December 23, 1996DO-96-053
Designated Agency Ethics Officials, General Counsels and Inspectors General
Stephen D. PottsDirector
Publication of Final Rule on 18 U.S.C. § 208
The Office of Government Ethics (OGE) published a final rule, Interpretation, Exemptions and Waiver Guidance Concerning 18 U.S.C. § 208 (Acts Affecting a Personal Financial Interest), in the Federal Register for December 18, 1996, with an effective date of January 17, 1997. A reprint of the final rule as published at 61 Fed. Reg. 66830-66851 (part III) is attached. The final rule describes the circumstances under which the prohibitions contained in 18 U.S.C. § 208(a) will be waived.
Section 208(a) of 18 U.S.C. prohibits employees of the executive branch from participating in an official capacity in particular matters in which they, or certain persons or entities with whom they have specified relationships, have a financial interest. Section 208(b) permits waivers of the prohibition in certain cases. First, section 208(b)(1) allows agencies to exempt employees on a case-by-case basis from the disqualification provisions of section 208(a). Similarly, section 208(b)(3) permits agencies to waive the disqualification requirement that would apply to special Government employees serving on Federal advisory committees. The new regulation provides waiver guidance as to both of these provisions. Moreover, under section 208(b)(2), OGE has the authority to promulgate executive branchwide regulations identifying financial interests that are too remote or inconsequential to warrant the disqualification required by section 208(a). Pursuant to the authority of section 208(b)(2), this final regulation identifies and describes those financial interests that are exempt from the prohibition of section 208(a). Finally, pursuant to the statute and section 201(c) of Executive Order 12674 (as modified by E.O. 12731), in this final rule, OGE is providing interpretative guidance on 18 U.S.C. § 208. OGE's authority under section 208(b)(2) to issue the executive branchwide regulatory exemptions contained in the final rule was established by the Ethics Reform Act of 1989 (Pub. L. No. 101-194), as amended (the Act). The Act amended 18 U.S.C. § 208(b)(2) to eliminate the authority of individual agencies to adopt agency- specific regulations exempting financial interests from the applicability of section 208(a). Pending the issuance of OGE's branchwide exemptions, "waivers" issued by agencies prior to November 30, 1989, have continued to apply. See 5 C.F.R. § 2635.402(d)(2) and new § 2640.206. Upon the effective date of the final regulation, all of the agencywide exemptions issued pursuant to 18 U.S.C. § 208(b)(2) as in effect prior to November 30, 1989, will be superseded.
On September 11, 1995, OGE published for comment a proposed rule regarding exemptions under 18 U.S.C. § 208(b)(2), waivers under 18 U.S.C. § 208(b)(1) and (b)(3), and interpretation of section 208 generally. See 60 Fed. Reg. 47208-47233 (September 11, 1995). The Office also published an interim rule on August 28, 1995, which established a single exemption under 18 U.S.C. § 208(b)(2) for financial interests that arise from Federal Government salary and benefits or from Social Security or veterans' benefits. See 60 Fed. Reg. 44706-44709 (August 28, 1995). The exemption in the interim rule was also republished for consideration as part of the proposed rule on September 11, 1995. The proposed rule and the interim rule each provided a 60-day comment period and invited comments by agencies and the public. Timely comments on both the interim and proposed rules were received from 25 sources. After carefully considering the comments and making appropriate modifications, this consolidated final rule was published after consultation with the Office of Personnel Management and after OGE obtained the concurrence of the Department of Justice.
Subpart A of the final rule is comprised of general provisions including definitions and an explanation of the scope and application of the prohibition of 18 U.S.C. § 208(a). The interpretation of 18 U.S.C. § 208(a) contained in the final rule reiterates and amplifies that found in subpart D of the Standards of Ethical Conduct for Employees of the Executive Branch codified at 5 C.F.R. part 2635, which itself continues in effect.
Subpart B of the final rule contains three categories of exemptions pursuant to section 208(b)(2). First, the regulation contains exemptions relating to interests arising from the ownership of mutual funds, unit investment trusts, and interests in employee benefit plans. Second, the regulation contains exemptions arising from the ownership of interests in securities. Finally, it contains several miscellaneous provisions establishing exemptions that apply only in specific situations or only to employees of certain agencies.
Subpart C of the final rule provides guidance on the issuance by agencies of individual waivers pursuant to 18 U.S.C. §§ 208(b)(1) and (b)(3), on consultations with OGE regarding such waivers and on the public availability of such waivers.
OGE will soon be making available an easy to read pamphlet describing the exemptions and Section 208 generally. The pamphlet will be designed so that agencies can reproduce it to facilitate advice and training of executive branch employees. This Office will advise you when the pamphlets are available for distribution.