[Federal Register Volume 75, Number 94 (Monday, May 17, 2010)]
[Proposed Rules]
[Pages 27456-27463]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-11599]


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 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. 75, No. 94 / Monday, May 17, 2010 / Proposed 
Rules  

[[Page 27456]]



FEDERAL ELECTION COMMISSION

5 CFR Chapter XXXVII

11 CFR Part 7

[NOTICE 2010-05]
RIN 3209-AA15


Standards of Conduct

AGENCY: Federal Election Commission.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Federal Election Commission (``Commission'' or ``FEC''), 
with the concurrence of the office of Government Ethics (``OGE''), 
seeks comments on proposed revisions to the ``Standards of Conduct,'' 
which are the FEC rules that govern the conduct of Commissioners and 
Commission employees. The proposed rules would update the Commission's 
current regulations to reflect statutory changes enacted after the 
Standards of Conduct were originally promulgated in 1986, and to 
conform to regulations issued by OGE and the Office of Personnel 
Management (``OPM''). OGE's regulations establish a government-wide 
standard of ethical conduct for the Executive Branch and independent 
agencies, and are known as OGE's Standards of Ethical Conduct. In 
addition to the proposed revisions to the FEC's Standards of Conduct, 
the Commission, with OGE's concurrence, is also proposing new rules 
that would supplement, for Commissioners and employees of the FEC, the 
OGE Standards of Ethical Conduct for Employees of the Executive Branch. 
The proposed rules that follow do not represent a final decision by the 
Commission or OGE on the issues presented by this rulemaking. The 
supplementary information that follows provides further information.

DATES: Comments must be received on or before June 16, 2010.

ADDRESSES: All comments must be in writing, must be addressed to Robert 
M. Knop, Assistant General Counsel, and must be submitted in e-mail, 
facsimile, or paper copy form. Commenters are strongly encouraged to 
submit comments by e-mail or fax to ensure timely receipt and 
consideration. E-mail comments must be sent to [email protected]. If 
e-mail comments include an attachment, the attachment must be in either 
Adobe Acrobat (.pdf) or Microsoft Word (.doc) format. Faxed comments 
must be sent to (202) 219-3923, with paper copy follow-up. Paper 
comments and paper copy follow-up of faxed comments must be sent to the 
Federal Election Commission, 999 E Street, NW., Washington, DC 20463. 
All comments must include the full name and postal service address of 
the commenter or they will not be considered. The Commission will post 
comments on its Web site after the comment period ends.

FOR FURTHER INFORMATION CONTACT: Mr. Robert M. Knop, Assistant General 
Counsel, or Attorneys Mr. Anthony T. Buckley or Mr. Ethan A. Carrier, 
999 E Street, NW., Washington DC 20463, (202) 694-1650 or (800) 424-
9530.

SUPPLEMENTARY INFORMATION:

I. Overview of OGE Rules Implementing the Ethics Reform Act and 
Proposed FEC Supplemental Rules

A. Legal Authority

    The Ethics Reform Act of 1989 \1\ includes restrictions on gifts, 
travel, outside activities, and outside employment. See Public Law 101-
194, tit. III and VI, 103 Stat. 1716 (1989). It authorizes the Office 
of Government Ethics (``OGE'') to implement regulations concerning the 
conduct of executive branch employees. See 5 U.S.C. 7351(c). In 1992, 
OGE issued a final rule setting forth uniform standards of ethical 
conduct and an interim final rule on financial disclosure, and in 1996 
issued a final rule on financial interests, all for executive branch 
departments and agencies of the Federal Government and their employees. 
These three executive branch-wide regulations, as corrected and 
amended, are codified at 5 CFR parts 2634, 2635, and 2640.\2\
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    \1\ Public Law 101-194, 103 Stat. 1716 (1989).
    \2\ Shortly before Congress passed the Ethics Reform Act, the 
President issued Executive Order 12674, which sets forth basic 
principles of ethical conduct for Federal employees and requires OGE 
to promulgate ``regulations that establish a single, comprehensive, 
and clear set of executive-branch standards of conduct.'' E.O. 
12674, 54 FR 15159, 15160 (Apr. 12, 1989). This Executive Order was 
later modified. E.O. 12731, 55 FR 42547 (Oct. 17, 1990). OGE's 
regulations also implement Executive Order 12674, as modified by 
Executive Order 12731.
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    The OGE regulations implementing the Ethics Reform Act supersede 
any agency standards of conduct regulations previously issued and 
therefore supersede, with some exceptions, the Commission's current 
regulations in 11 CFR part 7. Although agencies may still issue 
regulations to supplement OGE's Standards of Ethical Conduct in order 
to accommodate specific agency needs, these regulations must be issued 
in accordance with OGE's rules, and must be submitted to OGE for prior 
approval. See 5 CFR 2635.105(a) and (b). Agencies may, however, retain 
any regulations based on their own separate statutory authority or that 
address different, non-ethics matters.

B. Topics Addressed in OGE and OPM Regulations

    OGE regulations address gifts from outside sources, gifts between 
employees, conflicting financial interests, impartiality in performing 
official duties, pursuit of other employment, misuse of position, and 
outside employment and activities. See 5 CFR part 2635.\3\
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    \3\ The remainder of this section is only a brief summary. 
Important additional restrictions and exceptions may apply. Readers 
should consult the cited regulations for further information.
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    In addition to OGE's Standards of Conduct, Commission employees are 
subject to certain rules issued by OPM concerning employee 
responsibilities and conduct. See 5 CFR part 735. These OPM rules 
address restrictions on certain gambling activities, conduct 
prejudicial to the government, and unauthorized examination training 
for individuals preparing to take civil and Foreign Service 
examinations. See 5 CFR part 735.
    FEC and OGE have determined that the following proposed 
supplemental regulations are necessary and appropriate in view of FEC's 
programs and operations and to fulfill the purposes of the OGE 
standards. The supplemental regulations proposed will be issued in new 
chapter XXXVII of title 5 of the CFR. In addition, the FEC is revising 
its current regulations at 11 CFR part 7 to conform to the OGE and OPM 
regulations, without compromising the Commission's essential 
independence in its core

[[Page 27457]]

mission of administering Federal campaign finance laws.

II. Analysis of the Proposed Regulations

    The following discussion explains the Commission's proposal to 
amend the rules that govern the conduct of Commissioners and Commission 
employees by adding supplemental regulations in a new chapter XXXVII of 
5 CFR, consisting of part 4701, and by revising the Commission's 
Standards of Conduct in 11 CFR part 7. The Commission seeks comment on 
the proposed rules.

A. Proposed Supplemental Regulations in 5 CFR part 4701

1. Proposed 5 CFR 4701.101--Scope
    Proposed 5 CFR 4701.101 states the authority for the supplemental 
regulations, which includes 2 U.S.C. 437c(a)(3), 5 U.S.C. 7301, and 5 
U.S.C. App. (Ethics in Government Act of 1978). Proposed 5 CFR 
4701.101(a) indicates that the regulations of 5 CFR part 4701 apply to 
both members of the Commission (``Commissioners'') and employees of the 
Commission. Proposed 5 CFR 4701.101(b) lists some of the other 
regulations in title 5 and 11 CFR part 7 that would govern the ethical 
conduct of Commissioners and employees.
2. Proposed 5 CFR 4701.102--Prior Approval for Certain Outside 
Employment and Activities
    The OGE Standards of Ethical Conduct supersede the Commission's 
current regulation at 11 CFR 7.9(f) concerning prior approval for 
outside employment and activities. However, an agency may issue 
supplemental regulations with OGE's concurrence that require the 
agency's employees to obtain approval before engaging in outside 
employment or activities. See 5 CFR 2635.105 and 2635.803.
    The Commission has found the current approval requirement for 
outside employment or activities useful in ensuring that the outside 
employment and activities of its employees conform to all applicable 
laws and regulations. Because that requirement is deemed necessary to 
the administration of its ethics program, the Commission, with the 
concurrence of OGE, proposes to renew its requirement for prior 
approval of certain outside employment and activities, and to issue a 
supplemental regulation in accordance with 5 CFR 2635.803 at proposed 5 
CFR 4701.102.
    Proposed section 4701.102 would differ significantly from current 
11 CFR 7.9(f). The major difference is in the scope of the outside 
employment and activities covered by the proposed regulation. Current 
11 CFR 7.9(f) requires Commission employees to obtain prior approval 
for all outside employment and activities. The term ``outside 
employment or other outside activity'' is defined broadly at current 11 
CFR 7.2(h) to include ``any work, service or other activity performed 
by an employee.'' In contrast, proposed 5 CFR 4701.102 requires prior 
approval from the Designated Agency Ethics Official (``DAEO'') only for 
outside activities that are related to the employee's official duties 
or involve the application of the same specialized skills or the same 
educational background as used in the performance of the employee's 
official duties. This rule, which draws on portions of prior approval 
regulations adopted by several other Federal agencies with OGE 
concurrence, is narrowly constructed to address agency concerns, while 
limiting the administrative burdens placed on employees. See, e.g., 5 
CFR 3801.106 (Department of Justice); 5 CFR 4501.103 (OPM); 5 CFR 
6301.102 (Department of Education); and 5 CFR 8601.102 (Federal 
Retirement Thrift Investment Board).
    Proposed 5 CFR 4701.102(a) would set out the definitions of the 
terms used in proposed 5 CFR 4701.102(b). The definitions for ``active 
participant,'' ``employee,'' and ``related to the employee's official 
duties'' refer back to the definitions of these terms used in the 
general standards of conduct regulations issued by OGE.
    Proposed 5 CFR 4701.102(a)(2) would define ``employee'' as defined 
in OGE's regulation at 5 CFR 2635.102(h), which includes ``any officer 
or employee of an agency.'' This definition includes Commissioners. 
However, proposed section 4701.102(b) would exclude Commissioners from 
its procedures.\4\ Instead, proposed 11 CFR 7.6, discussed below, would 
address outside employment and activities by Commissioners.
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    \4\ The Act already restricts outside activities of 
Commissioners. See 2 U.S.C. 437c(a)(3). Regulations implementing 
this provision are already in place, see 11 CFR 7.9, and are being 
reassigned in this rulemaking. See below.
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    Proposed 5 CFR 4701.102(a)(3) would define ``outside employment'' 
to mean any form of non-Federal employment, business relationship or 
activity involving the provision of personal services, with or without 
compensation, other than in the discharge of official duties. The 
proposed definition provides a non-exhaustive list of services such as 
serving as a lawyer, officer, director, trustee, agent, consultant, 
contractor, general partner, active participant, teacher, speaker, 
writer, or any other services provided by an individual. This proposed 
definition of ``outside employment'' is similar to those adopted by 
other Federal agencies and is designed to cover a broad range of 
outside employment and activities in which a Commission employee may 
seek to engage. See, e.g., 5 CFR 3801.106 (Department of Justice) and 5 
CFR 5701.101 (Federal Trade Commission). Notably, this definition of 
``outside employment'' includes unpaid activity which may not conform 
to the usual understanding of ``employment.''
    Proposed 5 CFR 4701.102(b) states that a Commission employee other 
than a special Government employee \5\ must obtain prior, written 
approval from the DAEO before engaging in outside employment or 
activities where the services provided are related to the employee's 
official duties or involve the application of the same specialized 
skills or the same educational background as used in the performance of 
the employee's official duties. Accordingly, Commission employees would 
be required to obtain prior, written approval only when they sought to 
engage in outside employment or activities that are related, in one of 
those respects, to their official duties. For example, a Commission 
attorney wishing to engage in weekend employment as a salesperson for a 
retail organization would not need to seek prior approval because such 
employment would not be related to his or her official duties or 
involve the application of the same specialized skills or educational 
background as used in his or her position at the Commission. On the 
other hand, a Commission attorney wishing to represent a relative in a 
lawsuit filed against a private party in State court would be required 
to seek prior approval because such representation would involve the 
application of the same specialized skill or same educational 
background as used in his or her position with the Commission.
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    \5\ ``Special Government employee'' is defined at 5 CFR 
2635.102(l). Special Government employees are temporary or part time 
employees hired to provide expertise about the industry in which 
they work. Such special Government employees are expected to have 
outside employment, and it is unnecessary to require them to seek 
prior approval for such outside employment.
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    Proposed section 5 CFR 4701.102(c) would establish the procedure 
for the submission of approval requests to the DAEO. It would require 
that the request be submitted through all of the employee's 
supervisors. For purposes of this section, the Staff Director, the

[[Page 27458]]

General Counsel, the Inspector General, the Chief Financial Officer, a 
Commissioner, or the Commission would be considered the final level of 
supervision for their respective subordinates. A request would need to 
provide certain information, including the identity of the person, 
group, or organization for which the employee intends to provide 
services. Deadlines for a supervisor to respond to a request of a 
bargaining unit employee, and for a bargaining unit employee to submit 
a grievance in the event a request is denied, are contained in the 
Commission's Labor-Management Agreement. See Article 31, Labor-
Management Agreement between the Federal Election Commission and 
Chapter 204 of the National Treasury Employees Union, dated May 2, 
2007.
    Proposed 5 CFR 4701.102(d) would set forth the standard for 
approval of an employee's request regarding outside employment or 
activity, which is not in current 11 CFR 7.9(f). Approval would be 
granted only upon a determination that the outside employment or 
activity would not involve conduct prohibited by statute or Federal 
regulations. In making this determination, the regulations to be 
considered would include those at 5 CFR part 2635. Therefore, the 
approval would depend on (1) whether the outside employment or activity 
would create conflicting financial interests, or (2) a lack of 
impartiality in performing official duties, or (3) misuse of Government 
position, and (4) whether the employment or activity otherwise complies 
with 5 CFR part 2635.
    The Commission invites comments on this proposal and on whether an 
alternative system of seeking prior approval is preferable to that 
proposed and, if so, how an alternative system should be structured.

B. Proposed Revisions to the Commission's Standards of Conduct in 11 
CFR Part 7

    The FECA provides authority for some of the Commission's 
regulations in 11 CFR part 7, including current 11 CFR 7.14 and 7.15, 
which concern confidentiality of enforcement matters and are based on 2 
U.S.C. 437g(a)(12). The Commission proposes to retain these rules. The 
Commission also proposes to retain provisions that are informational or 
procedural in nature, such as current 11 CFR 7.1 (purpose and 
applicability), 7.2 (definitions), 7.4 (interpretation and advisory 
service), 7.5 (reporting suspected violations), and 7.6 (disciplinary 
and corrective actions). The revisions and clarifications proposed for 
these provisions are discussed below.
    As explained above in Overview of OGE Rules Implementing the Ethics 
Reform Act, many of the Commission's regulations in current 11 CFR part 
7 have been supplanted by OGE's regulations. Accordingly, the 
Commission proposes to remove the supplanted regulations from the 
Commission's Standards of Conduct in current 11 CFR part 7.
    The Commission's current regulation concerning political activity 
by Commissioners and Commission employees has been supplanted by the 
Hatch Act Reform Amendments of 1993. See Public Law 103-94, 107 Stat. 
1001 (1993); current 11 CFR 7.11. Therefore, the Commission proposes to 
remove that regulation. See discussion below.
    The regulations that the Commission proposes to retain and revise 
would also be redesignated. The following chart lists the removals, 
revisions, and redesignations proposed for current 11 CFR part 7.
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    \6\ This entry refers to the portion of current 11 CFR 7.1(b) 
that separately includes special Government employees. See also 
proposed 11 CFR 7.2(d).
    \7\ This entry refers to the portion of current 11 CFR 7.1(b) 
that explains that current 11 CFR part 7 applies to Commission 
members and employees.
    \8\ See also 5 CFR 2635.301-2635.304.
    \9\ See also proposed 5 CFR part 4701.
    \10\ See also 5 CFR 2635.501-2635.503 and 2635.703.
    \11\ See also discussion below.
    \12\ See also 5 CFR 2635.502, 2635.704-2635.705, and discussion 
below.
    \13\ The citation to current 11 CFR 7.15 in 11 CFR 201.1 would 
be revised to cite proposed 11 CFR 7.8.
    \14\ See also proposed 11 CFR 7.2(d) (including special 
Government employees).
    \15\ See also discussion below.

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                                                                         Redesignated      Supplanted by 5 CFR
          Current 11 CFR Section                     Proposal           11 CFR section           section
----------------------------------------------------------------------------------------------------------------
7.1(a)...................................  Remove as supplanted.......  ..............                 2635.101
7.1(b) \6\ & (c).........................  Remove as supplanted.......  ..............              2635.102(h)
7.1(b) \7\...............................  Revise.....................
7.2......................................  Revise.....................
7.3......................................  Remove as supplanted.......  ..............        2638.701-2638.706
7.4......................................  Revise and redesignate.....             7.3
7.5......................................  Revise and redesignate.....             7.4
7.6......................................  Revise and redesignate.....             7.5
7.7......................................  Remove as supplanted.......  ..............                 2635.101
7.8......................................  Remove as supplanted.......  ..............    2635.201-2635.205.\8\
7.9(a)...................................  Revise and redesignate.....             7.6
7.9(b)-(f)...............................  Remove as supplanted.......  ..............    2635.801-2635.809.\9\
7.10.....................................  Remove as supplanted.......  ..............   2635.401-2635.403.\10\
7.11.....................................  Remove as supplanted.......  ..............                Hatch Act
                                                                                                Amendments.\11\
7.12.....................................  Remove as supplanted.......  ..............            2635.402.\12\
7.13.....................................  Remove as supplanted.......  ..............                 2635.704
7.14.....................................  Revise and redesignate.....             7.7
7.15.....................................  Revise and redesignate.....        \13\ 7.8
7.16.....................................  Remove as supplanted.......  ..............        2635.901-2635.902
7.17-7.21................................  Remove as supplanted.......  ..............         2635.102(h).\14\
7.22-7.33................................  Remove as supplanted.......  ..............       18 U.S.C. 207.\15\
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[[Page 27459]]

1. Proposed 11 CFR 7.1--Scope
    Proposed 11 CFR 7.1(a) would state that the regulations in revised 
11 CFR part 7 apply to all members and employees of the Commission. 
Proposed 11 CFR 7.1(b) would list the other regulations in title 5 of 
the CFR and proposed 5 CFR part 4701 that would govern the ethical 
conduct of Commissioners and employees. Current 11 CFR 7.1(b), which 
states that the regulations in current 11 CFR part 7 apply to all 
employees and ``special Commission employees,'' would be removed. As 
explained below, proposed 11 CFR 7.2(d) would include ``special 
Government employees'' in the definition of ``employee.'' Although the 
Commission's current regulations use the term ``special Commission 
employee,'' the proposed regulation uses the term ``special Government 
employee'' as defined at 5 CFR 2635.102(l) in order to better conform 
to OGE terminology. Because proposed 11 CFR 7.1(a) states that the 
regulations in revised 11 CFR part 7 apply to all Commission employees, 
which includes special Government employees, current paragraph (b) is 
no longer necessary. Current 11 CFR 7.1(c), which states that the 
regulations in current 11 CFR part 7 must be construed in accordance 
with any applicable laws, regulations, and the Commission's Labor-
Management Agreement also would be removed because it is unnecessary to 
state that other laws, regulations, and agreements apply.
2. Proposed 11 CFR 7.2--Definitions
    Proposed 11 CFR 7.2 would continue to set forth the definitions 
used in 11 CFR part 7. The definition of ``Commission'' in current 11 
CFR 7.2(a) would remain unchanged. The definition of ``Commissioner'' 
in current 11 CFR 7.2(b) would be revised slightly. Whereas current 
paragraph (b) of 11 CFR 7.2 defines ``Commissioner,'' in part, as ``a 
voting member of the Federal Election Commission,'' proposed 11 CFR 
7.2(b) would delete the word ``voting'' from the definition. The word 
``voting'' is no longer necessary because all members of the Commission 
are currently voting members. This definition includes a Commissioner 
who holds his or her position by virtue of a recess appointment.
    The definition of ``conflict of interest'' in current section 
7.2(c) would be removed. Instead, the Commission would rely on OGE 
regulations and regulatory definitions regarding conflicts of interest, 
except for the provisions in proposed 11 CFR 7.6 governing outside 
employment and activities of Commissioners. See, e.g., 5 CFR 2635.801-
2635.809. Because proposed section 7.6 would not use the phrase 
``conflict of interest,'' a definition of that phrase specific to 11 
CFR part 7 would no longer be needed.
    The terms ``Designated Agency Ethics Officer'' and ``Ethics 
Officer'' in current 11 CFR 7.2(d) would be replaced with the term 
``Designated Agency Ethics Official'' in proposed section 7.2(c) and 
throughout the proposed regulations. See proposed 11 CFR 7.3, 7.4, and 
7.5. These changes would make the Commission's regulations consistent 
with OGE's regulations at 5 CFR 2638.104. Proposed 11 CFR 7.2(c) would 
also include a provision from current 11 CFR 7.4 stating that the 
Commission's General Counsel serves as the Designated Agency Ethics 
Official.
    In proposed 11 CFR 7.2(d), the definition of ``employee'' from 
current 11 CFR 7.2(e) would be amended to include a ``special 
Government employee as defined in 18 U.S.C. 202(a).'' OGE regulations 
at 5 CFR 2635.102(h) include ``special Government employee'' within the 
general definition of ``employee,'' thus subjecting special Government 
employees to the same Standards of Conduct as other employees, with 
certain limitations. Proposed section 7.2(d) would operate similarly.
    Proposed section 7.2(e) defines ``ex parte communication'' for the 
purposes of 11 CFR part 7. This definition is based on the definition 
of ``ex parte communication'' at 11 CFR 201.2(a) applicable to non-
enforcement situations.\16\ Similar to that definition, proposed 
section 7.9(e) defines ``ex parte communication'' as any written or 
oral communication by any person outside the agency to any Commissioner 
or any member of any Commissioner's staff, but not to any other 
Commission employee, that imparts information or argument regarding 
prospective Commission enforcement action or potential action 
concerning any pending enforcement matter. Similar to current 
Commission regulations at 11 CFR 111.22 and part 201, the proposed 
definition is limited to Commissioners and their staff members because 
the Commissioners are empowered to make decisions on enforcement 
matters, and their staff members are their confidential assistants on 
these matters. The Commission notes that ``matter'' as used in the 
proposed rule includes enforcement Matters Under Review, Administrative 
Fines, and Alternative Dispute Resolution cases (``ADR''). See also 
discussion of proposed 11 CFR 7.9, below.
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    \16\ The treatment of ex parte communications in enforcement 
matters is addressed in 11 CFR 111.22. The treatment of ex parte 
communications in audits, rulemakings, advisory opinions, public 
funding cases, and litigation matters is covered by 11 CFR part 201.
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    Proposed section 7.2(f) defines the term ``Inspector General.'' The 
definitions of ``former employee,'' ``official responsibility,'' 
``person,'' and ``special Commission employee'' at current 11 CFR 
7.2(f), (g), (i), and (j), respectively, would be removed from proposed 
section 7.2 as these definitions are no longer necessary. In addition, 
paragraph (h) of current 11 CFR 7.2 defining ``outside employment or 
other outside activity'' would be removed. Because the Commission 
proposes, with OGE concurrence, to replace much of current 11 CFR 7.9 
(outside employment or activities by Commission employees) with a 
supplemental regulation at 5 CFR 4701.102, paragraph (h) of current 11 
CFR 7.2 defining ``outside employment or other outside activity'' would 
be superfluous.
3. Proposed 11 CFR 7.3--Interpretation and Advisory Service
    Proposed 11 CFR 7.3 is a revised version of current 11 CFR 7.4, 
which addresses interpretation and advisory service. Proposed 11 CFR 
7.3(a) adds references to 5 CFR parts 735, 2634, 2635, 2640, and 4701 
as subjects on which a Commissioner or employee may seek interpretation 
and advice. Also, proposed paragraph (a) identifies the DAEO as the 
person from whom advice should be sought. Proposed paragraph (b) 
clarifies that the DAEO, a Commissioner, or an employee may request an 
opinion from the Director of OGE concerning interpretations of 5 CFR 
parts 2634, 2635, or 2640.
4. Proposed 11 CFR 7.4--Reporting Suspected Violations
    Proposed 11 CFR 7.4 is a revised version of current 11 CFR 7.5 and 
addresses the reporting of suspected violations of the FEC's Standards 
of Conduct and OGE's Standards of Ethical Conduct. Proposed section 7.4 
requires the reporting of suspected violations of 5 CFR parts 735, 
2634, 2635, 2640, and 4701 or revised 11 CFR part 7 to the DAEO, the 
Inspector General, or other appropriate law enforcement authorities.
5. Proposed 11 CFR 7.5--Corrective Action
    Proposed 11 CFR 7.5 informs employees that a violation of the FEC's 
Standards of Conduct or OGE's Standards of Ethical Conduct may be cause 
for appropriate corrective action, disciplinary action, or adverse 
action, in

[[Page 27460]]

addition to any penalty prescribed by law, including criminal 
penalties. Proposed section 7.5 is based on current paragraph 7.6(a). 
Procedures for taking corrective, disciplinary, and adverse actions are 
set forth in other authority. Accordingly, the procedures in current 
paragraphs 7.6(b) and (c) are unnecessary and would be deleted.
6. Proposed 11 CFR 7.6--Outside Employment and Activities by 
Commissioners
    Proposed 11 CFR 7.6 addresses outside employment or activities of 
Commissioners.\17\ FECA provides authority for additional restrictions 
on Commissioners' outside employment and activities. See 2 U.S.C. 
437c(a)(3).
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    \17\ Outside activities of all FEC employees are addressed in 
OGE's Standards of Ethical Conduct at 5 CFR 2635.801-2635.809, 
which, when the standards became effective in February 1993, 
superseded the Commission's current regulations at 11 CFR 7.9(b)-
(f). Commissioners have additional limitations on outside activities 
as described in proposed 11 CFR 7.6 and 2 U.S.C. 437c(a)(3).
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    Similar to the current rule at 11 CFR 7.9(a), proposed 11 CFR 7.6 
states that no Commissioner may devote a substantial portion of his or 
her time to any other business, vocation, or employment. This 
regulation would also retain the current rule's allowance of a 90-day 
period for a Commissioner, following the start of Commission service, 
to limit such activity.
    As noted in the 1986 Explanation and Justification for the current 
rule on Commissioners' outside activities, the use of the words 
``substantial portion'' of a Commissioner's time to trigger the 
regulation's prohibitions is based on the legislative history of 2 
U.S.C. 437c(a)(3). See Explanation and Justification for Final Rules on 
Standards of Conduct for Agency Employees, 51 FR 34440, 34442 (Sept. 
29, 1986). The Conference Report that accompanied the 1976 amendments 
to FECA discusses 2 U.S.C. 437c(a)(3): ``The conferees agree that the 
requirement is intended to apply to members who devote a substantial 
portion of their time to such business, vocation, or employment 
activities.'' H.R. Rep. No. 94-1057, at 34 (1976) (Conf. Rep.), 
reprinted in Legislative History of Federal Election Campaign Act 
Amendments of 1976, at 1028 (1977). The proposed rule continues this 
interpretation.
7. Proposed 11 CFR 7.7--Prohibition Against Making Complaints and 
Investigations Public
    FECA prohibits any person from making public ``any notification or 
investigation'' of a complaint under 2 U.S.C. 437g without the written 
consent of the person receiving the notification or with respect to 
whom the investigation is made. 2 U.S.C. 437g(a)(12)(A); 11 CFR 111.21. 
Proposed 11 CFR 7.7 derives its authority from that provision of FECA. 
The proposed rule follows current 11 CFR 7.14.
8. Proposed 11 CFR 7.8--Ex Parte Communications in Enforcement Actions
    Proposed 11 CFR 7.8 is a revised version of current 11 CFR 7.15 and 
addresses ex parte communications. The title of proposed 11 CFR 7.8 
clarifies that the rule applies specifically to ex parte communications 
in enforcement matters. Proposed 11 CFR 7.8(a) and (d) would revise the 
rule to clarify that the prohibition on ex parte communications would 
apply only to Commissioners and any member of a Commissioner's staff. 
These proposed changes would conform proposed 11 CFR 7.8 to the current 
ex parte rules in 11 CFR 111.22 and part 201. See also discussion of 
proposed 11 CFR 7.2(e), above. Proposed section 7.8 also contains 
nonsubstantive revisions from paragraphs (a), (c), and (d) of current 
section 7.15. Finally, proposed 11 CFR 7.8 would add references to 11 
CFR 111.22, governing ex parte communications made in connection with 
Commission enforcement actions, and 11 CFR part 201, governing ex parte 
communications made in connection with public funding, audits, 
litigation, rulemakings, and advisory opinions. See proposed 11 CFR 
7.8(e). The Commission seeks comment on these changes to its ex parte 
communication rules.
9. Proposed Removal of Current 11 CFR 7.11--Political and Organization 
Activity
    The Hatch Act Reform Amendments of 1993 \18\ lifted many of the 
restrictions imposed by the original Hatch Act on most Federal 
employees with regard to participation in political campaigns. However, 
Congress specifically addressed the FEC in the Hatch Act Amendments and 
left all of the original Hatch Act's restrictions in place for 
employees of the Commission, other than Commissioners. See 5 U.S.C. 
7323(b)(1) and (2). In contrast to the Commissioners, Commission 
employees may not give a political contribution to a Member of 
Congress, an employee of the Executive Branch (other than the President 
or Vice President), or an officer of a uniformed service. 5 U.S.C. 
7323(b)(1). Additionally, Commission employees may not ``take an active 
part in political management or political campaigns.'' 5 U.S.C. 
7323(b)(2)(A).
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    \18\ Public Law 103-94, 107 Stat. 1001 (1993) (``Hatch Act 
Amendments'').
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    The Hatch Act, as amended, prohibits certain political activities 
by Commissioners such as (1) using official authority or influence to 
interfere with an election, (2) knowingly soliciting or discouraging 
political activity by anyone subject to a Commission audit or 
investigation, (3) soliciting or receiving political contributions 
(except in certain, narrowly limited circumstances), or (4) being a 
candidate for public office in a partisan election. 5 U.S.C. 7323(a).
    OPM has authority to issue regulations regarding the Hatch Act 
Amendments, and the Office of Special Counsel (``OSC'') interprets and 
enforces those regulations. See 5 U.S.C. 1103(a)(5) and 7325. No 
provisions in the Hatch Act Amendments empower any agencies other than 
OPM to issue regulations pursuant to the Hatch Act Amendments, and no 
provision in FECA directly refers to the Hatch Act Amendments or 
previous Hatch Act restrictions. OPM has issued a regulation expressly 
prescribing the extent to which the political activities of employees 
may be limited beyond the restrictions in the Hatch Act Amendments. 
This OPM regulation provides that: ``No further proscriptions or 
restrictions may be imposed upon employees covered under this 
regulation except: (a) Employees who are appointed by the President by 
and with the advice and consent of the Senate; (b) Employees who are 
appointed by the President; (c) Non-career senior executive service 
members; (d) Schedule C employees, 5 CFR 213.3301, 213.3302; and (e) 
Any other employees who serve at the pleasure of the President.'' See 5 
CFR 734.104.
    The Commission has received an advisory opinion from OSC as to the 
scope of the Commission's authority to interpret the Hatch Act 
Amendments regarding Commissioners and Commission employees.\19\ The 
specific question asked was whether the Commission may adopt a 
regulation that would forbid a Commissioner or a Commission employee 
from publicly supporting, or working for, or contributing to, a 
candidate, political party, or political committee subject to the 
jurisdiction of the Commission, even if in the case of public support, 
the activity is not done in concert with the

[[Page 27461]]

candidate, political party, or political committee. In its opinion, the 
OSC noted the OPM regulations cited above and stated with respect to 
employees that ``the FEC cannot further restrict the political activity 
of its regular employees by forbidding them from publicly supporting or 
contributing to a candidate, political party, or political committee 
subject to the jurisdiction of the Commission.'' U.S. Office of Special 
Counsel Advisory Opinion, OSC File No. AD-03-0095, at 2 (Aug. 29, 
2003). The OSC opinion also noted with respect to Commissioners that 
``the FEC has no authority to adopt regulations that would forbid a 
Commissioner from publicly supporting, working for, or contributing to 
a candidate, political party, or political committee subject to the 
jurisdiction of the FEC.'' Id. at 2-3. Its final conclusion was that 
``the FEC may not adopt regulations that would limit the political 
activity of FEC employees or Commissioners beyond the restrictions set 
forth in the Hatch Act.'' \20\ Id. at 3.
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    \19\ A copy of the Office of Special Counsel's opinion is 
available on the Commission's Web site at http://www.fec.gov/law/law_rulemakings.shtml under ``Standards of Conduct.''
    \20\ Under 5 U.S.C. 1212, the advisory opinion authority of the 
OSC is limited to matters related to the Hatch Act. Therefore, the 
conclusions of the opinion are also limited to interpretations of 
the Hatch Act and OPM regulations. They do not apply to any separate 
statutory authority under FECA.
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    Accordingly, the Commission proposes to delete current section 7.11 
because it is inconsistent with the Hatch Act Amendments.
10. Proposed Removal of Current 11 CFR 7.12--Membership in Associations
    The Commission proposes to remove current 11 CFR 7.12, which 
addresses employee and Commissioner membership in associations. In 
1991, OGE issued a Notice of Proposed Rulemaking that included proposed 
regulations concerning participation in professional associations. See 
Notice of Proposed Rulemaking on Standards of Ethical Conduct for 
Employees of the Executive Branch, 56 FR 33778 (July 23, 1991). OGE 
decided, however, to reserve action in its final rule on this topic as 
a result of the overwhelming response to its request for comments. See 
Explanation and Justification for Final Rule on Standards of Ethical 
Conduct for Employees of the Executive Branch, 57 FR 35006 (Aug. 7, 
1992). The Commission agrees with the position taken by OGE in its 
rulemaking that ethical concerns regarding membership in 
nongovernmental associations or organizations may be addressed under 
the more general standards in 5 CFR part 2635. See 57 FR at 35035. 
Among those general provisions that are applicable are 5 CFR 2635.402 
(concerning disqualifying financial interests), 5 CFR 2635.502 
(concerning personal and business relationships), and 5 CFR 2635.704 
and 2635.705 (concerning use of government property and official time).
11. Proposed Removal of Current 11 CFR Part 7, Subpart D (Post 
Employment Conflict of Interest: Procedure for Administrative 
Enforcement Proceedings)
    Current 11 CFR part 7, subpart D, concerns administrative 
procedures to be followed for investigations of post-employment 
conflict-of-interest violations by individuals who have left Commission 
employment. Subpart D was based on a prior version of 18 U.S.C. 207 and 
5 CFR parts 2637 and 2641. When subpart D was adopted, 18 U.S.C. 207(j) 
authorized agency proceedings against individuals who violated that 
section and required that ``departments and agencies shall, in 
consultation with the Director of the Office of Government Ethics, 
establish procedures to carry out this subsection.''
    Subsequently, however, 18 U.S.C. 207(j) was amended and the section 
authorizing administrative procedures and the authority to draft 
regulations regarding the procedures was removed and replaced.\21\ The 
Commission has no pending post-employment situations concerning 
employees who left service prior to the repeal of this provision. 
Accordingly, the Commission is proposing to remove 11 CFR part 7, 
subpart D pertaining to proceedings regarding post-employment conflicts 
of interest in its entirety. Please note that former employees would 
remain subject to Department of Justice criminal prosecution under 18 
U.S.C. 207 for post-employment conflict of interest violations. See 18 
U.S.C. 216.
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    \21\ See Public Law 101-189, Div. A, Title VIII, Part B, sec. 
814(d)(2), 103 Stat. 1352, 1499 (1989).
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Certification of No Effect Pursuant to 5 U.S.C. 605(b)

Regulatory Flexibility Act

    The Commission certifies that the attached proposed rules, if 
promulgated, will not have a significant economic impact on a 
substantial number of small entities. The basis of this certification 
is that this rulemaking affects only the appointed members of the 
Federal Election Commission and its employees. The members of the 
Commission and its employees are individuals, and are not small 
entities under 5 U.S.C. 601.

List of Subjects

5 CFR Part 4701

    Conflict of interests, Government employees, Outside activities.

11 CFR Part 7

    Administrative practice and procedure, Conflict of interests, 
Government employees, Political activities (government employees).

    For the reasons set out in the preamble, the Federal Election 
Commission, with the concurrence of the Office of Government Ethics, 
proposes to amend title 5 of the Code of Federal Regulations, and the 
Federal Election Commission further proposes to amend chapter I of 
title 11 of the Code of Federal Regulations as follows:

TITLE 5--GOVERNMENT ORGANIZATION AND EMPLOYEES

    1. Add Chapter XXXVII, consisting of part 4701, to read as follows:

Chapter XXXVII--Federal Election Commission

PART 4701--SUPPLEMENTAL STANDARDS OF ETHICAL CONDUCT FOR EMPLOYEES 
OF THE FEDERAL ELECTION COMMISSION

Sec.
4701.101 Scope.
4701.102 Prior approval for certain outside employment.

    Authority: 2 U.S.C. 437c(a)(3); 5 U.S.C. 7301; 5 U.S.C. app. 
(Ethics in Government Act of 1978); E.O. 12674, 54 FR 15159, 3 CFR 
p. 215 (1989 Comp.), as modified by E.O. 12731, 55 FR 42547, 3 CFR 
p. 306 (1990 Comp.); 5 CFR 2635.105 and 2635.803.


Sec.  4701.101  Scope.

    (a) In accordance with 5 CFR 2635.105, the regulations in this part 
set forth standards of conduct that apply to members and other 
employees of the Federal Election Commission (``Commission'').
    (b) In addition, members and other employees of the Commission are 
subject to the following regulations:
    (1) 5 CFR part 735 (Employee Responsibilities and Conduct);
    (2) 5 CFR part 2634 (Executive Branch Financial Disclosure, 
Qualified Trusts, and Certificates of Divestiture);
    (3) 5 CFR part 2635 (Standards of Ethical Conduct for Employees of 
the Executive Branch); and
    (4) 11 CFR part 7 (Standards of Conduct for Members and Employees 
of the Federal Election Commission).


Sec.  4701.102  Prior approval for certain outside employment.

    (a) Definitions. For purposes of this section:

[[Page 27462]]

    (1) Active participant has the meaning set forth in 5 CFR 
2635.502(b)(1)(v).
    (2) Employee has the meaning set forth in 5 CFR 2635.102(h).
    (3) Definition of outside employment. For purposes of this section, 
outside employment means any form of non-Federal employment, business 
relationship or activity involving the provision of personal services, 
whether or not for compensation. It includes, but is not limited to, 
services as an officer, director, agent, advisor, attorney, consultant, 
contractor, general partner, trustee, teacher, speaker, writer, or any 
other services provided by an individual. It includes writing when done 
under an arrangement with another person for production or publication 
of the written product. The definition does not include participation 
in the activities of a nonprofit charitable, religious, professional, 
social, fraternal, educational, recreational, public service or civic 
organization, unless:
    (i) The activity provides compensation other than reimbursement of 
expenses;
    (ii) The activities of the non-Federal organization are devoted 
substantially to matters relating to the employee's official duties as 
defined in 5 CFR 2635.807(a)(2)(i)(B)-(E) and the employee will serve 
as officer or director of the non-Federal organization; or
    (iii) The activities will involve the provision of consultative or 
professional services. Consultative services means the provision of 
personal services, including the rendering of advice or consultation, 
which requires advanced knowledge in a field of science or learning 
customarily acquired by a course of specialized instruction and study 
in an institution of higher education, hospital, or similar facility. 
Professional services means the provision of personal services, 
including the rendering of advice or consultation, which involves 
application of the skills of a profession as defined in 5 CFR 
2636.305(b)(1) or involves a fiduciary relationship as defined in 5 CFR 
2636.305(b)(2).
    (4) Related to the employee's official duties means that the 
outside employment meets one or more of the tests described in 5 CFR 
2635.807(a)(2)(i)(B)-(E). Outside employment related to the employee's 
official duties includes:
    (i) Outside employment that an employee has been invited to 
participate in because of his or her official position rather than his 
or her expertise in the subject matter;
    (ii) Outside employment in which an employee has been asked to 
participate by a person that has interests that may be substantially 
affected by the performance or nonperformance of the employee's 
official duties;
    (iii) Outside employment that conveys information derived from 
nonpublic information gained during the course of government 
employment; and
    (iv) Outside employment that deals in significant part with any 
matter to which the employee is or has been officially assigned in the 
last year, or any ongoing or announced Commission policy, program, or 
operation.
    (b) Prior approval requirement. An employee of the Commission, 
including a member of a Commissioner's staff, but not a member of the 
Commission or a special Government employee, shall obtain written 
approval from the Designated Agency Ethics Official before engaging in 
outside employment where the services provided:
    (1) Are related to the employee's official duties; or
    (2) Involve the application of the same specialized skills or the 
same educational background as used in the performance of the 
employee's official duties.
    (c) Submission of requests for approval. (1) The request for 
approval shall be sent through all of the employee's supervisors and 
shall state the name of the person, group, or organization for whom the 
outside employment is to be performed; the type of outside employment 
to be performed; and the proposed hours of, and approximate dates of, 
the outside employment.
    (2) Upon a significant change in the nature or scope of the outside 
employment or in the employee's official position, the employee shall 
submit a revised request for approval.
    (d) Standard for approval. Approval shall be granted only upon a 
determination that the outside employment is not expected to involve 
conduct prohibited by statute or Federal regulation, including 5 CFR 
part 2635.

TITLE 11--FEDERAL ELECTIONS

Chapter I--Federal Election Commission

    2. Revise part 7 to read as follows:

PART 7--STANDARDS OF CONDUCT

Sec.
7.1 Scope.
7.2 Definitions.
7.3 Interpretation and advisory service.
7.4 Reporting suspected violations.
7.5 Corrective action.
7.6 Outside employment and activities by Commissioners.
7.7 Prohibition against making complaints and investigations public.
7.8 Ex parte communications in enforcement actions.

    Authority: 2 U.S.C. 437c, 437d, and 438; 5 U.S.C. 7321 et seq. 
and app. 3.


Sec.  7.1  Scope.

    (a) The regulations in this part apply to members and employees of 
the Federal Election Commission (``Commission'').
    (b) In addition, members and employees of the Commission are 
subject to the following regulations:
    (1) 5 CFR part 735 (Employee Responsibilities and Conduct);
    (2) 5 CFR part 2634 (Executive Branch Financial Disclosure, 
Qualified Trusts, and Certificates of Divestiture);
    (3) 5 CFR part 2635 (Standards of Ethical Conduct for Employees of 
the Executive Branch); and
    (4) 5 CFR part 4701 (Supplemental Standards of Ethical Conduct for 
Employees of the Federal Election Commission).


Sec.  7.2  Definitions.

    As used in this part:
    (a) Commission means the Federal Election Commission, 999 E Street, 
NW., Washington, DC 20463.
    (b) Commissioner means a member of the Federal Election Commission, 
in accordance with 2 U.S.C. 437c.
    (c) Designated Agency Ethics Official means the employee designated 
by the Commission to administer the provisions of the Ethics in 
Government Act of 1978 (5 U.S.C. appendix), as amended, and includes a 
designee of the Designated Agency Ethics Official. The General Counsel 
serves as the Commission's Designated Agency Ethics Official.
    (d) Employee means an employee of the Federal Election Commission 
and includes a special Government employee as defined in 18 U.S.C. 
202(a).
    (e) Ex parte communication means any written or oral communication 
by any person outside the agency to any Commissioner or any member of 
any Commissioner's staff, but not to any other Commission employee, 
that imparts information or argument regarding prospective Commission 
action or potential action concerning any pending enforcement matter.
    (f) Inspector General means the individual appointed by the 
Commission to administer the provisions of the Inspector General Act of 
1978, as amended (5 U.S.C. appendix), and includes any designee of the 
Inspector General.

[[Page 27463]]

Sec.  7.3  Interpretation and advisory service.

    (a) A Commissioner or employee seeking advice and guidance on 
matters covered by this part or 5 CFR parts 735, 2634, 2635, 2640, or 
4701 may consult with the Designated Agency Ethics Official. The 
Designated Agency Ethics Official should be consulted before 
undertaking any action that might violate this part or 5 CFR parts 735, 
2634, 2635, 2640, or 4701 governing the conduct of Commissioners or 
employees.
    (b) The Designated Agency Ethics Official, a Commissioner, or an 
employee may request an opinion from the Director of the Office of 
Government Ethics regarding an interpretation of 5 CFR parts 2634, 
2635, or 2640.


Sec.  7.4  Reporting suspected violations.

    Commissioners and employees shall disclose immediately any 
suspected violation of a statute or of a rule set forth in this part or 
of a rule set forth in 5 CFR parts 735, 2634, 2635, 2640, or 4701 to 
the Designated Agency Ethics Official, the Office of Inspector General, 
or other appropriate law enforcement authorities.


Sec.  7.5  Corrective action.

    A violation of this part or 5 CFR parts 735, 2634, 2635, 2640, or 
4701 by an employee may be cause for appropriate corrective, 
disciplinary, or adverse action in addition to any penalty prescribed 
by law.


Sec.  7.6  Outside employment and activities by Commissioners.

    No member of the Commission may devote a substantial portion of his 
or her time to any other business, vocation, or employment. Any 
individual who is engaging substantially in any other business, 
vocation, or employment at the time such individual begins to serve as 
a member of the Commission will appropriately limit such activity no 
later than 90 days after beginning to serve as such a member.


Sec.  7.7  Prohibition against making complaints and investigations 
public.

    (a) Commission employees are warned that they are subject to 
criminal penalties if they discuss or otherwise make public any matters 
pertaining to a complaint or investigation under 2 U.S.C. 437g, without 
the written permission of the person complained against or being 
investigated. Such communications are prohibited by 2 U.S.C. 
437g(a)(12)(A).
    (b) Section 437g(a)(12)(B) of title 2 of the United States Code 
provides as follows: ``Any member or employee of the Commission, or any 
other person, who violates the provisions of [2 U.S.C. 437g(a)(12)(A)] 
shall be fined not more than $2,000. Any such member, employee, or 
other person who knowingly and willfully violates the provisions of [2 
U.S.C. 437g(a)(12)(A)] shall be fined not more than $5,000.''


Sec.  7.8  Ex parte communications in enforcement actions.

    In order to avoid the possibility of prejudice, real or apparent, 
to the public interest in enforcement actions pending before the 
Commission pursuant to 2 U.S.C. 437g:
    (a) Except to the extent required for the disposition of 
enforcement matters as required by law (as, for example, during the 
normal course of an investigation or a conciliation effort), no 
Commissioner or member of any Commissioner's staff shall make or 
entertain any ex parte communications.
    (b) The prohibition of this section shall apply from the time a 
proper complaint is filed with the Commission pursuant to 2 U.S.C. 
437g(a)(1) or from the time that the Commission determines on the basis 
of information ascertained in the normal course of its supervisory 
responsibilities that it has reason to believe that a violation has 
occurred or may occur pursuant to 2 U.S.C. 437g(a)(2), and shall remain 
in force until the Commission has concluded all action with respect to 
the enforcement matter in question.
    (c) Any written communication prohibited by paragraph (a) of this 
section shall be delivered to the General Counsel, who shall place the 
communication in the case file.
    (d) A Commissioner or member of any Commissioner's staff involved 
in handling enforcement actions who receives an offer to make an oral 
communication or any communication concerning any enforcement action 
pending before the Commission as described in paragraph (a) of this 
section, shall decline to listen to such communication. If unsuccessful 
in preventing the communication, the Commissioner or employee shall 
advise the person making the communication that he or she will not 
consider the communication and shall prepare a statement setting forth 
the substance and circumstances of the communication. Within 48 hours 
of receipt of the communication, the Commissioner or any member of any 
Commissioner's staff shall prepare a statement setting forth the 
substance and circumstances of the communication and shall deliver the 
statement to the General Counsel for placing in the file in the manner 
set forth in paragraph (c) of this section.
    (e) Additional rules governing ex parte communications made in 
connection with Commission enforcement actions are found at 11 CFR 
111.22. Rules governing ex parte communications made in connection with 
public funding, Commission audits, litigation, rulemakings, and 
advisory opinions are found at 11 CFR part 201.

    Dated: May 11, 2010.

    On behalf of the Commission.
Matthew S. Petersen,
Chairman, Federal Election Commission.

    Approved: May 7, 2010.
Robert I. Cusick,
Director, Office of Government Ethics.
[FR Doc. 2010-11599 Filed 5-14-10; 8:45 am]
BILLING CODE 6715-01-P