[Federal Register: June 15, 1995 (Volume 60, Number 115)]
[Proposed Rules]
[Page 31415-31418]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr15jn95-23]

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Proposed Rules
                                                Federal Register
________________________________________________________________________

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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[[Page 31415]]

OFFICE OF GOVERNMENT ETHICS

5 CFR Part 2635

RIN 3209-AA04


Widely Attended Gatherings Gifts Exception Under the Standards of
Ethical Conduct for Employees of the Executive Branch

AGENCY: Office of Government Ethics (OGE).

ACTION: Proposed rule.

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SUMMARY: The Office of Government Ethics proposes to revise the gift
exception contained in the Standards of Ethical Conduct for Employees
of the Executive Branch to permit employees to accept invitations to
certain widely attended gatherings from persons other than the sponsors
of those events and to clarify that only those events attended by large
number of persons qualify as widely attended gatherings. The Office of
Government Ethics also proposes to permit authorization for a guest,
other than the employee's spouse, to accompany the employee to a widely
attended gathering or to an event at which the employee is assigned to
participate as a speaker, panelist or other information presenter at
which other guests will be in attendance. These proposed changes would
provide more flexibility in attendance at such events while preserving
agencies' ability to monitor compliance by their employees.

DATES: Comments by agencies and the public are invited and are due by
August 14, 1995.

ADDRESSES: Office of Government Ethics, Suite 500, 1201 New York
Avenue, NW., Washington, DC 20005-3917, Attention: Mr. Gressman.

FOR FURTHER INFORMATION CONTACT: William E. Gressman, Office of
Government Ethics; telephone: 202-523-5757; FAX: 202-523-6325.

SUPPLEMENTARY INFORMATION:

I. Background

    On August 7, 1992, the Office of Government Ethics published the
Standards of Ethical Conduct for Employees of the Executive Branch
(Standards) for codification at 5 CFR part 2635. See 57 FR 35006-35067,
as corrected at 57 FR 48557 and 57 FR 52583, with additional grace
period extensions for certain existing agency provisions at 59 FR 4779-
4780 and 60 FR 6390-6391. The Standards, which took effect on February
3, 1993, set uniform ethical conduct standards applicable to all
executive branch personnel. They include regulations implementing the
gift restrictions contained in 5 U.S.C. 7353 and section 101(d) of
Executive Order 12674 as modified by Executive Order 12731. In
accordance with those authorities, Sec. 2635.204 sets forth exceptions
to Sec. 2635.202(a), which provides that, in the absence of an
exception, an employee shall not directly or indirectly solicit or
accept a gift from a prohibited source or a gift that is given because
of the employee's official position.
    One of several exceptions set forth in Sec. 2635.204 is the
exception at Sec. 2635.204(g)(2) by which an employee may accept a
sponsor's unsolicited gift of free attendance at all or part of a
widely attended gathering. Unlike the de minimis exception at
Sec. 2635.204(a) for unsolicited gifts having a market value of $20 or
less per occasion (with a calendar year aggregate limit of $50),
Sec. 2635.204(g)(2) imposes no limitation on the market value of the
gifts of free attendance that may be accepted. While the tickets or
other fees for attendance at such gatherings ordinarily cost much less,
this exception would permit acceptance of free attendance at events for
which the ticket price exceeds even $1,000. In part to ensure that
prohibited sources do not use this exception to provide lavish
entertainment to employees of the agencies with which they do business
or otherwise interact, Sec. 2635.204(g)(2) specifies that an invitation
to a widely attended gathering can be accepted only if it is from the
sponsor of the event.
    On March 9, 1993, shortly after the Standards first took effect,
the White House declared a six-month suspension of application to press
dinners of that portion of Sec. 2635.204(g)(2) that limits acceptance
of invitations to widely attended gatherings to those issued by the
sponsor of the event. During that six-month period, executive branch
officials were authorized to attend press dinners as guests of
individuals or organizations other than the sponsor of the event, if
the event otherwise met the conditions of the widely attended gathering
exception. On December 21, 1993, with another round of press
association events in the offing, the White House issued a memorandum
to all agency heads once again temporarily suspending administrative
enforcement of the rule affecting widely attended gatherings solely as
it relates to dinners sponsored by news associations for which
admission for executive branch officials is paid by news organizations.
    In a letter of December 21, 1993 addressed to OGE, the White House
asked OGE to consider a revision to Sec. 2635.204(g)(2) to provide that
an employee may accept an invitation received directly from a news
organization to attend a widely attended gathering sponsored by a news
association where there has been a determination that the employee's
attendance is in the interest of the agency. In the alternative, the
White House suggested that OGE might wish to consider revising
Sec. 2635.204(g)(2) to provide an exemption for invitations to a
broader range of widely attended gatherings from persons other than the
sponsors of those events. The White House specified in its memorandum
of the same date that the suspension was to extend until August 1,
1994, or until such later date as OGE responded to its request for
revision of Sec. 2635.204(g)(2). This proposed rule is the first step
in OGE's response to the White House request. Thus, the suspension
effected by the White House's most recent memorandum of December 21,
1993 will extend until OGE has issued an interim or final rule
determination as to this matter after receiving and reviewing comments
in response to this notice of proposed rulemaking.
    In asking that OGE treat the press differently than others for
purposes of permitting employees to attend press association events,
the White House expressed the view that the press is not like other
individuals, organizations or entities. The press, it suggested,
provides the public with access to the institution of Government and,
thus, functions on behalf of the greater public [[Page 31416]] good in
seeking to gather, record and disseminate information about current
events. In the view of the White House, members of the press and press
organizations do not seek to do business with, nor do they seek
official action from, the Government officials about whom they report.
The White House suggested that this provides a justification for
treating invitations from press organizations differently than
invitations from others who are prohibited sources or who invite
Government employees because of their official positions.
    It may be true that members of the press, in some instances, do not
seek to do business with or seek official action from the particular
Government official about whom they are reporting. More often than not,
however, those who report about the actions of Government officials or
about Government programs do interview, or seek to interview, those who
are the subject of their reporting or who have official knowledge about
the subject. When that occurs they and the press organizations they
represent often are seeking official information from Government
officials and are seeking to occupy their official time. They are
``prohibited sources'' within the meaning of 5 CFR 2635.203(d)(1) to
the same extent as are others who seek official action from the
employees of a Federal agency. How successful they are in obtaining
that official information impacts upon their work product and redounds
to their benefit or detriment and, ultimately, to the benefit or
detriment of the news organizations they serve. Members of the press
and press organizations have interests that may be substantially
affected by the performance or nonperformance of the official duties of
the Government officials of whom they seek information and, thus, also
meet the definition of prohibited sources in 5 CFR 2635.203(d)(4). See
OGE informal advisory memorandum 87x13 issued October 23, 1987, as
published in the ``Informal Advisory Letters and Memoranda and Formal
Opinions of the United States Office of Government Ethics'' (at pp.
743-755 of the 1979-1988 bound volume), which is available from the
U.S. Government Printing Office. We agree with the White House view
that reporting by the press often serves the public good. Whether the
product or service is a new cancer medication approved by the Food and
Drug Administration or a blockbuster documentary on World War I funded,
in part, by a grant from the National Endowment for the Humanities, the
same can be said of the products or services of many others who are
prohibited sources.
    For the reasons stated above, we cannot concur in the White House
view that invitations from the press to widely attended gatherings
should be treated differently than invitations from other prohibited
sources or from others who invite Government officials because of their
official positions. We do agree with the White House view, however,
that Sec. 2635.204(g)(2) may be unnecessarily restrictive in
prohibiting acceptance of invitations to all widely attended gatherings
from a person other than the sponsor of the event. By this notice, OGE
proposes to adopt the White House's alternative suggestion to modify
Sec. 2635.204(g)(2) to permit acceptance of invitations to widely
attended gatherings from persons other than the sponsors of those
events where more than 100 will be in attendance and where the gift of
free attendance has a market value of $250 or less. The Office of
Government Ethics also proposes to modify Sec. 2635.204(g)(2) to
clarify that events attended by a few, rather than many, are not widely
attended gatherings. In addition, OGE is proposing to amend
Sec. 2635.204(g)(6) to permit authorization for a person other than a
spouse to accompany an employee to a widely attended gathering or to an
event at which the employee is assigned to participate as a speaker,
panel participant or other presenter of information (pursuant to
Sec. 2635.204(g)(1)), where an invitation has been extended to the
spouse or a guest and where others in attendance will generally be
accompanied by a spouse or a guest.
    The proposed amendments to Sec. 2635.204(g) are incorporated in
this notice of proposed rulemaking after consultation with the
Department of Justice and the Office of Personnel Management.

II. Analysis of the Proposed Changes

    As an exception to the gift prohibitions set forth in 5 CFR
2635.202(a), Sec. 2635.204(g)(2) now permits an employee to accept an
unsolicited gift of free attendance at a widely attended gathering
where the agency makes a determination that the employee's attendance
is in the interest of the agency, provided that the gift is from the
sponsor of the event. One of the two changes to Sec. 2635.204(g)(2)
proposed by this rule would permit an employee to accept an unsolicited
gift of free attendance at a widely attended gathering from a person
other than the sponsor of the event where there has been a
determination of agency interest, provided that more than 100 persons
are expected to attend the event and provided that the gift of free
attendance has a market value of $250 or less. The requirement that
attendance be expected to exceed 100 persons is proposed to limit the
use of this exception to events which, by their larger, more public
nature are unlikely to prompt questions regarding the appropriateness
of their characterization as widely attended. The $250 ceiling on the
value of free attendance that may be accepted from a person other than
the event's sponsor coincides generally with the public financial
disclosure reporting exclusion at 5 U.S.C. app. Sec. 102(a)(2)(A) of
the Ethics in Government Act (and 5 CFR 2634.304(a) of OGE's
implementing regulations) for gifts of less than $250 and, thus,
comports with legislative consensus that gifts below that amount are of
a value that need not be subjected to public scrutiny. Together, the
two limitations reduce the possibility that the exception for widely
attended gatherings might be used to provide lavish entertainment for
Government employees.
    To accommodate the proposed change to Sec. 2635.204(g)(2), a
conforming change to Sec. 2635.204(g)(3)(i) is proposed to require a
written finding of agency interest where the person who has extended
the invitation may be substantially affected by performance or
nonperformance of the employee's duties. The phrase ``person who has
extended the invitation'' means the person who is the donor of the gift
of free attendance. A conforming change to Sec. 2635.204(g)(4) is
proposed to clarify that the market value of free attendance by an
accompanying spouse or other guest, when authorized under
Sec. 2635.204(g)(6), is to be added to the market value of the
employee's own free attendance in determining the market value of the
gift of free attendance for the purpose of applying the $250 limit and
for the purpose of considering the relevant factors under
Sec. 2635.204(g)(3)(i). A new example 2 is proposed to be added
following Sec. 2635.204(g) to illustrate this modification. Example 1
would be modified to incorporate a free attendance value in excess of
$250 so that the example will continue to illustrate that higher value
gifts of free attendance may be accepted with agency approval only from
the sponsor of the event.
    The other change proposed to Sec. 2635.204(g)(2) is to add language
to clarify that widely attended gatherings are only those attended by a
large number of persons. As presently in effect, the paragraph states
that a gathering ``is widely attended if, for [[Page 31417]] example,
it is open to members from throughout a given industry or profession or
if those in attendance represent a range of persons interested in a
given matter.'' This sentence was intended to help describe the types
of events that would qualify as widely attended gatherings and was not
intended to alter the normal meaning of the phrase ``widely attended''
as encompassing those attended by many. It has been read otherwise by
some who have argued that small gatherings of fewer even than 20
qualify if the few in attendance represent the range of persons
interested in a given matter. Proposed new example 3 would help to
illustrate the meaning of the phrase widely attended gathering.
    The Office of Government Ethics also proposes to revise
Sec. 2635.204(g)(6) so that an employee who has received an invitation
to a widely attended gathering that includes an invitation to bring a
guest may be authorized by the agency designee to accept on behalf of
an accompanying guest, without regard to whether that guest is the
employee's spouse. Under paragraph (g)(6) as presently in effect, an
agency may only authorize an employee to accept a sponsor's invitation
to an accompanying spouse. The Office of Government Ethics agrees with
those who have observed that it is unfair to an employee who is not
married or whose spouse is unable or does not wish to attend an event
to restrict acceptance to spouses only. The expanded authority for an
accompanying guest would extend to an employee who, under
Sec. 2635.204(g)(1), is assigned to participate as a speaker, panel
participant or other presenter of information at a conference or other
event where others in attendance will generally be accompanied by a
spouse or other guest. The change proposed would include language
clarifying that the invitation to bring an accompanying spouse or other
guest may be accepted only if it is unsolicited. The expanded authority
could not be used for more than one accompanying guest.
    In the last sentence of Sec. 2635.204(g)(3)(i) the phrase
``monetary value'' is proposed to be changed to ``market value'' to
comport with the definition at Sec. 2635.203(c). Other language changes
to Sec. 2635.204(g)(2)-(g)(6) are proposed simply to conform to the
proposed substantive changes discussed above.

III. Matters of Regulatory Procedure

Executive Order 12866

    In promulgating this proposed rule, 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 proposed 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 proposed
amendatory rule will not have a significant economic impact on a
substantial number of small businesses because it primarily affects
Federal executive branch employees.

Paperwork Reduction Act

    The Paperwork Reduction Act (44 U.S.C. chapter 35) does not apply
to this proposed amendment because it does not contain information
collection requirements that require approval of the Office of
Management and Budget.

List of Subjects in 5 CFR Part 2635

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

    Approved: April 5, 1995.
Stephen D. Potts,
Director, Office of Government Ethics.

    Accordingly, 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. 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.

Subpart B--Gifts From Outside Sources

    2. Section 2635.204 is amended as set forth below:
    A. Revising paragraphs (g)(2) through (g)(6);
    B. Republishing the note following paragraph (g)(4);
    C. Revising example 1 following paragraph (g)(6);
    D. Redesignating examples 2, 3 and 4 following paragraph (g)(6) as
examples 4, 5 and 6, respectively; and
    E. Adding new examples 2 and 3 following paragraph (g)(6).
    The revisions, republication and addition read as follows:

Sec. 2635.204  Exceptions.

* * * * *
    (g) * * *
    (1) * * *
    (2) Widely attended gatherings. When there has been a determination
that his attendance is in the interest of the agency because it will
further agency programs and operations, an employee may accept an
unsolicited gift of free attendance at all or appropriate parts of a
widely attended gathering of mutual interest to a number of parties
from the sponsor of the event or, if more than 100 persons are expected
to attend the event and the gift of free attendance has a market value
of $250 or less, from a person other than the sponsor of the event. A
gathering is widely attended if it is attended by a large number of
persons and if, for example, it is open to members from throughout the
interested industry or profession or if those in attendance represent a
range of persons interested in a given matter. For employees subject to
a leave system, attendance at the event shall be on the employee's own
time or, if authorized by the employee's agency, on excused absence
pursuant to applicable guidelines for granting such absence, or
otherwise without charge to the employee's leave account.
    (3) Determination of agency interest. The determination of agency
interest required by paragraph (g)(2) of this section shall be made
orally or in writing by the agency designee.
    (i) If the person who has extended the invitation has interests
that may be substantially affected by the performance or nonperformance
of an employee's official duties or is an association or organization
the majority of whose members have such interests, the employee's
participation may be determined to be in the interest of the agency
only where there is a written finding by the agency designee that the
agency's interest in the employee's participation in the event
outweighs the concern that acceptance of the gift of free attendance
may or may appear to improperly influence the employee in the
performance of his official duties. Relevant factors that should be
considered by the agency designee include the importance of the event
to the agency, the nature and sensitivity of any pending matter
affecting the interests of the person who has extended the invitation,
the significance of the employee's role in any such matter, the purpose
of the event, the identity of other expected participants and the
market value of the gift of free attendance.
    (ii) A blanket determination of agency interest may be issued to
cover all or [[Page 31418]] any category of invitees other than those
as to whom the finding is required by paragraph (g)(3)(i) of this
section. Where a finding under paragraph (g)(3)(i) of this section is
required, a written determination of agency interest, including the
necessary finding, may be issued to cover two or more employees whose
duties similarly affect the interests of the person who has extended
the invitation or, where that person is an association or organization,
of its members.
    (4) Free attendance. For purposes of paragraphs (g)(1) and (2) of
this section, free attendance may include waiver of all or part of a
conference or other fee or the provision of food, refreshments,
entertainment, instruction and materials furnished to all attendees as
an integral part of the event. It does not include travel expenses,
lodgings, entertainment collateral to the event, or meals taken other
than in a group setting with all other attendees. Where the invitation
has been extended to an accompanying spouse or other guest (see
paragraph (g)(6) of this section), the market value of the gift of free
attendance includes the market value of free attendance by the spouse
or other guest as well as the market value of the employee's own
attendance.

    Note: There are statutory authorities implemented other than by
part 2635 under which an agency or an employee may be able to accept
free attendance or other items not included in the definition of
free attendance, such as travel expenses.

    (5) Cost provided by sponsor of event. The cost of the employee's
attendance will not be considered to be provided by the sponsor, and
the invitation is not considered to be from the sponsor of the event,
where a person other than the sponsor designates the employee to be
invited and bears the cost of the employee's attendance through a
contribution or other payment intended to facilitate that employee's
attendance. Payment of dues or a similar assessment to a sponsoring
organization does not constitute a payment intended to facilitate a
particular employee's attendance.
    (6) Accompanying spouse or other guest. When others in attendance
will generally be accompanied by a spouse or other guest, and where the
invitation is from the same person who has invited the employee, the
agency designee may authorize an employee to accept an unsolicited
invitation to an accompanying spouse or to another accompanying guest
to participate in all or a portion of the event at which the employee's
free attendance is permitted under paragraph (g) (1) or (2) of this
section. The authorization required by this paragraph may be provided
orally or in writing.
    Example 1. An aerospace industry association that is a prohibited
source sponsors an industry-wide, two-day seminar for which it charges
a fee of $400 and anticipates attendance of approximately 400. An Air
Force contractor pays $2,000 to the association so that the association
can extend free invitations to five Air Force officials designated by
the contractor. The Air Force officials may not accept the gifts of
free attendance. Because the contractor specified the invitees and bore
the cost of their attendance, the gift of free attendance is considered
to be provided by the company and not by the sponsoring association.
Had the contractor paid $2,000 to the association in order that the
association might invite any five Federal employees, an Air Force
official to whom the sponsoring association extended one of the five
invitations could attend if his participation were determined to be in
the interest of the agency. The Air Force official could not in any
event accept an invitation directly from the contractor because the
market value of the gift exceeds $250.
    Example 2. An employee of the Department of Transportation is
invited by a news organization to an annual press dinner sponsored by
an association of press organizations. Tickets for the event cost $250
per person and attendance is limited to 400 representatives of press
organizations and their guests. If the employee's attendance is
determined to be in the interest of the agency, she may accept the
invitation from the news organization because more than 100 persons
will attend and the cost of the ticket does not exceed $250. However,
if the invitation were extended to the employee and an accompanying
guest, her guest could not be authorized to attend since the market
value of the gift of free attendance would be $500 and the invitation
is from a person other than the sponsor of the event.
    Example 3. An employee of the Department of Energy and his wife
have been invited by a major utility to a dinner party for 20 people.
Others invited include eight officials of the utility and their spouses
and a representative of a consumer group concerned with utility rates
and her husband. The DOE official believes the dinner party will
provide him an opportunity to socialize with and get to know those in
attendance. The employee may not accept, even if his attendance could
be determined to be in the interest of the agency. The dinner party is
not a widely attended gathering; twenty is not a large number of
persons and, notwithstanding the presence of another person who is not
an official of the utility, those in attendance do not represent a
range of persons interested in any identifiable matter.
* * * * *
[FR Doc. 95-14611 Filed 6-14-95; 8:45 am]
BILLING CODE 6345-01-U