the event. By this notice, OGE 
proposes to adopt the White House's alternative suggestion to modify 
Sec. 2635.204(g)(2) to permit acceptance of invitations to widely 
attended gatherings from persons other than the sponsors of those 
events where more than 100 will be in attendance and where the gift of 
free attendance has a market value of $250 or less. The Office of 
Government Ethics also proposes to modify Sec. 2635.204(g)(2) to 
clarify that events attended by a few, rather than many, are not widely 
attended gatherings. In addition, OGE is proposing to amend 
Sec. 2635.204(g)(6) to permit authorization for a person other than a 
spouse to accompany an employee to a widely attended gathering or to an 
event at which the employee is assigned to participate as a speaker, 
panel participant or other presenter of information (pursuant to 
Sec. 2635.204(g)(1)), where an invitation has been extended to the 
spouse or a guest and where others in attendance will generally be 
accompanied by a spouse or a guest.
    The proposed amendments to Sec. 2635.204(g) are incorporated in 
this notice of proposed rulemaking after consultation with the 
Department of Justice and the Office of Personnel Management.

II. Analysis of the Proposed Changes

    As an exception to the gift prohibitions set forth in 5 CFR 
2635.202(a), Sec. 2635.204(g)(2) now permits an employee to accept an 
unsolicited gift of free attendance at a widely attended gathering 
where the agency makes a determination that the employee's attendance 
is in the interest of the agency, provided that the gift is from the 
sponsor of the event. One of the two changes to Sec. 2635.204(g)(2) 
proposed by this rule would permit an employee to accept an unsolicited 
gift of free attendance at a widely attended gathering from a person 
other than the sponsor of the event where there has been a 
determination of agency interest, provided that more than 100 persons 
are expected to attend the event and provided that the gift of free 
attendance has a market value of $250 or less. The requirement that 
attendance be expected to exceed 100 persons is proposed to limit the 
use of this exception to events which, by their larger, more public 
nature are unlikely to prompt questions regarding the appropriateness 
of their characterization as widely attended. The $250 ceiling on the 
value of free attendance that may be accepted from a person other than 
the event's sponsor coincides generally with the public financial 
disclosure reporting exclusion at 5 U.S.C. app. Sec. 102(a)(2)(A) of 
the Ethics in Government Act (and 5 CFR 2634.304(a) of OGE's 
implementing regulations) for gifts of less than $250 and, thus, 
comports with legislative consensus that gifts below that amount are of 
a value that need not be subjected to public scrutiny. Together, the 
two limitations reduce the possibility that the exception for widely 
attended gatherings might be used to provide lavish entertainment for 
Government employees.
    To accommodate the proposed change to Sec. 2635.204(g)(2), a 
conforming change to Sec. 2635.204(g)(3)(i) is proposed to require a 
written finding of agency interest where the person who has extended 
the invitation may be substantially affected by performance or 
nonperformance of the employee's duties. The phrase ``person who has 
extended the invitation'' means the person who is the donor of the gift 
of free attendance. A conforming change to Sec. 2635.204(g)(4) is 
proposed to clarify that the market value of free attendance by an 
accompanying spouse or other guest, when authorized under 
Sec. 2635.204(g)(6), is to be added to the market value of the 
employee's own free attendance in determining the market value of the 
gift of free attendance for the purpose of applying the $250 limit and 
for the purpose of considering the relevant factors under 
Sec. 2635.204(g)(3)(i). A new example 2 is proposed to be added 
following Sec. 2635.204(g) to illustrate this modification. Example 1 
would be modified to incorporate a free attendance value in excess of 
$250 so that the example will continue to illustrate that higher value 
gifts of free attendance may be accepted with agency approval only from 
the sponsor of the event.
    The other change proposed to Sec. 2635.204(g)(2) is to add language 
to clarify that widely attended gatherings are only those attended by a 
large number of persons. As presently in effect, the paragraph states 
that a gathering ``is widely attended if, for [[Page 31417]] example, 
it is open to members from throughout a given industry or profession or 
if those in attendance represent a range of persons interested in a 
given matter.'' This sentence was intended to help describe the types 
of events that would qualify as widely attended gatherings and was not 
intended to alter the normal meaning of the phrase ``widely attended'' 
as encompassing those attended by many. It has been read otherwise by 
some who have argued that small gatherings of fewer even than 20 
qualify if the few in attendance represent the range of persons 
interested in a given matter. Proposed new example 3 would help to 
illustrate the meaning of the phrase widely attended gathering.
    The Office of Government Ethics also proposes to revise 
Sec. 2635.204(g)(6) so that an employee who has received an invitation 
to a widely attended gathering that includes an invitation to bring a 
guest may be authorized by the agency designee to accept on behalf of 
an accompanying guest, without regard to whether that guest is the 
employee's spouse. Under paragraph (g)(6) as presently in effect, an 
agency may only authorize an employee to accept a sponsor's invitation 
to an accompanying spouse. The Office of Government Ethics agrees with 
those who have observed that it is unfair to an employee who is not 
married or whose spouse is unable or does not wish to attend an event 
to restrict acceptance to spouses only. The expanded authority for an 
accompanying guest would extend to an employee who, under 
Sec. 2635.204(g)(1), is assigned to participate as a speaker, panel 
participant or other presenter of information at a conference or other 
event where others in attendance will generally be accompanied by a 
spouse or other guest. The change proposed would include language 
clarifying that the invitation to bring an accompanying spouse or other 
guest may be accepted only if it is unsolicited. The expanded authority 
could not be used for more than one accompanying guest.
    In the last sentence of Sec. 2635.204(g)(3)(i) the phrase 
``monetary value'' is proposed to be changed to ``market value'' to 
comport with the definition at Sec. 2635.203(c). Other language changes 
to Sec. 2635.204(g)(2)-(g)(6) are proposed simply to conform to the 
proposed substantive changes discussed above.

III. Matters of Regulatory Procedure

Executive Order 12866

    In promulgating this proposed rule, the Office of Government Ethics 
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 proposed 
amendatory rule will not have a significant economic impact on a 
substantial number of small businesses because it primarily affects 
Federal executive branch employees.

Paperwork Reduction Act

    The Paperwork Reduction Act (44 U.S.C. chapter 35) does not apply 
to this proposed amendment because it does not contain information 
collection requirements that require approval of the Office of 
Management and Budget.

List of Subjects in 5 CFR Part 2635

    Conflict of interests, Executive branch standards of conduct, 
Government employees.

    Approved: April 5, 1995.
Stephen D. Potts,
Director, Office of Government Ethics.

    Accordingly, 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. 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.

Subpart B--Gifts From Outside Sources

    2. Section 2635.204 is amended as set forth below:
    A. Revising paragraphs (g)(2) through (g)(6);
    B. Republishing the note following paragraph (g)(4);
    C. Revising example 1 following paragraph (g)(6);
    D. Redesignating examples 2, 3 and 4 following paragraph (g)(6) as 
examples 4, 5 and 6, respectively; and
    E. Adding new examples 2 and 3 following paragraph (g)(6).
    The revisions, republication and addition read as follows:


Sec. 2635.204  Exceptions.

* * * * *
    (g) * * *
    (1) * * *
    (2) Widely attended gatherings. When there has been a determination 
that his attendance is in the interest of the agency because it will 
further agency programs and operations, an employee may accept an 
unsolicited gift of free attendance at all or appropriate parts of a 
widely attended gathering of mutual interest to a number of parties 
from the sponsor of the event or, if more than 100 persons are expected 
to attend the event and the gift of free attendance has a market value 
of $250 or less, from a person other than the sponsor of the event. A 
gathering is widely attended if it is attended by a large number of 
persons and if, for example, it is open to members from throughout the 
interested industry or profession or if those in attendance represent a 
range of persons interested in a given matter. For employees subject to 
a leave system, attendance at the event shall be on the employee's own 
time or, if authorized by the employee's agency, on excused absence 
pursuant to applicable guidelines for granting such absence, or 
otherwise without charge to the employee's leave account.
    (3) Determination of agency interest. The determination of agency 
interest required by paragraph (g)(2) of this section shall be made 
orally or in writing by the agency designee.
    (i) If the person who has extended the invitation has interests 
that may be substantially affected by the performance or nonperformance 
of an employee's official duties or is an association or organization 
the majority of whose members have such interests, the employee's 
participation may be determined to be in the interest of the agency 
only where there is a written finding by the agency designee that the 
agency's interest in the employee's participation in the event 
outweighs the concern that acceptance of the gift of free attendance 
may or may appear to improperly influence the employee in the 
performance of his official duties. Relevant factors that should be 
considered by the agency designee include the importance of the event 
to the agency, the nature and sensitivity of any pending matter 
affecting the interests of the person who has extended the invitation, 
the significance of the employee's role in any such matter, the purpose 
of the event, the identity of other expected participants and the 
market value of the gift of free attendance.
    (ii) A blanket determination of agency interest may be issued to 
cover all or [[Page 31418]] any category of invitees other than those 
as to whom the finding is required by paragraph (g)(3)(i) of this 
section. Where a finding under paragraph (g)(3)(i) of this section is 
required, a written determination of agency interest, including the 
necessary finding, may be issued to cover two or more employees whose 
duties similarly affect the interests of the person who has extended 
the invitation or, where that person is an association or organization, 
of its members.
    (4) Free attendance. For purposes of paragraphs (g)(1) and (2) of 
this section, free attendance may include waiver of all or part of a 
conference or other fee or the provision of food, refreshments, 
entertainment, instruction and materials furnished to all attendees as 
an integral part of the event. It does not include travel expenses, 
lodgings, entertainment collateral to the event, or meals taken other 
than in a group setting with all other attendees. Where the invitation 
has been extended to an accompanying spouse or other guest (see 
paragraph (g)(6) of this section), the market value of the gift of free 
attendance includes the market value of free attendance by the spouse 
or other guest as well as the market value of the employee's own 
attendance.

    Note: There are statutory authorities implemented other than by 
part 2635 under which an agency or an employee may be able to accept 
free attendance or other items not included in the definition of 
free attendance, such as travel expenses.

    (5) Cost provided by sponsor of event. The cost of the employee's 
attendance will not be considered to be provided by the sponsor, and 
the invitation is not considered to be from the sponsor of the event, 
where a person other than the sponsor designates the employee to be 
invited and bears the cost of the employee's attendance through a 
contribution or other payment intended to facilitate that employee's 
attendance. Payment of dues or a similar assessment to a sponsoring 
organization does not constitute a payment intended to facilitate a 
particular employee's attendance.
    (6) Accompanying spouse or other guest. When others in attendance 
will generally be accompanied by a spouse or other guest, and where the 
invitation is from the same person who has invited the employee, the 
agency designee may authorize an employee to accept an unsolicited 
invitation to an accompanying spouse or to another accompanying guest 
to participate in all or a portion of the event at which the employee's 
free attendance is permitted under paragraph (g) (1) or (2) of this 
section. The authorization required by this paragraph may be provided 
orally or in writing.
    Example 1. An aerospace industry association that is a prohibited 
source sponsors an industry-wide, two-day seminar for which it charges 
a fee of $400 and anticipates attendance of approximately 400. An Air 
Force contractor pays $2,000 to the association so that the association 
can extend free invitations to five Air Force officials designated by 
the contractor. The Air Force officials may not accept the gifts of 
free attendance. Because the contractor specified the invitees and bore 
the cost of their attendance, the gift of free attendance is considered 
to be provided by the company and not by the sponsoring association. 
Had the contractor paid $2,000 to the association in order that the 
association might invite any five Federal employees, an Air Force 
official to whom the sponsoring association extended one of the five 
invitations could attend if his participation were determined to be in 
the interest of the agency. The Air Force official could not in any 
event accept an invitation directly from the contractor because the 
market value of the gift exceeds $250.
    Example 2. An employee of the Department of Transportation is 
invited by a news organization to an annual press dinner sponsored by 
an association of press organizations. Tickets for the event cost $250 
per person and attendance is limited to 400 representatives of press 
organizations and their guests. If the employee's attendance is 
determined to be in the interest of the agency, she may accept the 
invitation from the news organization because more than 100 persons 
will attend and the cost of the ticket does not exceed $250. However, 
if the invitation were extended to the employee and an accompanying 
guest, her guest could not be authorized to attend since the market 
value of the gift of free attendance would be $500 and the invitation 
is from a person other than the sponsor of the event.
    Example 3. An employee of the Department of Energy and his wife 
have been invited by a major utility to a dinner party for 20 people. 
Others invited include eight officials of the utility and their spouses 
and a representative of a consumer group concerned with utility rates 
and her husband. The DOE official believes the dinner party will 
provide him an opportunity to socialize with and get to know those in 
attendance. The employee may not accept, even if his attendance could 
be determined to be in the interest of the agency. The dinner party is 
not a widely attended gathering; twenty is not a large number of 
persons and, notwithstanding the presence of another person who is not 
an official of the utility, those in attendance do not represent a 
range of persons interested in any identifiable matter.
* * * * *
[FR Doc. 95-14611 Filed 6-14-95; 8:45 am]
BILLING CODE 6345-01-U