May 19, 1999
                                    DO-99-024


MEMORANDUM

TO:       Designated Agency Ethics Officials

FROM:     Stephen D. Potts
          Director

SUBJECT:  Supreme Court Decision in United States v. Sun-Diamond
          Growers


     This is a follow-up to the message on the United States v.
Sun-Diamond Growers case that I sent to executive branch employees
on April 8, 1999.  The purpose of that message was to alert
employees to the fact that the outcome of the Sun-Diamond Growers
case would not have legal effect on the administrative standards of
conduct regarding acceptance of gifts from outside sources. 

     On April 27, 1999, the Supreme Court issued its decision in
Sun-Diamond Growers, affirming the ruling of the U.S. Court of
Appeals for the District of Columbia Circuit.  The issue before the
Supreme Court involved the interpretation of the criminal illegal
gratuities statute.  In siding with the Appeals Court, the Supreme
Court adopted a more narrow interpretation of that statute than
that which had been advocated by the Independent Counsel.  The
Supreme Court held that "in order to establish a violation of
18 U.S.C. § 201(c)(1)(A), the Government must prove a link between
a thing of value conferred upon a public official and a specific
`official act' for or because of which it was given."

     The Supreme Court's decision does not disturb the noncriminal
prohibitions on gifts found at 5 U.S.C. § 7353.  Nor does it affect
Executive Order 12674 which directed the Office of Government
Ethics (OGE) to promulgate executive branch standards of conduct. 
The administrative standards of conduct contained in 5 C.F.R.
part 2635, Standards of Ethical Conduct for Employees of the
Executive Branch (Standards), which, in part, implement those
authorities, were not in issue in the Sun-Diamond Growers case. 
They continue to be fully effective as to executive branch
employees.

     In particular, subpart B of the Standards, which contains
prohibitions on the acceptance of gifts from outside sources,
continues to be fully applicable to the conduct of executive branch
employees.  Section 2635.202(a)(1) bars an executive branch
employee from accepting gifts from prohibited sources.  Prohibited
sources, as defined at 5 C.F.R. § 2635.203(d), are persons who have
interests that may be affected by some official agency action. 
Section 2635.202(a)(2) prohibits an employee from accepting a gift
that is given because of the employee's official position. 
Section 2635.203(e) defines when a gift is solicited or accepted
because of an employee's official position.  

     There are limited exceptions which permit acceptance of gifts
under certain circumstances.  Those exceptions, found in 5 C.F.R.
§ 2635.204, also continue to apply and are unaffected by the
Supreme Court's decision.  Section 2635.202(b) states that anything
accepted consistent with the Standards will not constitute an
illegal gratuity otherwise prohibited by 18 U.S.C. § 201(c)(1)(B)
unless it is accepted in return for being influenced in the
performance of an official act.  The provision clarifies the
relationship between 18 U.S.C. § 201(c)(1) and 5 U.S.C. § 7353(b)
and it reflects Congressional intent that acceptance of a gift in
accordance with the Standards will not subject an employee to
prosecution for violation of the illegal gratuities statute. 

     It is important that all executive branch employees have a
correct understanding of their obligations under the Standards and
that they do not create difficulties for themselves through some
misunderstanding regarding the effect of the Sun-Diamond Growers
case on the administrative standards regarding the acceptance of
gifts.  It is also important that employees be aware of any
additional agency specific prohibitions on the acceptance of gifts. 
Employees should also be aware of any additional gift exceptions in
their agency supplemental regulations and appreciate the
significance in terms of the rules on gifts of the division of an
agency or department into separate components.

     I encourage you to communicate this information to the
employees of your agency in whatever manner you deem to be most
appropriate.  I will be placing this memorandum on OGE's web site
which may be accessed at www.usoge.gov.  The earlier message of
April 8, 1999 is posted on the OGE web site.  One way of
communicating this information to employees would be to encourage
them to visit the OGE web site.