[Federal Register Volume 63, Number 149 (Tuesday, August 4, 1998)]
[Proposed Rules]
[Pages 41476-41477]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-20717]


 ========================================================================
 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. 63, No. 149 / Tuesday, August 4, 1998 / 
Proposed Rules  

[[Page 41476]]


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OFFICE OF GOVERNMENT ETHICS

5 CFR Part 2635

RIN 3209-AA04


Standards of Ethical Conduct for Employees of the Executive 
Branch

AGENCY: Office of Government Ethics (OGE).

ACTION: Proposed rule; amendments.

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SUMMARY: The Office of Government Ethics is proposing minor amendments 
to the regulation governing standards of ethical conduct for executive 
branch employees, to conform with interpretive advice and to improve 
clarity concerning gifts from outside sources.

DATES: Comments are invited and must be received before October 5, 
1998.

ADDRESSES: Send comments to the Office of Government Ethics, Suite 500, 
1201 New York Avenue, NW., Washington, DC 20005-3917, Attention: 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; Internet E-mail address: [email protected] 
(for E-mail messages, the subject line should include the following 
sentence--Rulemaking to amend standards of ethical conduct sections on 
gifts).

SUPPLEMENTARY INFORMATION:

I. Background

    Some six years ago, the Office of Government Ethics (OGE) issued a 
final rule establishing the standards of ethical conduct, under 
authority of section 201(a) of Executive Order 12674 (57 FR 35006-
35067, August 7, 1992). These standards and the examples therein, as 
amended and codified at 5 CFR part 2635, are the primary source of 
guidance for ethics officials and employees throughout the executive 
branch in applying the fourteen fundamental principles of ethical 
conduct contained in the Executive order. By final rule published at 62 
FR 48746-48748 (September 17, 1997), OGE amended the standards of 
ethical conduct regulation, which removed superseded references to the 
former honorarium bar, reflected statutory changes on procurement 
integrity, added references to a new regulation on conflicts of 
interest (5 CFR part 2640), and made other minor corrections and 
updates.
    Based on feedback from the ethics community, OGE believes that the 
standards of ethical conduct are generally fulfilling the intended 
goals of the Executive order in establishing useful, practical 
guidelines for the executive branch. Over the past six years, OGE has 
provided interpretive advice to ethics officials on the application of 
these standards, as specific fact patterns have arisen. As a result, 
OGE has determined that selected provisions in the standards should now 
be amended, in order to codify some of that advice and to clarify the 
intended meaning of the regulatory language. Minor amendments proposed 
herein will accomplish that with respect to certain provisions in 
subpart B (Gifts From Outside Sources). The Office of Government Ethics 
will separately propose minor amendments to other sections of the 
standards of ethical conduct, to further codify interpretive advice and 
to improve clarity.

II. Analysis of Proposed Amendments

Section 2635.203

    Sections 2635.202 and 2635.203 of the standards of ethical conduct 
regulation (5 CFR part 2635), published as a final rule in 1992, 
implemented the general ban on soliciting or accepting gifts from 
prohibited sources described in 5 U.S.C. 7353 and section 101(d) of 
Executive Order 12674. In addition, Sec. 2635.202(a)(2) included a 
general ban on soliciting or accepting gifts from outside sources if 
given because of the employee's official position. As indicated in the 
preamble to the proposed standards of conduct regulation in 1991 (56 FR 
33780), this latter provision was intended to codify OGE's longstanding 
interpretation that employees must avoid actions that might result in 
or create the appearance of using public office for private gain, a 
principle that was reinvigorated in 1989 by sections 101(g) and 101(n) 
of Executive Order 12674.
    Gifts given ``because of the employee's official position'' are, as 
defined in Sec. 2635.203(e), those which would not have been solicited, 
offered, or given had the employee not held his position as a Federal 
employee. This definition has been applied too broadly by some, in 
OGE's view, to encompass gifts based on the mere happenstance that the 
recipient is a Government employee, rather than confining it to 
situations where gifts are motivated by Federal employment status, 
position, or the authority and duties related thereto.
    Therefore, in order to fully effectuate the intent of this 
prohibition, OGE proposes to amend the definition of gifts given 
because of the employee's official position at Sec. 2635.203(e), by 
clarifying that it applies only where the gift would not have been 
solicited, offered, or given had the employee not held the status, 
authority or duties associated with his Federal position. New Example 2 
further illustrates this intended meaning.

Section 2635.204

    Section 2635.204 of the standards of ethical conduct regulation 
established certain exemptions from the gift prohibitions discussed 
above, as authorized by 5 U.S.C. 7353 and Executive Order 12674. The 
introductory text of that section currently notes that a gift accepted 
under one of the exceptions will not be deemed to violate the fourteen 
general principles of ethical behavior contained in Sec. 2635.101(b) 
and Executive Order 12674. Some ethics officials and employees have 
misunderstood the primary intent of this statement, which is that 
appearance concerns will not preclude use of the gift exceptions or 
require an employee to reject a gift which falls within one of the 
exceptions.
    The proposed revision to the introductory text of Sec. 2635.204 
highlights the appearance standard as the primary principle among the 
fourteen that are deemed not to override acceptance of a gift under one 
of the exceptions. As indicated in the 1992 preamble to the final 
standards of ethical conduct regulation at 57 FR 35012, this primacy of 
the gift exceptions over appearance concerns helps promote consistency 
in application of the gift provisions. Also, as that preamble 
indicated, appearance

[[Page 41477]]

concerns are already built into the conditions required for use of the 
various gift exceptions, which should allay any concerns that the 
appearance standard might be ignored. Moreover, a cautionary statement 
in the introductory text of Sec. 2635.204 remains, to alert employees 
that it may sometimes be prudent not to accept gifts even though 
permitted, and Sec. 2635.202(c)(3) limits the over-frequent acceptance 
of gifts under the exceptions because of the appearance of using public 
office for private gain.

Section 2635.204(a)

    The exception for gifts aggregating $20 or less per occasion has 
caused confusion for some ethics officials and employees as to whether 
all gifts at a particular event must be aggregated or only gifts from 
each source. A review of the preambles to the proposed and final 
standards of ethical conduct regulation has led to OGE's interpretation 
that only gifts from the same source must be aggregated in determining 
whether the value is $20 or less (see 56 FR 33781 and 57 FR 35015-
35016). Therefore, the proposed amendment to Sec. 2635.204(a) specifies 
that the de minimis exception allows gifts aggregating $20 or less 
``per source per occasion,'' and provides a new example.
    To interpret the rule otherwise could unnecessarily restrict 
acceptance of de minimis gifts to those from the first source that 
happens to reach a particular employee at an event or occasion. 
Furthermore, applying the $20 maximum to gifts from all sources per 
occasion would thwart the intent of the de minimis exception, which 
otherwise focuses on each source. Thus, the term ``per occasion'' was 
intended to apply in the same manner as the term ``in a calendar 
year,'' for which an aggregate $50 limit from each source applies under 
Sec. 2635.204(a).
    This proposed amendment effectuating OGE's interpretation that the 
$20 limit applies per source per occasion will not permit an employee 
to accept an inappropriately high total value of gifts at a particular 
occasion or event, as Sec. 2635.202(c)(3) still restricts acceptance 
from the same or different sources on so frequent a basis that it 
creates an appearance of using public office for private gain. Nor will 
it permit an employee to accept a gift worth more than $20 toward which 
several sources have each contributed $20 or less, because a gift is 
not divisible for acceptance purposes unless it consists of distinct 
and separate items. This applies equally to a meal, which OGE does not 
consider to be divisible.

III. Matters of Regulatory Procedure

Executive Order 12866

    In promulgating these proposed rule amendments, 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. These proposed amendments have also been reviewed by the 
Office of Management and Budget under that Executive order.

Regulatory Flexibility Act

    As Deputy 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 these proposed amendments do not contain any information 
collection requirements that require the approval of the Office of 
Management and Budget.

List of Subjects in Part 2635

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

    Approved: July 29, 1998.
F. Gary Davis,
Deputy Director, Office of Government Ethics.

    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. 7301, 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.

    2. Section 2635.203 is amended by revising paragraph (e) and adding 
a new Example 2 after that paragraph to read as follows:


Sec. 2635.203  Definitions.

* * * * *
    (e) A gift is solicited or accepted because of the employee's 
official position if it is from a person other than an employee and 
would not have been solicited, offered, or given had the employee not 
held the status, authority or duties associated with his Federal 
position.
* * * * *
    Example 2: Employees at a regional office of the Department of 
Justice (DOJ) work in Government-leased space at a private office 
building, along with various private business tenants. A major fire 
in the building during normal office hours causes a traumatic 
experience for all occupants of the building in making their escape, 
and it is the subject of widespread news coverage. A corporate hotel 
chain, which does not meet the definition of a prohibited source for 
DOJ, seizes the moment and announces that it will give a free 
night's lodging to all building occupants and their families, as a 
public goodwill gesture. Employees of DOJ may accept, as this gift 
is not being given because of their Government positions. The 
donor's motivation for offering this gift is unrelated to the DOJ 
employees' status, authority or duties associated with their Federal 
position, but instead is based on their mere presence in the 
building as occupants at the time of the fire.
* * * * *
    3. The undesignated introductory text of Sec. 2635.204 is amended 
by revising the first sentence to read as follows:


Sec. 2635.204  Exceptions.

    The prohibitions set forth in Sec. 2635.202(a) do not apply to a 
gift accepted under the circumstances described in paragraphs (a) 
through (l) of this section, and an employee's acceptance of a gift in 
accordance with one of those paragraphs will be deemed not to violate 
the principles set forth in Sec. 2635.101(b), including appearances. * 
* *
* * * * *
    4. Paragraph (a) of Sec. 2635.204 is amended by adding the words 
``per source'' before the words ``per occasion'' in the first sentence, 
and by adding a new Example 5 after paragraph (a) to read as follows:


Sec. 2635.204  Exceptions.

* * * * *
    (a) * * *
* * * * *
    Example 5: During off-duty time, an employee of the Department 
of Defense (DOD) attends a trade show involving companies that are 
DOD contractors. He is offered a $15 computer program disk at X 
Company's booth, a $12 appointments calendar at Y Company's booth, 
and a deli lunch worth $8 from Z Company. The employee may accept 
all three of these items because they do not exceed $20 per source, 
even though they total more than $20 at this single occasion.
* * * * *
[FR Doc. 98-20717 Filed 8-3-98; 8:45 am]
BILLING CODE 6345-01-U