April 12, 1999

                                    DO-99-014



MEMORANDUM



TO:       Designated Agency Ethics Officials



FROM:     Stephen D. Potts

          Director



SUBJECT:  OGE Regulations and an Agency's Duty to Engage in

          Collective Bargaining





     More and more frequently, agencies have sought the advice of

the Office of Government Ethics (OGE) where the executive

branchwide ethics regulations issued by OGE in chapter XVI of

title 5 of the Code of Federal Regulations are the subject of union

proposals during the collective bargaining process.  In addition,

OGE recently has become aware of some troubling applications of its

regulations in this context.(1) We are issuing this memorandum to

address these concerns.

     

     An agency's duty to bargain in good faith with its exclusive

bargaining representative (union) under the Federal Service Labor-

Management Relations Statute (FSLMRS), 5 U.S.C. chapter 71, does

not extend to union proposals that are "inconsistent with . . . any

Governmentwide rule or regulation."  See 5 U.S.C. &#167; 7117(a). 

(2)Various provisions in the executive branchwide ethics regulations

issued by OGE in 5 C.F.R. chapter XVI call for the agency to make

some determination, to come to some conclusion, to grant or deny

approval, or otherwise to exercise judgment (all of which are

referred to collectively herein as agency determinations) in

implementing the regulations.(3) Those provisions are intended to

confer sole and exclusive authority on the agency with regard to

those agency determinations, even though some of the regulations do

not use phrases such as "sole" or "exclusive" or similar language. 

Union proposals that seek to prescribe those agency determinations,

or to provide for their review outside the agency (e.g., through

arbitration), are inconsistent with those regulations and therefore

are not subject to the duty to bargain.  Those agency

determinations are final and unreviewable (except pursuant to the

exercise of OGE's oversight responsibilities for the executive

branch ethics program).



     For example, criteria for agencies to apply in identifying

which of their employees must file confidential financial

disclosure reports are listed at 5 C.F.R. &#167;&#167; 2634.904 and 2634.905. 

The regulations at 5 C.F.R. &#167; 2634.904(a)(1) state that "the

agency" is responsible for concluding who is a confidential filer

based on the requirements set forth in &#167; 2634.904.  In 5 C.F.R.

&#167; 2634.905, "the agency head or designee" determines exclusions

from the filing requirements.  No one else may make these

determinations.  Any proposal to the contrary would, therefore, be

nonnegotiable because the agency's authority is sole and exclusive.



     Other examples concern financial interests prohibited under

the authority of 5 C.F.R. &#167; 2635.403.  Under 5 C.F.R.

&#167; 2635.403(a), the issuance of a supplemental agency regulation

prohibiting or restricting the acquisition or holding of a

financial interest or a class of financial interests is to be based

on "the agency's" determination (with OGE's concurrence) that the

acquisition or holding of such financial interests would cause a

reasonable person to question the impartiality and objectivity with

which agency programs are administered.  Likewise, agency

determinations of substantial conflict under 5 C.F.R.

&#167; 2635.403(b), prohibiting or restricting an employee from

acquiring or holding a financial interest or a class of financial

interests, are to be made by the "agency designee."  Union

proposals that seek to prescribe those agency determinations or

provide for their review outside the agency are contrary to the

executive branchwide regulations at 5 C.F.R. &#167; 2635.403(a) and (b). 

In addition, a union proposal seeking to exceed the 90 days set by

5 C.F.R. &#167; 2635.403(d) as a reasonable period to divest a financial

interest would be nonnegotiable.  It is "the agency" that has sole

and exclusive authority to determine whether a longer period should

be allowed "in cases of unusual hardship."



     It would be inconsistent with OGE executive branchwide

regulations for an agency to negotiate agency determinations that

are within its sole and exclusive authority.  This understanding

and application of the regulations are critical because they serve

the important purpose of finality and avoid protracting matters

that must be resolved expeditiously and uniformly in conformance

with the mandate of Executive Order 12674.



     Agency ethics officials should contact OGE's Office of General

Counsel as soon as possible when any provision in OGE's executive

branchwide ethics regulations in 5 C.F.R. chapter XVI is the

subject of a union proposal.  In this way, OGE can answer any

questions about the provision and thereby assist in assessing any

unresolved negotiability issues.  In appropriate cases, where the

negotiability of a proposal concerning the regulations is before

the Federal Labor Relations Authority, OGE may seek to participate

as amicus curiae.



------------------------------------

1. See, e.g., the decision by the Federal Labor Relations Authority in

Patent Office Professional Ass'n and Patent and Trademark Office, 53

F.L.R.A. 625 (1997), finding a duty to bargain over proposals

concerning agency determinations to require divestiture of prohibited

financial interests under 5C.F.R. &#167;2635.403. 



2. It is clear from both the legislative history of the FSLMRS and

FSLMRS case law that OGE's executive branchwide ethics regulations in

chapter XVI of title 5 of the Code of Federal Regulations are

"Governmentwide" for purposes of the FSLMRS. See H.R.Conf. Rep. No.

95-1717, at 158 (1978), reprinted in 1978U.S.C.C.A.N. 2860, 2893;

U.S. Department of Health and Human Services v. Federal Labor

Relations Authority, 844 F.2d 1087 (4th Cir. 1988); Overseas Education

Association v. Federal Labor Relations Authority, 827 F.2d 814 (D.C.

Cir. 1987); U.S. Department of Treasury, I.R.S. v. Federal Labor

Relations Authority, 996 F.2d 1246 (D.C. Cir. 1993). 



3. In conferring this sole and exclusive authority to the agency, the

regulations may refer to "the agency" or may specify an individual,

e.g., "Secretary," "head of the agency," "agency head," "agency head's

designee," "agency designee," "designee," "designated agency ethics

official," "alternate designated agency ethics official," "agency

ethics official," "ethics official," "designated ethics official,"

"deputy ethics official," "agency official," "Government official,"

"official specified," "reviewing official," "official to whom

authority has been delegated," "delegate," "responsible official,"

"person responsible," "supervisor," or "officer designated."