[Federal Register Volume 61, Number 162 (Tuesday, August 20, 1996)]
[Rules and Regulations]
[Pages 42965-42970]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-21144]



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  Federal Register / Vol. 61, No. 162 / Tuesday, August 20, 1996 / 
Rules and Regulations  

[[Page 42965]]



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: Final rule.

-----------------------------------------------------------------------

SUMMARY: The Office of Government Ethics is issuing a final rule 
revising 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, subject to appropriate 
limitations, and to clarify that only those events attended by a large 
number of persons qualify as widely attended gatherings. The rule also 
permits agency authorization for a guest, other than the employee's 
spouse, to accompany the employee to a widely attended gathering or to 
a conference or other event at which the employee is assigned to 
participate as a speaker, panel participant, or other presenter of 
information.

EFFECTIVE DATE: September 19, 1996.

FOR FURTHER INFORMATION CONTACT: William E. Gressman or Vincent J. 
Salamone, Office of Government Ethics, Suite 500, 1201 New York Avenue, 
NW., Washington, DC 20005-3917; telephone: 202-208-8000; FAX: 202-208-
8037.

SUPPLEMENTARY INFORMATION:

I. Background

    On June 15, 1995, the Office of Government Ethics published a 
proposed amendment to the Standards of Ethical Conduct for Employees of 
the Executive Branch (Standards), as codified at 5 CFR part 2635, that 
would allow acceptance by agency employees of certain invitations of 
free attendance at widely attended gatherings from persons (individuals 
or organizations) other than sponsors of the events and to otherwise 
modify the gifts exception for such gatherings. See 60 FR 31415-31418, 
which provided for a 60-day public comment period. The Office of 
Government Ethics received eleven comment letters on the proposed rule 
from eight executive agencies, two agency employees and one private 
organization, as well as a few telephonic comments. In this rulemaking 
document, OGE is finalizing the proposed amendment, with certain 
changes (noted below) mostly in response to certain of the comments 
received.
    The section of the Standards subject to this rulemaking is 5 CFR 
2634.204(g), one provision of subpart B of the Standards which 
implements the outside source 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 the primary constraint at 
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.
    Section 2635.204(g)(2), as it has been in effect for the past three 
and a half years, provides that an agency employee may accept an 
unsolicited gift of free attendance at all or part of a widely attended 
gathering from the sponsor of the event, subject to a determination of 
agency interest. 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) has to date specified 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, with 
respect to attendance at press dinners, of that portion of 
Sec. 2635.204(g)(2) that has limited acceptance of invitations of free 
attendance at widely attended gatherings to those issued by the sponsor 
of the event. Thus, during that six- month period, executive branch 
officials were authorized to attend press dinners as guests of 
individuals or organizations other than the event's sponsor, 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 another 
memorandum to all agency heads once again temporarily suspending 
administrative enforcement of that portion 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 December 21, 1993 letter addressed to OGE, the White House 
asked OGE to consider a revision to Sec. 2635.204(g)(2) of the 
Standards 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 exception for invitations to 
a broader range of widely attended gatherings from persons other than 
the sponsors of those events. Both in the rule as proposed and as being 
finally adopted here, OGE has opted for this alternative approach. The 
White House specified in its above-referenced December 1993 memorandum 
that the suspension as to press dinners 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).

[[Page 42966]]

Therefore, as noted in the preamble to the proposed rule, the White 
House suspension as to press dinners has remained in effect. However, 
when this final rule takes effect on September 19, 1996, that 
suspension will be superseded by the broader ``nonsponsor'' free 
attendance gift provisions of Sec. 2635.204(g) as amended in this 
rulemaking document.

II. Analysis of Comments

    As noted, the Office of Government Ethics has carefully considered 
the comments submitted on last year's proposed rule and, as discussed 
below, is modifying a few portions of the rule as proposed in adopting 
it as final. The discussion below is focused on the major areas of 
comment regarding the proposed rule changes.

Clarification of Widely Attended Gatherings Definition/A Large Number 
of Persons

    Several agencies commented on the proposed addition of an express 
clause requiring attendance by ``a large number of persons'' to the 
definition of a widely attended gathering in Sec. 2635.204(g)(2). One 
commenter asked that the term be eliminated altogether from the final 
rule. Four agencies questioned why the proposed change to the rule did 
not require that a specific minimum number of persons be expected to 
attend a gathering for it to be considered attended by a ``large number 
of persons.'' One of these agencies commented that such a minimum 
number designation would assist program administration by helping to 
reduce the number of employee inquiries on this matter. However, three 
agencies wanted ethics officials to be able to focus more on factors 
other than the size of the event, such as the nature of the gathering 
itself and the event's overall importance to the agency's programs and 
operations when making a determination about a widely attended 
gathering under Sec. 2635.204(g)(3). One agency suggested that OGE 
might be able to avoid the limitations of setting a minimum number by 
providing instead for an acceptable range of numbers. Further, two 
commenters suggested that OGE could assist agencies more by providing 
agencies with a list of factors that the agencies could apply to 
determine if an event qualified as widely attended.
    After carefully reviewing these recommendations, including the 
alternative approaches suggested, OGE has decided not to change the 
proposed addition of the ``large number of persons'' clause, other than 
to add the clarification that attendance by such a number is 
``expected.'' While a specific minimum number or a range of numbers 
might, in some ways, facilitate agency administration of the rule and 
even possibly reduce employee inquiries, OGE believes that setting such 
numbers for sponsor gifts would unduly limit the flexibility that 
agencies require to administer this rule effectively. (The newly 
revised rule does require a minimum number of attendees as to 
nonsponsor gifts of free attendance, which are subject to additional 
safeguards (see the discussion below).)
    It is OGE's belief that executive agencies are in the best position 
to determine when unsolicited gifts of free attendance offered by 
sponsors of widely attended gatherings (or nonsponsors) should be 
permitted based on a balancing of the event's value in facilitating 
administration of agency programs/operations versus any appearance 
concerns. As stated in the proposed rule, agencies should apply the 
normal meaning of the phrase ``widely attended'' as encompassing those 
events that are attended by many persons and excluding those events 
attended by only a few. Additionally, ethics officials should note that 
the rule requires more than a ``large number'' of attendees--the 
gathering itself must be of mutual interest to those in attendance. See 
OGE Informal Advisory Letters 93 x 15, 93 x 18 and 94 x 2, as published 
in ``The Informal Advisory Letters and Memoranda and Formal Opinions of 
the United States Office of Government Ethics,'' which is available 
from the U.S. Government Printing Office and is on OGE's electronic 
bulletin board TEBBS (``The Ethics Bulletin Board System'').
    In sum, the determination of whether an event is widely attended 
requires ethics officials to carefully examine the particular 
circumstances of each event in light of all the regulatory factors. 
Even if an event is expected to be attended by a large number of 
persons and to have present a diversity of views or interests (see 
discussion below), agency ethics officials must still make a finding 
that the agency's interest in the employee's participation in the event 
outweighs any concern that the acceptance of the gift of free 
attendance may or may appear to improperly influence the employee in 
the performance of his or her official duties. We believe that these 
requirements will help preserve the Government's valid interest in 
ensuring that employees are free from improper influences and that the 
acceptance of any gift of free attendance from an outside source will 
not create the appearance of partiality.
    Furthermore, one commentator asked if the term ``a large number of 
persons'' would include any accompanying spouse or other guest of each 
invitee. The Office of Government Ethics believes that accompanying 
spouses and guests can be counted, both for determining whether a large 
number of persons is expected to attend an event and for purposes of 
the 100-person threshold applicable to acceptance of gifts of free 
attendance from nonsponsors.
    A few agencies pointed out that an ambiguity in the definition of a 
widely attended gathering was created by the use of the term ``for 
example'' in the second sentence of proposed Sec. 2635.204(g)(2). In 
response to these concerns, OGE is changing the wording of the passage 
in Sec. 2635.204(g)(2) of this final rule, by adding the words 
``persons with a diversity of views or interests'' before the ``for 
example'' phrase, to clarify that the types of events which are widely 
attended are those at which a ``large number of persons'' is expected 
to attend and at which persons having a diversity of viewpoints or 
interests are expected to be present. The latter factor can be 
satisfied if the event is open to members from throughout a given 
industry or profession, if persons in attendance represent a range of 
persons interested in a given matter, or if there is otherwise a 
diversity of views or interests present. Agencies should consider both 
factors in determining whether an event is ``widely attended''--the 
number of persons attending the event and the breadth of the views and 
interests presented by the group itself.
    Several agencies expressed specific concerns with proposed new 
Example 3 following the regulatory text of Sec. 2635.204(g), focusing 
on the proposed disqualification of a 20-person dinner party as not 
meeting the ``large number of persons'' test. Some comments noted that 
the example might well be overly restrictive in the context of smaller 
agencies. The desirability of agency discretion in setting a lower 
limit for sponsor events was also stressed. One agency recommended that 
Example 3 be revised so that reference to the number of persons in 
attendance at the dinner party of the major utility be removed from the 
example and that the event be merely referred to as a small dinner 
party. In this way, the point would be made that agency officials 
should consider the size of a gathering as part of their analysis on 
whether an event was a widely attended gathering. The Office of 
Government Ethics has rewritten Example 3 to try to clarify the main 
point intended that a small dinner

[[Page 42967]]

party is not a widely attended gathering. Further, OGE has reworked the 
comment at the end of the example about the additional requirement that 
a range of persons interested in a given matter be present at any 
qualified widely attended gathering. This passage has been broken out 
into a separate sentence and the hypothetical facts have been modified, 
to reference a larger company ``banquet'' as still not widely attended, 
in order to emphasize that attendance by persons with a diverse set of 
views or interests is an additional, separate requirement for finding 
that a gathering is ``widely attended.''

Sponsor/Nonsponsor Distinction

    Although there was general support for the proposed new exception 
to allow employees to accept an invitation of free attendance to a 
larger widely attended gathering from a source other than the sponsor 
in appropriate cases, two agencies and a private organization 
questioned the need for any distinction between such gifts from the 
sponsor and from others. After carefully reviewing this matter, OGE has 
decided to maintain the additional standards imposed as to 
``nonsponsor'' gifts. The Office of Government Ethics believes that 
there is an important distinction between situations in which gifts of 
free attendance are offered by sponsors of widely attended gatherings, 
as opposed to those circumstances where gifts of free attendance are 
tendered by nonsponsors. When a sponsor invites an individual to attend 
an event, the sponsor is presumably doing so for the benefit of all 
those in attendance. The sponsor's attention is also not focused solely 
upon the invitee at the event. Thus, the invitee does have more of an 
opportunity to meet and mingle with a wider number of people in 
attendance. This supports more fully the agency's interest in his or 
her attendance at the event. When a nonsponsor invites an individual to 
attend an event, however, the attention of the nonsponsor host is more 
focused upon the employee. The 100-person threshold provides an 
additional measure of public and press scrutiny of that relationship. 
In addition, the $250 ceiling on nonsponsor donor gifts constitutes an 
important further safeguard against more lavish entertainment, which a 
nonsponsor might be able to afford in a one-on-one situation, but the 
sponsor could not in any significant numbers. The dollar ceiling also 
protects against excess in the case of fundraising events that are not 
lavish, but exclusive because of cost of attendance. Finally, OGE 
stresses that both nonsponsor and sponsor gifts must still be screened 
by agencies for any appearance of conflict in accordance with 
Sec. 2635.204(g)(3) of the Standards. Together, these protections will 
help ensure that any gifts of free attendance accepted are in the best 
interests of the agency concerned and do not involve an appearance of 
undue influence or loss of impartiality.

Press Dinners

    One agency suggested that OGE might consider adopting an exception 
that applies to press dinners, because of the uniqueness of press 
organizations, rather than carving out a broader sponsor/nonsponsor 
distinction. Another commenter suggested an alternative approach in 
which OGE would determine that journalist members of the press groups 
were themselves ``individual sponsors'' of a dinner. As stated above 
and in the preamble to the proposed rule, OGE earlier considered and 
rejected the option of singling out the press under the widely attended 
gatherings exception. The Office of Government Ethics does not believe 
that the press should be treated differently than any other private 
entities that deal with the Government. Thus, in liberalizing this 
provision, with appropriate safeguards, OGE believes that there is no 
reason to limit nonsponsor gifts to press entities.

The 100 Person Attendee Threshold for Nonsponsor Gifts

    Four commenters recommended that OGE drop the proposed requirement 
that 100 persons be in attendance at a widely attended gathering before 
a gift of free attendance can be accepted from a nonsponsor. The 
general consensus among these four commenters was that this number 
should be left to the judgment of agency ethics officials and that it 
would unduly restrict agency discretionary authority in those 
situations where gifts of free attendance are offered by nonsponsors of 
widely attended gatherings. An agency and one individual commenting 
thought that the proposed 100-person threshold would not be fair to 
smaller agencies or smaller industry groups. The agency indicated that, 
particularly in the scientific and technical communities, an agency's 
interest might be advanced by having a representative attend a public 
meeting at which fewer than 100 persons are expected to disseminate 
information about its agency functions and policies. Additionally, one 
agency was concerned that a prohibited source could circumvent the rule 
by ensuring that a sufficient number of persons were invited to an 
event at the appropriate cost. One agency, however, favored the use of 
specific numbers, stating that this would facilitate the administration 
of the rule.
    After reviewing these comments, OGE has decided to maintain the 
proposed 100-person threshold in the final rule. The Office of 
Government Ethics recognizes that it may be in the agency's interest, 
in some cases, to have an employee attend a nonconflicting event where 
less than 100 persons are expected if it would assist the agency in the 
accomplishment of its mission. In that regard, OGE notes that the new 
rule's specific 100-person threshold only applies to nonsponsor gifts. 
Thus a sponsor's offer of free attendance to an otherwise qualified 
widely attended gathering (including attendance by ``a large number of 
persons'') could be accepted, if there were an agency interest 
determination under Sec. 2635.204(g)(3), even though fewer than 100 
persons were expected to attend. Furthermore, if permissible in terms 
of appropriations principles, the agency could consider paying for the 
employee's attendance at smaller events. The employee could also pay 
his or her own way. Finally, as to other events involving fewer than 
100 expected attendees, certain separate authorities, such as the 
Government employees training statute, the law permitting agencies to 
accept certain travel payments from non-Federal sources, or other 
agency statutory authority might permit the acceptance of free 
attendance. See 5 U.S.C. 4111 and 31 U.S.C. 1353, as well as the 
respective implementing regulations of the Office of Personnel 
Management, at subpart G of 5 CFR part 410, and the General Services 
Administration, at 41 CFR part 304-1; see also the note following 
Sec. 2635.204(g)(4) of the Standards.
    The rationale for the 100-person threshold as to nonsponsor gifts 
of free attendance is that the larger, generally more public events are 
subject to greater potential press and public scrutiny, which will 
serve as additional protection against any apparent conflict situation. 
In combination with the $250 free attendance gift value limitation 
(discussed below), these two requirements will protect against the 
possibility that this new exception might result in the provision to 
Government employees by a nonsponsor donor of lavish entertainment or 
an opportunity to attend an event made highly exclusive by virtue of 
the admission price.
    One agency suggested that OGE provide agency designees with the 
authority to except a nonsponsor offer of free attendance from the 100-
person

[[Page 42968]]

requirement in appropriate circumstances. However, OGE believes that 
there should be a uniform threshold for nonsponsor gifts and has not 
accepted that suggestion.
    Another agency asked for additional clarification on whether 
accompanying spouses and other guests are to be counted for purposes of 
the 100-person requirement. In response, OGE notes that spouses and 
guests, who often form an integral part of widely attended gatherings, 
may be counted for purposes of determining whether the 100-person 
requirement is met for a particular event.

The $250 Ceiling on Nonsponsor Gifts of Free Attendance

    One agency comment indicated that having the $250 cap on nonsponsor 
gifts would facilitate administration of the regulation. However, 
another agency thought that the amount should be lowered, but that the 
rule should provide an exemption for charitable events where the face 
value of the ticket primarily reflects a charitable contribution and 
not a benefit to the employee. The Office of Government Ethics is 
concerned that providing for any such exemption would unnecessarily 
complicate the rule and detract from the uniformity to be accorded as 
to nonsponsor free attendance offers. Furthermore, the opportunity to 
attend, free of charge, an event where the ticket prices include a 
sizable donation, and thus make the event more exclusive, can also be 
viewed as a benefit to the employee. On the other hand, one agency and 
a private organization believed that the $250 numerical limitation for 
free attendance in the case of a nonsponsor was too low. The Office of 
Government Ethics has neither raised nor lowered the $250 ceiling 
amount, because we believe that $250 is the right amount, permitting 
reasonable application of the new authority as to nonsponsor gifts 
while protecting against lavish entertainment by prohibited sources.
    A few commentators suggested that provision be made for periodic 
reevaluation of the ceiling amount. A commenting organization noted 
that most hotels that accommodate many widely attended gatherings have 
an escalation factor built into their contracts with private 
organizations and that some sort of mechanism was needed to keep up 
with rising costs. The Office of Government Ethics notes that 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 
legislative and OGE consensus that gifts of lesser amount do not need 
to be subjected to public or confidential financial reporting under the 
Ethics in Government Act, 5 U.S.C. app., sections 102(a)(2) and 107, or 
OGE's 5 CFR part 2634 regulation thereunder. Considering that the $250 
ceiling is imposed only in those situations where the gift of free 
attendance is coming from a nonsponsor, OGE believes it is a reasonable 
limitation to protect Government employees and their agencies from the 
possible appearance of favoritism or undue influence. The Office of 
Government Ethics notes that it will periodically review the 
appropriateness of the $250 ceiling in the future. If any adjustment to 
that dollar amount appears appropriate, OGE will initiate a rulemaking 
action to change it.

Accompanying Guest Authority

    Two commenters supported the proposed revision of 
Sec. 2635.204(g)(6) to permit acceptance of an offer of free attendance 
to a widely attended gathering extended, by the same donor, to an 
accompanying guest of an employee whether or not the guest is the 
employee's spouse (that provision has been limited to an accompanying 
spouse). One commenter opposed the proposed change. In this final rule, 
OGE has decided to retain the change as proposed. The expansion of 
acceptance authority to another guest, when appropriate, will provide 
additional flexibility in cases where the agency has determined that 
acceptance of the gift of free attendance for an accompanying guest, in 
addition to the employee, at a widely attended gathering of mutual 
interest to a number of parties will further agency programs and 
operations. In addition to addressing the fact that many employees are 
not married, the expanded rule would apply to situations in which a 
spouse is unable or does not wish to attend an event, but another 
family member, a colleague or another appropriate guest could attend. 
The Office of Government Ethics notes that the offer of free attendance 
for the guest must be from the same person offering to pay for the 
employee's attendance. Further, only one guest of an employee maybe 
authorized to accept an offer of free attendance to accompany the 
employee to an event at which the employee himself or herself is 
authorized by the employing agency to accept a gift of free attendance. 
Moreover, in such cases, the value of the guest's free attendance must 
be aggregated with that of the employee's in applying $250 ceiling for 
nonsponsor gifts (see Sec. 2635.204(g)(6) and Example 2, the wording of 
both of which has been slightly revised to reflect their application to 
an accompanying guest's free attendance).

Miscellaneous

    Finally, OGE is making a couple of minor clarifications to the rule 
as proposed in adopting it as final.

III. Matters of Regulatory Procedure

Executive Order 12866

    In promulgating this final 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. This amendatory regulation has also 
been reviewed by the Office of Management and Budget (OMB) under that 
Executive order.

Regulatory Flexibility Act

    As the Deputy General Counsel of OGE, I certify under the 
Regulatory Flexibility Act (5 U.S.C. chapter 6) that this amendatory 
rule will not have a significant economic impact on a substantial 
number of small entities because it primarily affects Federal executive 
branch employees and their agencies.

Paperwork Reduction Act

    The Paperwork Reduction Act (44 U.S.C. chapter 35) does not apply 
to this amendatory regulation because it does not contain information 
collection requirements that require OMB approval.

List of Subjects in 5 CFR Part 2635

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

    Approved: August 14, 1996.
Marilyn L. Glynn,
Deputy General Counsel, Office of Government Ethics.

    Accordingly, for the reasons set forth in the preamble, the Office 
of Government Ethics is amending part 2635 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:

[[Page 42969]]

    A. Revising paragraphs (g)(2) through (g)(5);
    B. Revising the text of paragraph (g)(6) preceding Example 1 and
    C. Redesignating Examples 2, 3 and 4 of paragraph (g)(6) as 
Examples 4, 5 and 6, respectively; and
    D. Adding new Examples 2 and 3 to paragraph (g)(6). The revisions, 
and additions read as follows:


Sec. 2635.204  Exceptions.

* * * * *
    (g) * * *
    (2) Widely attended gatherings. When there has been a determination 
that his attendance is in the interest of the agency 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 expected that a large number of 
persons will attend and that persons with a diversity of views or 
interests will be present, for example, if 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 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 (g)(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 of free attendance 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 (g)(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 industrywide, 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 
case accept an invitation directly from the nonsponsor 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 for free 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 (DOE) and his 
wife have been invited by a major utility

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executive to a small dinner party. A few other officials of the utility 
and their spouses or other guests are also invited, as is 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 the free invitation under this exception, even 
if his attendance could be determined to be in the interest of the 
agency. The small dinner party is not a widely attended gathering. Nor 
could the employee be authorized to accept even if the event were 
instead a corporate banquet to which forty company officials and their 
spouses or other guests were invited. In this second case, 
notwithstanding the larger number of persons expected (as opposed to 
the small dinner party just noted) and despite the presence of the 
consumer group representative and her husband who are not officials of 
the utility, those in attendance would still not represent a diversity 
of views or interests. Thus, the company banquet would not qualify as a 
widely attended gathering under those circumstances either.
* * * * *
[FR Doc. 96-21144 Filed 8-19-96; 8:45 am]
BILLING CODE 6345-01-P