Southern Corp., upon receipt of a certificate of divesture2 from the Office of Government Ethics. In the event that OGE declines to issue such certificate, you have agreed to divest of these energy concern interests immediately upon receipt of such declination.

You have also advised this office that you are a tenured professor at Baylor University and that you intend to take a leave of absence from your university position, returning to the university when you have terminated your employment with the Department. Baylor University is an energy concern within the meaning of section 601(b) of the Act. Therefore, pursuant to the divestiture requirement of section 602(a), you may not continue to hold an official relationship with the university as a supervisory employee of the Department.

However, section 602 (c) of the Act provides that the Secretary may grant a waiver of the divestiture requirements of section 602 (a) where exceptional hardship would result, or where the interest is a pension, insurance or other similarly vested interest. You have requested that the Secretary grant such a waiver of the divestiture requirement with respect to your relationship with Baylor University. When granted, however, this waiver will not affect the application of the participation restrictions of section 208, title 18, United States Code, with respect to your participation in matters affecting Baylor University.

Section 208 prohibits a Federal officer or employee from participating personally and substantially, as a Government employee, in any particular matter in which, to his knowledge, he

2 Section 502 of the Ethics Reform Act of 1989 (Pub. L. No. 101-194) which amended section 1043 of the Internal Revenue Code provides that employees who are required to divest of financial interests due to conflict-of-interest rules may be eligible for special tax treatment of capital gains arising from the transaction. Section 502 provides:

If an eligible person sells any property pursuant to a
certificate of divestiture, at the election of the
taxpayer, gain from such sale shall be recognized only
to the extent that the amount realized on such sale
exceeds the cost. .. of any permitted property purchased
by the taxpayer during the 60-day period beginning on the
date of such sale.

Non-recognition of capital gains is available only to those individuals who have received a Certificate of Divestiture issued by the Office of Government Ethics.

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has, or his spouse, minor child, partner, organization in which he is serving as officer, director, trustee, partner, or employee, or any person or organization with whom he is negotiating or has any arrangement concerning prospective employment has, a financial interest. Accordingly, you should avoid any participation in any matter the outcome of which could have a direct and predictable effect upon Baylor University.

In addition, you have reported on Schedule A of your Standard Form 278, that you hold common stock in AT&T, and U.S. West Co., and that your spouse holds stock in Wisconsin Energy Corp. and Minnesota Power and Light. These interests constitute financial interests within the meaning of 18 U.S.C. 208. You have agreed to recuse yourself from participation in any particular matter that could have a direct and predictable effect upon any of these entities, or any other such financial interests, unless your reviewing official determines that the financial interest in the particular matter is not so substantial as to be deemed likely to affect the integrity of the services which the Government may expect of you.

You should also be aware that Executive Order 12674 prohibits employees appointed by the President to non-career positions in the executive branch from receiving outside earned income during the term of the Presidential appointment. You have advised that you have resigned from your positions with the following organizations: Venture Assistance, Inc.; Association for Private Enterprise Education; Society of Economic Educators; Waco Athletic Club; Texas Council on Economic Education; National Federation of Independent Business, Education Advisory Committee; and the Education Advisory Committee of Texas Utilities Electric. You have also advised that you have resigned from the office of Mayor of Woodway, Texas and have terminated your activities under your sole proprietorship business, including providing consulting services to Professional Development Programs Co. Please provide this office with documentation of your resignations from these organizations.

Please let me know if I can be of further assistance.

Ralph D. Goldenberg
Assistant General Counsel
for General Law