Recommendation 7: Recommendation 8: Recommendation 9: Recommendation 10: Recommendation 11: employees in all three branches be covered by a uniform percentage cap on outside earned income, but that the President have authority to exempt categories of earned income from the cap that do not present significant issues of ethical propriety or interfere with the full performance of job duties. The Commission recommends that senior federal employees in all three branches of government be prohibited from serving on the boards of directors of for-profit commercial enterprises (whether or not compensated) and that requests by such employees to serve on the boards of directors of nonprofit organizations be subject to review on a case-by-case basis. The Commission recommends the following changes in the laws and regulations governing acceptance of gifts: (1) enactment of uniform gift acceptance authority government-wide; (2) enactment of a uniform maximum value for gifts to individuals; and (3) enactment of revisions to the current statutory bar on gifts to supervisors. The Commission recommends that restrictions in 18 U.S.C. § 208 on negotiation for employment be amended to extend to Members and employees of the legislative and judicial branches. We further recommend that Congress reconsider the necessity of retaining statutes applying special restrictions to specified categories of employees. To the extent that Congress feels that such supplementary restrictions are necessary, those prohibitions should be consolidated into § 208. The Commission recommends that the one-year cooling-off period presently applicable to Senior Employees of the executive branch be extended to the legislative and judicial branches and their senior staff. As to all three branches, the bar should permit self-representation by the former employee on particular matters involving the former employee specifically. The Commission recommends that Congress enact legislation that adds a new provision to 18 U.S.C. § 207 creating a twoyear post-employment bar, for executive and legislative branch personnel, against the use or disclosure of certain specifically defined, non-public information in connection with representing a party to the government or in connection with aiding or advising a party in such a representation. Such legislation should include: (1) a provision that includes non-public procurement-related proprietary or source selection information within the scope of the restriction; and (2) if specifically definable, a provision that includes non-public information as Recommendation 12: Recommendation 13: Recommendation 14: Recommendation 15: Recommendation 16: Recommendation 17: Recommendation 18: Recommendation 19: to the government's position and strategy in international trade, disarmament, and finance negotiations. The Commission recommends amending the 18 U.S.C. § 207(b)(i) two-year official responsibility bar to add a knowledge requirement. The Commission recommends repeal of the 18 U.S.C. § 207(b)(ii) two-year prohibition against Senior Employees assisting in a representational effort by personal presence. The Commission recommends that the Executive Office of the President be treated as one agency for the purpose of the oneyear cooling off period. The Commission recommends that the receipt of compensation not be included as an essential element of any post-employment restriction. The Commission recommends that the public financial disclosure reporting system mandated by the Ethics in Government Act of 1978 be continued, but the floors of the highest categories of value for reporting of income and assets should be raised, there should be broader ranges of values within the categories, and specified statutory reporting requirements should be replaced by general requirements, with an authorization for the Office of Government Ethics to impose detailed reporting requirements by regulation. In addition, for non-career appointees, the reporting requirements for liabilities should be expanded to include mortgages on personal residences and loans from specified relatives. The Commission recommends that financial reporting requirements and review be made more uniform across the three branches of government. The Commission recommends that a coordinating committee composed of ethics officials of the three branches of Government study ways to simplify the Presidential appointment process by reducing the number and complexity of forms to be completed by potential appointees. The Commission recommends revision, updating and reissuance of Executive Order 11222 to emphasize the President's commitment to the highest ethical standards for executive branch employees. Recommendation 20: Recommendation 21: Recommendation 22: Recommendation 23: Recommendation 24: Recommendation 25: Recommendation 26: Recommendation 27: The Commission recommends that the Office of Government Ethics be directed by executive order to consolidate all executive branch standards of conduct regulations into a single set of regulations. Individual agencies could supplement these regulations with stricter standards with the approval of the Office of Government Ethics. The Office of Government Ethics should also issue a comprehensive ethics manual. The Commission recommends that executive branch agencies should be responsible for training their employees concerning ethics requirements, but an agency should obtain the Office of Government Ethics approval of its annual plan for training and awareness activities. The Commission recommends that Congress appoint an independent ethics official, to be confirmed by both houses, who would head a permanent ethics office that would investigate allegations of misconduct, report findings publicly to the ethics committee of the appropriate house, and recommend appropriate sanctions. The Commission believes that a White House Ethics Council or similar body could be helpful in preserving high ethical standards in the executive branch. The Commission recommends the addition of misdemeanor and civil penalties as sanctions for violations of 18 U.S.C. §§ 203209 but recommends that willful violations of these laws should continue to be punishable as felonies. The Commission recommends that Chapter 11 of title 18 of the United States Code be amended to allow the Attorney General to seek injunctive relief for all violations of 18 U.S.C. §§ 203209. The Commission recommends the strengthening of administrative debarment procedures for former government employees who violate the post-employment restrictions in 18 U.S.C. § 207. Assuming the continued use of an Independent Counsel mechanism, the Commission recommends that Congress enact legislation to extend the scope of the Independent Counsel statute to cover the legislative branch. III. ETHICS ISSUES DURING EMPLOYMENT Recommendation 1 The Commission recommends that the conflict-of-interest statute, 18 U.S.C. A. Present Law The existing conflict of interest statute, 18 U.S.C. § 208, requires each officer and employee of the executive branch to refrain from participat[ing] personally and substantially as a Government officer or employee, through decision, approval, disapproval, recommendation, the rendering of advice, investigation, or otherwise, in a ... particular matter in which, to his knowledge, he, 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 . . . The stated penalty for violating § 208 is a fine or imprisonment for up to two years. In short, § 208 makes it a criminal offense for a government employee to take action in a matter that will affect his financial interests or those of specified relatives and associates. Preliminarily, it is worth highlighting some of the factors that go into the determination of whether a conflict of interest exists. The term "particular matter" has been interpreted by the U.S. Department of Justice, Office of Legal Counsel, as including not only very specific cases or controversies but also general matters such as rulemaking when the outcome of the matter has a "direct and predictable effect" on an official's financial interests. See Office of Legal Counsel, Memorandum for the Solicitor of the Interior, "Scope of the Term 'Particular Matter' Under 18 U.S.C. § 208," January 12, 1987 [hereinafter cited as "1987 OLC Opinion"].' As a general matter, the "direct and 2 The interpretation of the term "particular matter" by the Office of Legal Counsel was based on a comparison of the language in § 208 with the language in §§ 203, 205 and 207, and on the legislative history of § 208. Rather than referring to merely "particular matters," §§ 203, 205, and 207 add a qualifying phrase and refer instead to "particular matters involving a specific party or parties." The Office of Legal Counsel noted this difference and concluded that the absence of the qualifying phrase in § 208 reflected the absence of an intention to exclude "general rulemaking, formulation of general policy or standards, other similar administrative matters, and legislative activities." predictable effect" test has become the test for determining whether an action would have a sufficient nexus with an employee's financial interests (including those interests attributable to him) so as to create a conflict. (See 1987 OLC Opinion at 7-10 (discussing the "direct and predictable effect" test).) Under § 208(a), no distinction is made as to the significance or substantiality of a financial interest. Thus, even the smallest interests may create a conflict of interest under the law. An official faced with a possible conflict of interest has a number of options available: (1) (2) (3) (4) Recusal: The official can step aside and refrain from participating in the particular matter in which he faces a conflict. Waiver: The statute authorizes two kinds of waivers. First, an agency may issue a waiver to a given individual if it determines that the interest is "not so substantial as to be deemed likely to affect the integrity" of the employee's services. § 208(b)(1). Categories of financial interests can also be made nondisqualifying on an agency-wide basis by a regulation published in the Federal Register, as to interests that are "too remote or too inconsequential to affect the integrity" of the employee's service. § 208(b)(2). (Recommendations 2 and 3 address these waiver authorities more specifically.) Use of a Blind Trust: Employees may also choose to place assets in one of two kinds of blind trust authorized by the Ethics in Government Act. Detailed regulations govern the trust arrangements, and trusts must be approved by the Office of Government Ethics. See generally 5 C.F.R. § 734.401-.408. Use of a "qualified diversified blind trust" is only appropriate when an official's holdings meet certain diversification tests established by regulation and may only be used by officials in advise and consent positions. 5 C.F.R. § 734.404. Use of a regular "qualified blind trust" is not limited to diversified portfolios, but an official who creates a regular blind trust continues to have a disqualifying financial interest in each of the assets that he has put in that trust until such time as the trustee notifies him that the asset has been sold. 5 C.F.R. § 734.403. Divestiture: The employee can sell, give away, or otherwise divest himself of the asset or other interest in question. The Office of Legal Counsel concluded from its review of the legislative history of § 208 that Congress intended to broaden the scope of the original (1868) conflicts laws, which had limited the applicability of the law to "the transaction of business" of an official with a nongovernmental business entity in which the official had a pecuniary interest. (See 1987 OLC Opinion at 3.) The original language proposed in 1961 was to apply to transactions "involving the government," a phrase borrowed from the model legislation prepared by the Association of the Bar of New York. The report on that model legislation stated that "[a]n effective conflict of interest rule on disqualification must reach out to compel disqualification of the interested official not only in respect of business transactions with business entities, but in respect of all federal executive action that substantially affects his personal economic interests. . . ." (1987 OLC Opinion at 4). |