[Federal Register Volume 62, Number 154 (Monday, August 11, 1997)]
[Rules and Regulations]
[Pages 42897-42899]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-21047]

Rules and Regulations
                                                Federal Register

This section of the FEDERAL REGISTER contains regulatory documents 
having general applicability and legal effect, most of which are keyed 
to and codified in the Code of Federal Regulations, which is published 
under 50 titles pursuant to 44 U.S.C. 1510.

The Code of Federal Regulations is sold by the Superintendent of Documents. 
Prices of new books are listed in the first FEDERAL REGISTER issue of each 


Federal Register / Vol. 62, No. 154 / Monday, August 11, 1997 / Rules 
and Regulations

[[Page 42897]]



5 CFR Parts 1001 and 4501

RIN 3206-AG87, 3209-AA15

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

AGENCY: U.S. Office of Personnel Management (OPM).

ACTION: Final rule.


SUMMARY: The U.S. Office of Personnel Management, with the concurrence 
of the Office of Government Ethics (OGE), is adopting as final an 
interim rule published July 16, 1996, issuing a final rule which 
supplements, for OPM employees, the executive branch-wide Standards of 
Ethical Conduct (Standards) issued by OGE.

EFFECTIVE DATE: August 11, 1997.

FOR FURTHER INFORMATION CONTACT: Wade Plunkett, Principal Deputy Ethics 
Official, U.S. Office of Personnel Management, Office of the General 
Counsel, 1900 E. Street, N.W., Washington, D.C. 20415-0001, Telephone: 
(202) 606-1700, FAX: (202) 606-2609.


I. Background

    On July 16, 1996, OPM published with OGE concurrence and co-
signature, Supplemental Standards of Ethical Conduct for Employees of 
OPM as an interim rule with request for comments (61 FR 36993-36997). 
The interim rule was intended to supplement the Standards of Ethical 
Conduct for Employees of the Executive Branch (Standards) published by 
OGE on August 7, 1992, and effective February 3, 1993 (57 FR 35006-
35067), as corrected at 57 FR 48557, 57 FR 52583, and 60 FR 51667, and 
amended at 61 FR 42965-42970 (as corrected at 61 FR 48733 and 61 FR 
50689-50691) (interim rule revisions adopted as final at 62 FR 12531), 
with additional grace period extensions for certain existing agency 
standards of conduct, including requirements for prior approval of 
outside activities, at 59 FR 4779-4780, 60 FR 6390-6391, and 60 FR 
66857-66858. The executive branch-wide Standards, codified at 5 CFR 
part 2635, establish uniform standards of ethical conduct for executive 
branch employees. The interim rule was issued pursuant to 5 CFR 
2635.105, which authorizes executive branch agencies to publish agency-
specific supplemental regulations necessary to implement their 
respective ethics programs. The interim rule, in new 5 CFR part 4501, 
contained a notice requirement designed to ensure that OPM employees do 
not use their official positions or nonpublic information to obtain an 
advantage for themselves or for certain other persons on competitive 
and other examinations relating to Federal service; a requirement, 
revised from prior 5 CFR 1001.735-203, for OPM employees to obtain 
prior approval before engaging in certain types of outside activities; 
and a cross-reference to other ethics and conduct-related statutes and 
regulations. With regard to 5 CFR part 1001, OPM's internal standards 
of conduct regulations, the interim rule also repealed that portion 
which had been retained on an interim basis pending issuance of OPM's 
supplemental standards of ethical conduct regulations and those 
portions which had been superseded by the new Standards or by the 
executive branch financial disclosure regulations issued by OGE; 
retained a separate Privacy Act conduct code; and added to 5 CFR part 
1001 a cross-reference to ethics and other conduct-related statutes and 
    The interim rule requested comments and prescribed a 30-day comment 
period. OPM received two comments on the interim rule, one from an OPM 
employee and another from the President of the International Personnel 
Management Association. Both comments were timely. OPM has carefully 
considered the points made in the comments, reviewed other Federal 
agency rules, considered changes in Federal law since publication of 
the interim rule, and reexamined OPM's previous requirement for prior 
approval of outside employment and activity. OPM has decided to make a 
minor modification to the rule. With that modification, OPM, with OGE's 
concurrence, is now adopting as final the interim rule Supplemental 
Standards of Ethical Conduct for Employees of the U.S. Office of 
Personnel Management for codification in chapter XXXV of 5 CFR, 
consisting of part 4501.

II. Summary of the Comments

    The employee who commented on the interim regulations asserted that 
OPM should have allowed more time for comment. Both commenters objected 
to the requirement for obtaining prior approval before engaging in 
certain outside activities. The employee also asserted that the 
regulatory definitions are confusing. The personnel management 
association official suggested that the prior approval requirements 
raise the question of whether approval of an outside activity would 
constitute ``sanction'' of the activity by OPM. Finally, the personnel 
management association official suggested that the requirement for 
prior approval runs counter to the spirit of an amendment to 18 U.S.C. 

III. Analysis of the Comments

Comment Period

    The employee commenter asserted that OPM should have allowed more 
time for comment, stating that the changes are not ``minor'' and that 
it was unnecessary for the regulations to go into effect immediately. 
OPM was not required to publish its supplemental standards as a 
proposed rule or an interim rule with request for comment, but could 
have published the new supplemental standards as a final rule pursuant 
to authority at 5 U.S.C. 1103(b)(1) and 1105. OPM believes it took 
reasonable and appropriate steps to notify employees of the publication 
of the interim rule, and that an extension of the comment period is not 
warranted. OPM received no additional comments since August 15, 1996.

Section 4501.103  Prior Approval for Certain Outside Activities

    Both commenters objected to the requirement for obtaining prior 
approval before engaging in certain outside activities, contained in 5 
CFR 4501.103(a). The commenters perceived the requirement for prior 
approval of the

[[Page 42898]]

employee's participation, for or without compensation, in the types of 
outside activities set forth at 5 CFR 4501.103(a) as being unnecessary 
and an infringement upon the employee's freedom of speech. They assert 
that this is especially true with regard to the provision of 
professional services involving the application of the same specialized 
skills or the same educational background as performance of the 
employee's official duties (Sec. 4501.103(a)(1)) and teaching, 
speaking, and writing that relates to the employee's official duties 
(Sec. 4501.103(a)(2)), but which are conducted without compensation to 
the employee. The employee commenting asserted that the requirement 
covers activities that ``never before have been considered to be 
problems'' and seems designed primarily ``to ensure that the employee 
repeatedly affirms that he or she knows what the rules are.'' Both 
commenters were concerned also that the prior approval requirement 
involves burdensome ``red tape'' to obtain approval, would prevent the 
employee from speaking openly and informally in professional meetings--
according to the employee, ``in some cases educating audiences about 
technical issues, and in others clarifying OPM policies''--and the 
employee thought that the requirement would effectively prohibit the 
professional employee from ``doing all the normal things that a 
professional does to maintain the role of professional.'' In OPM's 
view, however, prior approval for certain activities serves many 
legitimate functions, not the least of which is an opportunity to 
counsel in order to ensure that the agency and the employee are aware 
of potential violations of ethics laws or regulations and take 
appropriate steps to avoid their violation. Violations of ethics laws 
or regulations may occur even where the activity is performed without 
monetary compensation to the employee. Prior approval also provides a 
means of protection for the employee against subsequent adverse action 
by ensuring that the employee is aware of the specific applicability of 
ethics statutes and regulations to the proposed activity.
    It would be incorrect to conclude, because the previous OPM 
requirement for prior approval which was in effect prior to the 
issuance of the OGE Standards did not expressly mention other types of 
activities, that other activities could not present violations of 
ethics laws or regulations which would require resolution.
    In drafting Sec. 4501.103(a), OPM took care to clarify the 
previously existing requirement in prior 5 CFR 1001.735-203 and to 
narrow its scope, consistent with the Standards. OPM's former 
regulations also prohibited ``[o]utside employment activity which is in 
violation of a statute, Executive Order, or regulation, including 
applicable State and local statutes and ordinances.'' 5 CFR 1001.735-
    Although an activity might be lawful, there could be parameters to 
an activity, such as restrictions upon the employee's representational 
activities, imposed by ethics laws and regulations, some of which have 
criminal sanctions. The requirement that an employee obtain prior 
approval was designed to ensure that the employee was aware of any such 
    Prior written approval from the employee's regional or staff office 
head was required before the employee could serve as a member of a 
committee or board which planned or rendered advice on training courses 
or programs offered by non-Government organizations, or could engage in 
after-hours teaching as a faculty member; receipt of compensation was 
not a prerequisite. See prior 5 CFR 1001.735-203 (c) and (d). 
Previously, prior written approval was also required before an employee 
``engage[d] in any kind of outside paid employment on a substantially 
regular basis,'' 5 CFR 1001.735-203(f). As noted, OPM determined in its 
new supplemental standards to focus more narrowly the prior approval 
requirement. See 5 CFR 4501.103 (a)(1)-(a)(4).
    Nonetheless, the former, as well as the current, provisions on 
outside employment and activity expressly did not preclude an employee 
from participating in the affairs of a ``charitable, religious, 
professional, social, fraternal, nonprofit educational and 
recreational, public service, or civil organization.'' See prior 5 CFR 
1001.735-203(g)(3). The prior approval process does not seek to prevent 
the free exercise of an employee's rights to outside employment or 
speech as is evident by new 5 CFR 4501.103(c) which provides that:

    Approval shall be granted only upon a determination by the 
agency designee, in consultation with an agency ethics official when 
such consultation is deemed necessary by the agency designee, that 
the outside activity is not expected to involve conduct prohibited 
by statute or Federal regulation, including 5 CFR part 2635.

    This section was included to show that the presumption is that an 
activity will be approved unless there is some ethical violation which 
must be addressed. We emphasize, further, that OPM's new rules 
contained in 5 CFR part 4501 are supplemental to, and intended to be 
read in conjunction with, the OGE Standards contained at 5 CFR part 
2635. Currently, the OGE Standards at 5 CFR part 2635, subpart H, 
provide for some restrictions on outside activities and additionally 
allow for prior approval to ensure that no other existing statutes or 
regulations will be violated.
    Insofar as comments on the interim rule have asserted that the 
prior approval requirement itself somehow violates employees' rights 
under the First Amendment of the Constitution, we point out that the 
requirement does not prohibit any form of expression or association. In 
the case of Williams v. Internal Revenue Service, 919 F.2d 745 (D.C. 
Cir. 1990), it was held that an agency regulation that required 
employees to obtain permission from the agency before engaging in 
outside employment and that was tailored to the Government's interest 
in efficiency and avoiding the appearance of impropriety, did not 
violate employees' First Amendment rights.
    Knowledge of these Standards is the personal responsibility of 
every OPM employee. OPM has established an ethics point of contact in 
every OPM service or staff office at the central office and agency 
ethics officials in the Office of the General Counsel to facilitate 
access to ethics laws and regulations for OPM employees. However, due 
to the frequent complexity of ethics laws and regulations, 
understanding of the rules may require consultation with an agency 
ethics official. For this reason, OPM has endeavored to isolate and 
require prior approval of those types of outside activities where an 
ethics statute or regulation may limit the employee's activities to 
ensure that both the interests of the Government and the employee are 
    The personnel management association official suggests that the 
prior approval requirement runs counter to a recent amendment to 18 
U.S.C. 205. OPM disagrees. The Federal Employee Representation 
Improvement Act of 1996; Pub. L. 104-177, 110 Stat. 1563, August 6, 
1996, modified 18 U.S.C. 205 to permit employee representation of 
employee organizations under certain circumstances. OPM published 
proposed regulations reflecting this amendment's impact on its 5 CFR 
part 251 executive branch-wide regulations on agency relationships with 
organizations representing Federal employees and other organizations 
that are not labor organizations. See 62 FR 19525 (April 22, 1997). 
That proposed revision to the part 251 agency relationships regulations 
would continue the express provision that

[[Page 42899]]

agency officials and employees are advised to consult with their 
designated agency ethics officials for guidance regarding any conflicts 
of interests that may arise under 18 U.S.C. 205. Moreover, the 
modification to section 205 permitting Federal employees to represent 
certain nonprofit organizations before the Government in certain 
circumstances is different in focus, from the separate, and consistent 
requirement in these supplemental standards regulations that OPM 
employees obtain prior approval before engaging in certain outside 
activities. OPM feels both regulations are consistent with current 
Government-wide policy and each other, and it should not revise the 
scope of the approval for teaching, speaking and writing which relates 
to official duties in this part 4501 regulation applicable to OPM 
employees. This authority will be exercised consistent with the 
provisions of 18 U.S.C. 205, as amended, and other applicable conflicts 
laws and regulations.


    The employee asserts that the regulations are confusing in that 
they refer to definitions contained elsewhere in the Code of Federal 
Regulations, such as definitions of ``official duties'', ``outside 
activity'', ``profession'', ``prohibited source'', and 
``compensation'', to which, he contends, most OPM readers do not have 
access. The prior approval requirement regarding teaching, speaking, 
and writing, contained at 5 CFR 4501.103(a)(2), supplements the Office 
of Government Ethics Standards contained at 5 CFR 2635.801 and 
2635.807. The definition of ``compensation'' is contained at 5 CFR 
2635.807(a)(2)(iii). Section 4501.103(d) defines the terms ``active 
participant,'' ``nonpublic information,'' ``professional services,'' 
``prohibited source,'' and ``relates to the employee's official 
duties.'' It is OPM's view that the terms necessary for employees to 
understand the regulation are adequately provided and cross-references 
are clearly stated.
However, should access to the regulations pose a problem or should any 
other confusion exist, agency ethics officials are available to answer 
specific questions regarding any ethics provision's applicability to 
OPM employees.

Appearance of OPM Sanctioning an Outside Activity

    The personnel management association official commented that the 
prior approval requirement raises the question of whether ``approval'' 
of an outside activity would constitute ``sanction'' of the activity by 
OPM. The agency has a legitimate interest in the teaching, making of a 
speech or other presentation by an agency employee on a matter that 
relates to the employee's official duties and which, by the manner of 
its presentation, could create the appearance of being the official 
position of OPM. However, the prior approval requirement, as previously 
discussed, is meant to provide an opportunity to counsel in order to 
ensure that the agency and employee are aware of any violation of 
ethics laws or regulations. It should not in any way indicate that OPM 
is sanctioning the activity.
    In summary, OPM has determined not to modify any of the substantive 
provisions in adopting the interim supplemental OPM standards at 5 CFR 
part 4501 as final. A typographical error will be corrected as noted 

IV. Correction of Typographical Error

    OPM is correcting in this final rule a typographical error that 
appeared in the authority citation for part 4501 which incorrectly 
cites 5 CFR 2635.802 as ``2635.-802''.

Regulatory Flexibility Act

    As Director of OPM, I certify that this regulation will not have 
significant economic impact on a substantial number of small 
entities within the meaning of the Regulatory Flexibility Act (5 
U.S.C. chapter 6).

Paperwork Reduction Act

    As Director of OPM, I have determined that the Paperwork 
Reduction Act (44 U.S.C. chapter 35) does not apply because this 
regulation does not contain any information collection requirements 
that require the approval of the Office of Management and Budget.

List of Subjects in 5 CFR Parts 1001 and 4501

    Conflict of interests, Government employees.

    Dated: July 16, 1997.
James B. King,
Director, U.S. Office of Personnel Management.

    Approved: July 29, 1997.
Stephen D. Potts,
Director, Office of Government Ethics.

    Accordingly, OPM is adopting the interim rule, adding 5 CFR part 
4501 and amending 5 CFR part 1001, which was published at 61 FR 36993 
on July 16, 1996, as a final rule with the following change.

Chapter XXXV Office of Personnel Management


    1. The authority citation for part 4501 is corrected to read as 

    Authority: 5 U.S.C. 7301; 5 U.S.C. App. (Ethics in Government 
Act of 1978), E.O. 12674, 54 FR 15159, 3 CFR, 1989 Comp., p. 215, as 
modified by E.O. 12731, 55 FR 42547, 3 CFR, 1990 Comp., p. 306; 5 
CFR 2635.105, 2635.702, 2635.703, 2635.802, 2635.803, 2635.805.

[FR Doc. 97-21047 Filed 8-8-97; 8:45 am]