[Federal Register Volume 63, Number 61 (Tuesday, March 31, 1998)]
[Rules and Regulations]
[Pages 15273-15274]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-8312]



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 Rules and Regulations
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  Federal Register / Vol. 63, No. 61 / Tuesday, March 31, 1998 / Rules 
and Regulations  

[[Page 15273]]


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OFFICE OF GOVERNMENT ETHICS

5 CFR Part 2634

RIN 3209-AA00


Amendment to Clarify Regulatory Intent on Finality of Review for 
Complaints Regarding Designation of Positions for Employee Confidential 
Financial Disclosure Reporting

AGENCY: Office of Government Ethics (OGE).

ACTION: Final rule; clarifying amendment.

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SUMMARY: The Office of Government Ethics is amending the executive 
branchwide financial disclosure regulation to clarify its original 
intent that the review provided for therein by an agency head (or his 
designee) is final for all purposes regarding employee complaints about 
designation of positions for confidential financial disclosure 
reporting, and that it constitutes the sole and exclusive means of such 
review.

EFFECTIVE DATE: March 31, 1998.

ADDRESSES: Office of Government Ethics, Suite 500, 1201 New York 
Avenue, NW., Washington, DC 20005-3917, Attn.: Mr. G. Sid Smith.

FOR FURTHER INFORMATION CONTACT: G. Sid Smith, Senior Associate General 
Counsel, Office of Government Ethics, telephone: 202-208-8000; TDD: 
202-208-8025; FAX: 202-208-8037.

SUPPLEMENTARY INFORMATION: Six years ago, the Office of Government 
Ethics issued a regulation at subpart I of 5 CFR part 2634 (under its 
authority at 5 U.S.C. appendix, section 107(a) and section 201(d) of 
Executive Order 12674) to govern the confidential financial disclosure 
reporting system for executive branch employees, effective October 5, 
1992. Pursuant to the provisions therein at Secs. 2634.904 and 
2634.905, each executive branch department and agency designates which 
positions will require employees to file confidential disclosure 
reports (primarily OGE Form 450), based on criteria in the regulation. 
Section 2634.906 established the executive branch procedures for 
handling employees' complaints about an agency's designation of their 
positions, whereby review and decision of the agency head or his 
designee shall be final.
    The purpose of this finality, without additional appeals or 
complaints, is to avoid protracted review of filer designations, which 
could seriously undermine the effectiveness and orderly administration 
of the executive branch confidential financial disclosure system. While 
an agency's decision to require confidential reports by employees in 
designated positions affects the privacy of employees, there are 
sufficient safeguards built into the system to adequately minimize 
privacy intrusions, such that the need for nonpublic financial 
disclosure clearly outweighs privacy concerns. Therefore, prompt and 
final decisions about who must file these reports are necessary and 
appropriate.
    The bases for the confidential financial disclosure system and the 
safeguards that have been built in are described at 5 CFR 2634.901. 
Specifically, the confidential disclosure system serves the necessary 
purposes of assisting in the prevention of employee conflicts of 
interest and maintaining ethical integrity in agency programmatic 
functions. These reports are strictly confidential, not available to 
the public under the Freedom of Information Act (5 U.S.C. 552, 
exemptions (b)(3), (b)(4) and (b)(6)) or otherwise, and protected under 
the Privacy Act (5 U.S.C. 552a), section 107(a) of the Ethics in 
Government Act (5 U.S.C. appendix, Sec. 107(a)), and section 201(d) of 
Executive Order 12674. Additionally, only certain types of positions 
may be designated, applying the criteria provided, and employees may 
seek review by the agency head (or designee) of an agency decision to 
designate their positions for filing, in accordance with the procedure 
prescribed in Sec. 2634.906.
    Given the importance of the confidential reporting system and these 
built-in protections for employees, OGE determined that it was 
necessary and appropriate to reach finality as promptly as possible 
when handling filer designation complaints. That was and continues to 
be the basis for the statement in the regulatory text at 5 CFR 2634.906 
that the decision of the agency head or his designee is final. Because 
OGE considered the finality language of the regulation to be clear and 
unambiguous, its meaning was not discussed in the preamble to that 
regulatory promulgation at 57 Federal Register 11800-11830 (April 7, 
1992).
    It has become apparent, however, that some may be interpreting this 
finality as limited to the agency's internal decisional mechanism for 
review, leaving open the possibility of negotiated grievance and 
arbitration procedures, or other remedies within or outside the agency. 
See, for example, the Federal Labor Relations Authority's decision in 
American Federation of Government Employees, Local 3258 (Union) and 
U.S. Department of Housing and Urban Development, Boston, Massachusetts 
(Agency), 0-AR-2734 (FLRA, Feb. 19, 1998).
    In order to clarify the original intent of the regulation in that 
regard, OGE is issuing this minor clarifying regulatory amendment, 
which will state more emphatically that the agency head's (or his 
designee's) decision upon review of complaints regarding the 
designation of an employee's position for filing confidential financial 
disclosure reports is final and conclusive for all purposes, 
notwithstanding any other provision of law or regulation. Specifically, 
the amendment to the regulation re-emphasizes, by expressly stating, 
that this procedure is the sole and exclusive means of seeking such 
review, and that the final decision by the agency head or designee is 
intended to preclude administrative or negotiated grievances, 
arbitration procedures, and any other review or appeal, either within 
or outside the agency.

Administrative Procedure Act

    Pursuant to 5 U.S.C. 553 (b) and (d), as Director of the Office of 
Government Ethics, I find good cause exists for waiving the general 
notice of proposed rulemaking, public comment procedures and 30-day 
delay in effectiveness as to this revision. The notice, comment and 
delayed effective date are being waived because this minor amendment to 
OGE financial disclosure regulations concerns a matter of agency

[[Page 15274]]

organization, practice and procedure. Furthermore, it is in the public 
interest that this amendment become effective immediately, in order to 
preserve the orderly administration of the confidential financial 
disclosure system. The amendment's sole purpose is to clarify the 
original intent of the financial disclosure regulation on a discrete 
matter which has been the subject of recent question.

Executive Order 12866

    In promulgating this minor amendment to its regulation, OGE has 
adhered to the regulatory philosophy and the applicable principles of 
regulation set forth in section 1 of Executive Order 12866, Regulatory 
Planning and Review. This amendment has not been reviewed by the Office 
of Management and Budget under that Executive order, as it is not 
deemed ``significant'' thereunder.

Regulatory Flexibility Act

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

Paperwork Reduction Act

    The Paperwork Reduction Act (44 U.S.C. chapter 35) does not apply, 
because this rulemaking does not create any additional information 
collection requirements, but simply clarifies the finality of a 
procedure for determining which positions require employees to file 
confidential financial disclosure reports (OGE Form 450), involving an 
information collection procedure previously approved in February 1996 
by the Office of Management and Budget (OMB Control No. 3209-0006).

List of Subjects in 5 CFR Part 2634

    Administrative practice and procedure, Certificates of divestiture, 
Conflict of interests, Financial disclosure, Government employees, 
Penalties, Privacy, Reporting and recordkeeping requirements, Trusts 
and trustees.

    Approved: March 17, 1998.
Stephen D. Potts,
Director, Office of Government Ethics.

    For the reasons set forth in the preamble, the Office of Government 
Ethics is amending part 2634 of chapter XVI of 5 CFR as follows:

PART 2634--[AMENDED]

    1. The authority citation for part 2634 continues to read as 
follows:

    Authority: 5 U.S.C. App. (Ethics in Government Act of 1978); 26 
U.S.C. 1043; 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.

    2. Section 2634.906 is amended by revising the second sentence and 
adding a new final sentence and a note at the end to read as follows:


Sec. 2634.906  Review of confidential filer status.

    * * * A decision by the agency head or designee regarding the 
complaint shall be final and conclusive for all purposes, 
notwithstanding any other provision of law or regulation. This 
procedure is the sole and exclusive means of seeking review of an 
agency's decision to designate positions and the employees therein for 
filing confidential financial disclosure reports.

    Note: The provision in this section for a final decision by the 
agency head or designee is intended to preclude administrative or 
negotiated grievances, arbitration procedures, and any other review 
or appeal, either within or outside the agency. This finality of the 
agency head's (or designee's) decision is necessary in order to 
maintain the prompt and orderly administration of the executive 
branch confidential financial disclosure system.

[FR Doc. 98-8312 Filed 3-30-98; 8:45 am]
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