[Federal Register Volume 64, Number 51 (Wednesday, March 17, 1999)]
[Rules and Regulations]
[Pages 13063-13064]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-6492]



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  Federal Register / Vol. 64, No. 51 / Wednesday, March 17, 1999 / 
Rules and Regulations  

[[Page 13063]]


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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: Final rule; amendments.

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SUMMARY: The Office of Government Ethics is amending portions of the 
regulation governing standards of ethical conduct for executive branch 
employees on seeking other employment, to conform with interpretive 
advice and to improve clarity.

EFFECTIVE DATE: April 16, 1999.

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: On August 26, 1998, the Office of Government 
Ethics (OGE) published proposed minor amendments to the standards of 
ethical conduct for executive branch employees (5 CFR part 2635), to 
codify interpretive advice and clarify intended meaning in subpart F 
(Seeking Other Employment) and in the definition of ``receive'' at 
Sec. 2635.807 of subpart H (Outside Activities). See 63 FR 45415-45417. 
We received only one comment, which related exclusively to the proposed 
amendment to Sec. 2635.807. Upon further consideration, and in view of 
separate concerns about other provisions of Sec. 2635.807, we have 
decided not to make the proposed definitional revision in Sec. 2635.807 
at this time. If, in the future, OGE decides to revive that proposal, 
we will issue a new proposed rule revision, with opportunity for 
comments.
    No comments were received concerning subpart F, so OGE is herewith 
publishing the proposed amendments to subpart F as a final rule, with 
no changes, effective April 16, 1999. A summary of those amendments 
follows.

Subpart F

    Subpart F of the standards of ethical conduct regulation, as 
promulgated for codification at 5 CFR part 2635 in 1992, implemented 
certain provisions of a criminal statute and an Executive order, 
specifically: (1) 18 U.S.C. 208, restricting employees' official 
participation in matters wherein a person or organization with whom 
they are negotiating for or have an arrangement concerning prospective 
employment has a financial interest, and (2) sections 101(h) and 101(j) 
of Executive Order 12674, directing employees to act impartially in 
official matters and not to engage in seeking or negotiating for 
outside employment that conflicts with official duties and 
responsibilities. Because these provisions of the criminal statute and 
Executive order are so closely related, they were combined for 
implementation at subpart F, with a requirement generally for 
disqualification from participation in certain matters when an employee 
is ``seeking other employment,'' a term that encompasses both 
negotiating and other specified lesser contacts.
    The existing language of Sec. 2635.601 and Sec. 2635.602 in that 
subpart suggests that coverage may be limited to situations where the 
employee's ``performance or nonperformance of official duties will 
affect'' the financial interests of a prospective employer. A somewhat 
more accurate test, for purposes of 18 U.S.C. 208, is contained in the 
existing Sec. 2635.604(a), Sec. 2635.605(a), and Sec. 2635.606(a), 
which is that coverage extends to participation in ``a particular 
matter that has a direct and predictable effect'' on those financial 
interests. The criminal statute does not limit its application to 
situations where one's performance of official duties will affect a 
financial interest, but instead focuses on whether a matter in which 
the employee participates will affect the financial interest. Further, 
the statute is triggered only if the effect on the financial interest 
will be direct and predictable.
    This variation among sections of the regulation was an unintended 
result of the process by which provisions on prospective employment in 
the criminal statute and Executive order were implemented jointly. As 
questions from ethics officials have arisen concerning these apparent 
discrepancies, OGE has advised that the requirements of 18 U.S.C. 208 
control. In order to more clearly align the provisions of subpart F 
with that advice and the criminal statute, OGE is amending 
Sec. 2635.601 and Sec. 2635.602 accordingly, by this current 
rulemaking.
    Additionally, amendments in this current rulemaking to 
Sec. 2635.601, Sec. 2635.602, Sec. 2635.604, Sec. 2635.605, and 
Sec. 2635.606 clarify initially in each section that the restrictions 
apply only when the employee would be ``participating personally and 
substantially'' in a particular matter. These modifications will 
further ensure that subpart F is consistent with 18 U.S.C. 208 and in 
conformance with OGE advice.

Matters of Regulatory Procedure

Executive Order 12866

    In promulgating these final rule amendments, 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 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 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 contain any information collection 
requirements that require the approval of the Office of Management and 
Budget.

[[Page 13064]]

List of Subjects in 5 CFR Part 2635

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

    Approved: December 7, 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 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.


Sec. 2635.601  [Amended]

    2. Section 2635.601 is amended by removing the words ``who 
otherwise would be affected by the performance or nonperformance of the 
employees' official duties.'' from the end of the first sentence and 
adding the words ``whose financial interests would be directly and 
predictably affected by particular matters in which the employees 
participate personally and substantially.'' in their place, and by 
adding the new sentence ``See Sec. 2635.402 and Sec. 2640.103 of this 
chapter.'' between the second and third sentences.


Sec. 2535.602  [Amended]

    3. Section 2635.602 is amended by removing the words ``the 
employee's official duties would affect'' from the first sentence of 
the undesignated introductory text and adding the words ``particular 
matters in which the employee will be participating personally and 
substantially would directly and predictably affect'' in their place, 
and by removing the words ``affected by the performance or 
nonperformance of his official duties'' from the first sentence of the 
note following the undesignated introductory text and adding the words 
``affected directly and predictably by particular matters in which he 
participates personally and substantially'' in their place.
    4. Section 2635.603 is amended by revising paragraph (d) to read as 
follows:


Sec. 2635.603  Definitions.

* * * * *
    (d) Direct and predictable effect, particular matter, and personal 
and substantial have the respective meanings set forth in 
Sec. 2635.402(b)(1), (3), and (4).


Sec. 2635.604  [Amended]

    5. Section 2635.604 is amended by adding the words ``personally and 
substantially'' after the word ``participate'' in the first sentence of 
paragraph (a).


Sec. 2635.605  [Amended]

    6. Section 2635.605 is amended by adding the words ``personally and 
substantially'' after the word ``participate'' in the first sentence of 
paragraph (a), and by adding the words ``personally and substantially'' 
after the word ``participate'' in the first sentence of paragraph (b).


Sec. 2635.606  [Amended]

    7. Section 2635.606 is amended by removing the words ``taking 
official action'' from the first sentence of paragraph (a) and adding 
the words ``participating personally and substantially'' in their 
place.

[FR Doc. 99-6492 Filed 3-16-99; 8:45 am]
BILLING CODE 6345-01-U