U.S. GOVERNMENT PRINTING OFFICE

65–930 CC WASHINGTON : 2000

REAUTHORIZATION OF THE OFFICE OF

GOVERNMENT ETHICS

HEARING

BEFORE THE

SUBCOMMITTEE ON THE CIVIL SERVICE

OF THE

COMMITTEE ON

GOVERNMENT REFORM

HOUSE OF REPRESENTATIVES

ONE HUNDRED SIXTH CONGRESS

FIRST SESSION

August 4, 1999

Serial No. 106–134

Printed for the use of the Committee on Government Reform

(

Available via the World Wide Web: http://www.gpo.gov/congress/house

http://www.house.gov/reform

(II)

COMMITTEE ON GOVERNMENT REFORM

DAN BURTON, Indiana, Chairman

BENJAMIN A. GILMAN, New York

CONSTANCE A. MORELLA, Maryland

CHRISTOPHER SHAYS, Connecticut

ILEANA ROS-LEHTINEN, Florida

JOHN M. MCHUGH, New York

STEPHEN HORN, California

JOHN L. MICA, Florida

THOMAS M. DAVIS, Virginia

DAVID M. MCINTOSH, Indiana

MARK E. SOUDER, Indiana

JOE SCARBOROUGH, Florida

STEVEN C. LATOURETTE, Ohio

MARSHALL ‘‘MARK’’ SANFORD, South

Carolina

BOB BARR, Georgia

DAN MILLER, Florida

ASA HUTCHINSON, Arkansas

LEE TERRY, Nebraska

JUDY BIGGERT, Illinois

GREG WALDEN, Oregon

DOUG OSE, California

PAUL RYAN, Wisconsin

HELEN CHENOWETH, Idaho

DAVID VITTER, Louisiana

HENRY A. WAXMAN, California

TOM LANTOS, California

ROBERT E. WISE, JR., West Virginia

MAJOR R. OWENS, New York

EDOLPHUS TOWNS, New York

PAUL E. KANJORSKI, Pennsylvania

PATSY T. MINK, Hawaii

CAROLYN B. MALONEY, New York

ELEANOR HOLMES NORTON, Washington,

DC

CHAKA FATTAH, Pennsylvania

ELIJAH E. CUMMINGS, Maryland

DENNIS J. KUCINICH, Ohio

ROD R. BLAGOJEVICH, Illinois

DANNY K. DAVIS, Illinois

JOHN F. TIERNEY, Massachusetts

JIM TURNER, Texas

THOMAS H. ALLEN, Maine

HAROLD E. FORD, JR., Tennessee

JANICE D. SCHAKOWSKY, Illinois

———

BERNARD SANDERS, Vermont

(Independent)

KEVIN BINGER, Staff Director

DANIEL R. MOLL, Deputy Staff Director

DAVID A. KASS, Deputy Counsel and Parliamentarian

CARLA J. MARTIN, Chief Clerk

PHIL SCHILIRO, Minority Staff Director

SUBCOMMITTEE ON THE CIVIL SERVICE

JOE SCARBOROUGH, Florida, Chairman

ASA HUTCHINSON, Arkansas

CONSTANCE A. MORELLA, Maryland

JOHN L. MICA, Florida

DAN MILLER, Florida

ELIJAH E. CUMMINGS, Maryland

ELEANOR HOLMES NORTON, Washington,

DC

THOMAS H. ALLEN, Maine

EX OFFICIO

DAN BURTON, Indiana HENRY A. WAXMAN, California

GEORGE NESTERCZUK, Staff Director

NED LYNCH, Professional Staff Member

JOHN CARDARELLI, Clerk

TANIA SHAND, Minority Professional Staff Member

(III)

C O N T E N T S

Page

Hearing held on August 4, 1999 ............................................................................. 1

Statement of:

Potts, Stephen D., Director, Office of Government Ethics, accompanied

by Marilyn Glynn, General Counsel ............................................................ 6

Walden, Gregory S., Patton Boggs LLP, former Associate Counsel to

the President ................................................................................................. 20

Letters, statements, et cetera, submitted for the record by:

Potts, Stephen D., Director, Office of Government Ethics, prepared statement of ........................................................................................................... 10

Scarborough, Hon. Joe, a Representative in Congress from the State

of Florida, prepared statement of ................................................................ 4

Walden, Gregory S., Patton Boggs LLP, former Associate Counsel to

the President, prepared statement of .......................................................... 23

(1)

REAUTHORIZATION OF THE OFFICE OF

GOVERNMENT ETHICS

WEDNESDAY, AUGUST 4, 1999

HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON THE CIVIL SERVICE, COMMITTEE ON GOVERNMENT REFORM, Washington, DC.

The subcommittee met, pursuant to notice, at 10:10 a.m., in room 2247, Rayburn House Office Building, Hon. Joe Scarborough (chairman of the subcommittee) presiding. Present: Representatives Scarborough and Cummings.

Staff present: George Nesterczuk, staff director; Ned Lynch, pro- fessional staff member; John Cardarelli, clerk; Garry Ewing, counsel; Jennifer Hemingway, legislative assistant/scheduling; Tania

Shand, minority professional staff member; and Earley Green, minority staff assistant.

Mr. SCARBOROUGH. I’d like to call this hearing to order and wel- come you all. I would certainly like to thank our witnesses for coming and speaking today. I apologize for the delay. Actually, I was

walking down the hall and had on my card that this is in 2203.

I stopped Mr. Cummings, our distinguished ranking member, and

I dutifully told him he was going in the wrong direction so we enjoyed the first few minutes of John Mica’s subcommittee hearing

and then decided to come over here to the correct room. So I followed Mr. Cummings and will do so in the future, possibly even on

issues like long-term care. I have more confidence in you this

morning than myself.

Again, thank you for coming. We’re going to be conducting a

hearing now to review the operations of the Office of Government

Ethics in preparation for our legislation to reauthorize the agency.

This Nation has always recognized that the character of our highest elected officials is vital to the success of our representative government. That goes for our appointed officials also. A periodic review of the works of the office established to enforce the ethical

standards of Federal service permits us to assess our progress in

complying with the intentions and the spirit of the ethics laws.

The Office of Government Ethics, a small but very well respected

agency, promulgates policies and ethical standards that are implemented by a network of more than 120 designated agency ethics officers. It also provides training and educational programs through

more than 8,500 employees who conduct ethics training to provide

guidance to employees throughout the government. Most of these

employees work in agency counsels’ offices and perform their ethical responsibilities as collateral duties related to other work.

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The Ethics in Government Act relies heavily upon financial disclosure requirements to guard against conflicts of interest. Senior

officials are expected to disclose their assets and recuse themselves

from decisions that might provide even an appearance of conflicts

of interest. The act also restricts the work that government employees can perform after they leave office. As our witnesses will testify

today, these conditions are meant to have a serious effect on government employment, particularly at the highest levels.

It is not clear, however, that our ethics rules have produced more

ethical government. Our current President pledged as a candidate

that he would have ‘‘the most ethical administration in history.’’

When he entered office, he issued an Executive order tightening

the post-employment restrictions on people who would serve in his

administration. Our experience with this administration, however,

forces us to question whether financial disclosure and post-employment restrictions are adequate to address problems associated with

integrity in our public officials. The list of this administration’s

questionable practices is too long to ignore and they will go well beyond the use of the White House for improper campaign fund raising. Unfortunately, it is not clear that all of the administration’s

actions are prohibited by current law. As we continue reauthorizing

the Office of Government Ethics, we should examine whether some

of those practices warrant changes in the underlying laws that we

have now.

For example, the administration’s Health Care Task Force included many ‘‘special government employees.’’ These people continued to work and receive compensation from private organizations

that had substantial interests in the outcome of the task force’s

policy recommendations. Their activities raised much controversy

concerning conflicts of interest.

Then there were the so-called volunteers working in the White

House, more than half of whom were actually on the payroll of the

Democratic National Committee while working in the White House.

Others worked at the White House while on the payroll of various

special interest groups.

Finally, we have the example of John Huang. This political fundraiser received more than $700,000 from his former employer, the

Lippo Group, before taking a position in the International Trade

Administration at the Department of Commerce. Do large severance payments from former employers prior to government employment give the appearance of a conflict of interest or at least raise

a specter of doubt?

In addition to these issues, we should also consider whether the

sanctions associated with violations of current law are adequate to

deter and/or punish unethical conduct in office. The Office of Government Ethics currently refers criminal violations to the Department of Justice, which has primary responsibility for any prosecutions. Has this avenue of prosecution been adequate?

These questions appear simple, but they arise because even the

careful design of previous legislation did not address all of the potential areas of public concern. I do not anticipate a comprehensive

review of the alleged improprieties, but I believe our reauthorization of this agency should at least address the concerns that we

have developed from our recent experience.

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Obviously I think that makes all of us stronger whether we’re

talking about looking at a Republican administration or a Democratic administration, whether we’re talking about this current administration or administrations in the future.

Our witnesses today are Mr. Stephen D. Potts, the Director of

the Office of Government Ethics. He is now serving his second 5-

year term and that term will expire in June of next year. Our second witness today is Mr. Gregory S. Walden. Mr. Walden is currently counsel at the firm of Patton Boggs, but he was invited to

serve as a witness today because of his role in overseeing Ethics

in Government Act compliance as associate counsel to President

Bush. He has since continued studies related to the Ethics in Government Act and published a book on the topic entitled ‘‘Our Best

Behavior.’’

And with that, I would like to turn it over to Mr. Cummings for

any comments he may have.

[The prepared statement of Hon. Joe Scarborough follows:]

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Mr. CUMMINGS. Mr. Chairman, I appreciate your convening this

hearing on the Office of Government Ethics. It’s been a number of

years since the subcommittee has held an oversight hearing on

OGE and it is prudent that we establish a record of how the agency

is operating. OGE’s mission is not only to prevent and resolve conflicts of interest and to foster high ethical standards for Federal

employees but also to strengthen the public’s confidence that the

government’s business is conducted with impartialialty and integrity. OGE does this by reviewing and certifying the financial disclosure forms filed by Presidential nominees requiring Senate confirmation, serving as a primary source of advice, and counseling on

conduct and financial disclosure issues and by providing information on and promoting understanding of ethical standards and executive agencies. OGE and its staff are well regarded by Federal

agencies with whom they do business.

Mr. Gregory Walden, who will be testifying before us shortly,

stated in his prepared remarks that OGE has played an essential

and significant role in fostering the public’s trust in the integrity

of government. OGE has performed exceptionally well and deserves

to be reauthorized, and I am sure that the rest of the day’s testimony will prove that to be the case. There is no question that Mr.

Stephen Potts has done an outstanding job along with his staff,

and we thank you for your service.

I look forward to hearing from all of today’s witnesses regarding

OGE’s reauthorization. Thank you.

Mr. SCARBOROUGH. If I could ask our witnesses to stand so we

can administer the oath.

[Witnesses sworn.]

Mr. SCARBOROUGH. Thank you. Be seated.

Why don’t we go ahead and start with Director Potts.

STATEMENT OF STEPHEN D. POTTS, DIRECTOR, OFFICE OF

GOVERNMENT ETHICS, ACCOMPANIED BY MARILYN GLYNN,

GENERAL COUNSEL

Mr. POTTS. Thank you very much, Mr. Scarborough. Mr. Chairman and members of the subcommittee, first of all let me just acknowledge the presence of Mr. Greg Walden. He’s been a colleague

over the years. We’ve continued to enjoy working with him from

time to time and have great respect for what knowledge and information he has brought to the ethics community. We’re very happy

that even though he’s in the private sector, that he continues to do

so.

I want to thank you for the opportunity to appear today to discuss the reauthorization of the Office of Government Ethics. And

I will keep my remarks brief. And I request the subcommittee to

include my formal statement as part of the hearing record.

Mr. SCARBOROUGH. Without objection, so ordered.

Mr. POTTS. With me today is OGE’s General Counsel, Marilyn

Glynn.

The 3 years since our last reauthorization have passed quickly

and for OGE we believe very productively. I’d like to take this opportunity to review briefly some of our accomplishments during

these last 3 years.

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Over 2 years ago to enhance our program capabilities, we reorganized our Office of Education and created a new Office of Agency

Programs with three separate divisions. One was education and

program services. Two was financial disclosure and the third was

program review. This reorganization committed more resources to

OGE’s education and training functions. OGE now provides more

direct service to agencies through our desk officer program and we

have developed employee training materials such as a computerbased ethics game, pamphlets, and new video training tapes. We’ve

also provided new courses designed for the education of ethics officials, including conference style workshops for ethics officials out in

the various regions of the United States.

In addition, our program reviews have focused not only on determining if reviewed agencies were maintaining their programs properly but also on finding and sharing best practices of agencies in

carrying out the various elements of their programs which we could

then in turn share with the other agencies of the Federal Government.

Over the past 3 years to implement the ethics program and serve

the ethics community, OGE has made more effective use of technological advances. We’ve developed a website for easy dissemination

of information to the ethics program community, to employees and

to the public. In addition, we’ve developed a CD–Rom containing all

of the basic resource and reference material important to the program. We’ve developed software that is used in the completion of

the confidential financial disclosure forms filed by over 250,000 employees in the executive branch, and we’re in the process of developing the software necessary for the completion of the public financial disclosure reports, which of course are filed by a far smaller

universe of filers.

Recently as the United States and other countries and organizations have focused on the effect of corruption on governments and

economies throughout the world, we have been called upon by U.S.

foreign policy agencies to provide technical assistance regarding the

elements of a corruption prevention program as one part of the government’s overall anticorruption efforts. In response to requests

from these agencies and also from foreign countries and multinational organizations for information about our program, we have

met with more than 550 visitors from over 55 countries in our offices. And we’ve also as personnel time permitted and usually with

the financial support of U.S. foreign policy entities, participated in

anticorruption programs held abroad.

Over the past 3 years, OGE has continued to devote a substantial amount of our resources to our ongoing programs. We’ve continued to review and certify the financial disclosure forms filed by

Presidential nominees requiring Senate confirmation and serve as

the primary authority on conduct and financial disclosure issues.

During these past 3 years, we handled 724 nominee forms and

approximately 3,000 annual and termination financial reports. In

addition, we continue to provide interpretive guidance on the criminal conflict of interest statutes and to review and update our regulations for the standards of conduct.

As you know, earlier this year our office sent draft legislation requesting an 8-year reauthorization. We hope that you’ll favorably

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consider our proposal and our desire that future authorizations not

expire during the first or fourth years of a Presidential term. Our

programmatic responsibilities in the areas of nominee financial disclosure reviews and transition post employment advice places a

greater strain on our resources during those particular years, the

first and fourth years of a Presidential term. Consequently, we believe it’s more helpful for us and for Congress for our reauthorization review to occur outside those 2 years.

Now, it’s true that a 3 or 4-year period of authorization would

avoid the problematic first and fourth years of a Presidential administration, but we believe there are good reasons to authorize

OGE for 7 or 8 years. First, our track record over the past 20 years

of existence. I think that we have shown during those 20 years that

this organization has operated in a nonpartisan and a very professional and effective way. So I think that’s one reason to reauthorize

this office for 7 or 8 years.

Second, I think this is a very fundamental program. This is not

some program that should run out. There are a lot of programs

that sort of have their day and accomplish their mission. Then you

move on and maybe they ought to be sunsetted. But this is something that is very fundamental because the fundamental tenet of

our program is public service is a public trust. That is something

that is permanent and should be permanent as part of the government. And so we want to make sure that this office is around to

try to be the source for our implementing the strategy of public

service being a public trust.

The third is the size and care that we’ve taken with our budget.

First of all, as to size, I mean, we are a tiny agency right now. We

have about 80 employees and we have a total budget of about $9

million. So in terms of size and budget contrasted to the other

agencies and departments, we are tiny. I think that’s another reason why we should be given a longer authorization period in light

of our mission and small budget.

And finally, the resources that both our Office and the Congress

must expend in a reauthorization process. It would be one thing if

the only opportunity for the Congress to review our activities would

be the reauthorization process. Then I might say that yes, it should

be more frequent than just what we’re requesting to have a reauthorization for 7 or 8 years. But of course as we’ve said, any time

that this committee or any Member here or in the Senate wants

to ask us questions and wants us to come up and explain our program and talk about it in detail, we are always available. We welcome that interest in our program because we are always trying to

make the program better and to improve it. And in addition to

that, as you noted, Mr. Scarborough, my term ends next year, and

our experience is that in connection with the consideration of a new

nominee, the Senate usually conducts a review of our agency’s program and gets into it in some detail in that context.

So I would anticipate when a new nominee to be director of the

Office is being considered next year, at least on the Senate side,

there will be a consideration in great detail of our program. And

then finally, we have of course the responsibility to report under

the Government Performance and Results Act exactly what results

we have had and what our performance has been. I think there is

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now a mechanism in place that really hasn’t been to consider exactly how we are doing and for this committee to stay on top of

really what’s going on at OGE. So for all of these reasons, I want

to urge you to authorize the agency for either 7 or 8 years.

Now, in closing, let me just shift gears briefly. Your letter of invitation posed a number of questions and I’ve addressed those in my

written statement. If you’d like further elaboration or clarification,

of course I’ll do my best to respond. I’d be happy to answer any

other questions that you have about OGE, our programs, or about

our reauthorization legislation. I want to thank you for the opportunity to appear today.

[The prepared statement of Mr. Potts follows:]

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Mr. SCARBOROUGH. Thank you, Mr. Potts. Mr. Walden.

STATEMENT OF GREGORY S. WALDEN, PATTON BOGGS LLP,

FORMER ASSOCIATE COUNSEL TO THE PRESIDENT

Mr. WALDEN. Thank you, Mr. Chairman, Mr. Cummings. I’m

pleased to testify today in support of OGE’s reauthorization. This

is my fourth visit before this committee and I’m honored by your

invitation as well by Mr. Potts’ kind remarks.

In its 20 years of existence with just under 100 employees OGE

has performed an essential role within the executive branch in fostering the public’s confidence and trust in the integrity of government. On the whole OGE has performed exceptionally well and deserves to be reauthorized. Because of its solid performance, OGE

ought to have a permanent place in the executive branch.

A single executive agency independent of all others is essential

to fulfill the cardinal objectives of any system of government ethics:

Uniformity, consistency, reasonableness, fairness and objectivity.

At this point in OGE’s history, the question before the Congress

should not be whether to reauthorize OGE but whether OGE

should be charged with any new or different authority.

I do not have a strong opinion as to the length of reauthorization,

although I agree with Director Potts that a reauthorization should

not expire the first or last year of any administration. In my opinion, it’s a legislative judgment, to be made by those who oversee

OGE, whether a regular authorization is necessary to provide the

best opportunity for needed ethics reform. There are a number of

programs run by the executive branch that expire after a certain

time and need to be reauthorized. Those are important programs

but the reauthorization period provides Congress with an opportunity to tackle necessary reforms. Regardless of whether the reauthorization is for 4 years or for 8, Congress should conduct regular

oversight and I would suggest perhaps a yearly oversight hearing.

Congress should oversee OGE the way it would oversee any other

executive agency.

Regarding OGE’s rulemaking authority, OGE needs to complete

its rulemaking to implement and interpret section 209, the supplementation of salary statute, and in particular section 207 dealing with post-employment restrictions. Now, there is a consensus

within the ethics community—perhaps not shared by Congress,

that the post-employment restrictions matrix is excessive, it’s complex, and it’s uneven. But it’s up to Congress to reform that statute. OGE cannot do it. What OGE can do and should do is issue

interpretive guidelines because right now section 207 is a trap for

the unwary. The matter is not made better but made worse in my

opinion by President Clinton’s Executive order, which is riddled

with exemptions and loopholes, and is also more excessive than

necessary and should be repealed by the next President.

It would also behoove OGE to conduct a rulemaking proceeding

regarding the use of legal defense funds. Now, this is a difficult

subject and OGE has done a good job, in my opinion, in giving advice to legal defense fund trustees and government officials to date,

but I believe it deserves a comprehensive review by Congress and

perhaps legislation will be necessary. Members of Congress and

staff also from time to time have set up a legal defense fund and

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perhaps there ought to be a single rule for all employees and officials.

Regarding OGE’s investigative authority, OGE has statutory authority right now to investigate allegations that an executive

branch official has violated ethics standards, but OGE’s authority

is circumscribed. OGE is just one actor in a cast of government investigators and prosecutors. And OGE by rule has further limited

its authority to conduct initial investigations that do not rise to the

level of a crime, deferring to agency personnel. As a general matter, I think that’s reasonable, but occasionally there will be benefits

to the public as well as to the administration in having OGE conduct that initial investigation. Where directed by the President or

requested by a member of the cabinet, and provided OGE is given

necessary resources, OGE could conduct an investigation in lieu of

an agency ethics or IG investigation. In any event, if the investigation remains within the agency under current policy and practice,

an OGE official in my opinion should be assigned to participate in

such investigation to the extent necessary to ensure its thoroughness, objectivity, and faithfulness to OGE’s interpretation and guidance. Perhaps agency ethics officials and IGs should be required to

notify the Director of OGE and the White House Counsel simultaneously upon the initiation of an ethics investigation involving any

Presidential appointee. The President could then determine whether OGE should conduct the investigation or whether a more formal

role of OGE is necessary or appropriate.

Regarding OGE’s audits or program reviews, I recommend that

OGE rearrange its schedule of reviews to ensure that every cabinet

department and the White House Counsel’s office is reviewed in

the second year of a new administration. With respect to training

and education, I believe more attention should be placed on Presidential appointees, non-career SES officials and schedule C employees as well as employees in regional and field offices. My sense is

that these two classes of employees, for different reasons, are most

at risk of violating ethics standards.

In my prepared statement, I recommend several changes to the

ethics laws. I wish to highlight only one of these recommendations

in my opening remarks. The term special government employee

should be clarified to codify the functional test used by the Department of Justice and OGE. Simply put, an informal advisor who

participates regularly in internal agency deliberations or who supervises or directs other Federal employees, even an informal advisor who does so without pay or without formal appointment, ought

to be subject to the conflict of interest laws and financial disclosure

standards to which the rest of the Federal work force is subject.

Yet, the current uncertainty of the application of the ethics laws

to informal advisors has resulted in a number of situations where

Federal functions are being performed by persons with conflicting

Federal interests. For instance, agency personnel offices may not be

sufficiently sensitive to the simple matter in which contract consultants unwittingly become special government employees.

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In 1996 the House passed a revision of the SGE definition to codify the functional test. The Senate deleted the provision and the revision did not become law. I urge this Congress to clarify the SGE

definition and to do so before the next President is inaugurated.

Thank you very much for the opportunity to testify and I will be

happy to answer any of your questions.

[The prepared statement of Mr. Walden follows:]

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Mr. SCARBOROUGH. Thank you very much. Let’s begin our questioning with you, Mr. Potts, and let me ask you this. Since we’ve

just had a discussion on special government employees, let me ask

you whether the White House—this White House or any past

White Houses, if it was even relevant then, has come to you and

asked you for assistance in determining whether a particular individual fits into this class of special government employees; in fact,

if they ever asked you that question.

Mr. POTTS. First of all, let me say that we support the idea of

the legislation. In fact we’re one of the forces behind that legislation being offered previously that Mr. Walden referred to, to in effect codify in the law the elements that we consider as a matter

of policy in deciding whether someone is a special Government employee, but I would also caution that I would strongly oppose the

idea of that being thrown into the reauthorization legislation. We

don’t want to have that cluttering up the reauthorization.

Yes, we have been consulted by, I would say, all White House

counsel that have served during the almost 9 years that I’ve been

director, and I say Counsel but that means someone in their office,

about individual cases of whether someone is a special government

employee, but I think the way that it’s actually applied it’s usually

pretty clear as to who is and who is not a special Government employee if someone really is just willing to get the facts of what the

particular arrangement is. So typically when we are presented with

questions like that, it’s more a question of just finding out factually

exactly what is the person doing—are they working in a government office? Are they being supervised? And if they are, they’re

special Government employees and they’re subject to all of the ethics rules.

Mr. SCARBOROUGH. To help us with this definition, let’s talk

about a few people that have played an active role in the White

House, again just for the purposes of definition and whether they

were, should be, or would be a special government employee under

past definition or the proposed new definition. Let’s start with

somebody like Paul Begala or Dick Morris, where you read these

books already on the history of the Clinton administration through

the first 6 years and you see the very important people. I remember reading ‘‘New York Times’’ and ‘‘Washington Post’’ articles especially in 1996 talking about almost daily meetings of everybody

sort of hovering around in the Oval Office and Dick Morris and

Paul Begala being at the center of that and obviously being at the

center of what activities all these government employees would be

doing in these agencies over the next year. And I’m certainly not

sitting here saying that’s inappropriate because every White

House, at least in modern time, has had their own—I guess I

shouldn’t say Dick Morris—everybody has had friends that have

come in and those lines obviously get blurred.

But let me ask first of all just for the record was Paul Begala

or Dick Morris classified as a special Government employee?

Mr. POTTS. I don’t know specifically and I don’t recall ever being

asked. I gather you don’t recall our being asked and it wouldn’t be

necessary, of course, for us to be asked because we expect each department agency, including the White House, to administer its own

program. We’re there to consult. There is, particularly with the

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Counsel’s office, a very active back and forth about a lot of issues.

But we expect them to make those decisions and so we don’t actually know in the cases that you cite.

Mr. SCARBOROUGH. Mr. Walden, should they be? Under your definition—and again, let’s get out of the specifics of this administration and say—let’s say George W. Bush or Al Gore, the next President, and they have people like this in and out of their White

House, or Bill Bradley. We don’t want to offend anybody from New

Jersey. Should people in that position be classified as a special

Government employee?

Mr. WALDEN. Yes. If the informal advisor is taking part regularly

in internal agency deliberations, there really is no difference between that informal advisor and a White House staffer. I would

distinguish the meetings that all Presidents have had with the

head of the Chamber of Commerce or the head of the AFL–CIO,

or a good counselor and friend, or the chairman of the RNC or the

DNC, in one-on-one meetings with the President or another White

House official. The President should be free to continue to get advice from anybody at any time but where that advisor is brought

into the government and sits around the table and helps the agency, the White House, come to a decision, he is a de facto government employee.

I believe that conduct meets the functional test and I would say

that based on public reports, if they’re true, Paul Begala and Dick

Morris crossed the line and were special Government employees. I

don’t want to fault Paul Begala or Dick Morris or Harry Thomason

or even the White House office or certainly the OGE, but certainly

within the Clinton White House there was management control of

people coming in and making sure those people were judged yes or

no and screened and required to file financial disclosure statements.

Mr. SCARBOROUGH. Do you think your clarifying definition that

you’re proposing would help clean this up a little bit for the next

administration?

Mr. WALDEN. I think it would, but passing the law still requires

people to administer the law and better management of the White

House and some agencies would be in order. Clarifying the definition would make it very clear that even without a formal appointment, you can run afoul; you become a special Government employee.

Mr. POTTS. Let me say I agree with that and I think the passage

of the law would help everyone in the government, including the

White House, know exactly what the criteria are. They are out

there but having it in a statute and clarifying that if a person is

performing a Federal function and they are subject to supervision

by someone that’s clearly a Federal official, then they’re a special

Government employee. Those criteria would separate out the kind

of people that Greg mentioned, like the president of the Chamber

of Commerce or the president of a labor union or someone coming

in. They clearly are not going to perform a Federal function nor are

they subject to being supervised by someone in the Federal Government.

Mr. SCARBOROUGH. I’m glad you clarified that because I think

the supervisory role helps differentiate—I’ve heard some people say

28

in the past they were a little concerned about this because let’s say

Mr. Cummings is President 10 years from now and he has a friend

who’s been a friend since he was 11 years old. Well, he should be

able to talk to him every day and get advice from him so this definition in no way would stop somebody from leaning hard on a

friend or even have a friend coming into the White House and talking and somebody that he could trust, but again supervisory issue

is the key issue there?

Mr. POTTS. Right.

Mr. SCARBOROUGH. We’re going to have two votes. Why don’t we

go ahead and take a break and we’ll go over and vote and then be

back hopefully in the next 15, 20 minutes.

Thank you.

[Recess.]

Mr. SCARBOROUGH. Mr. Cummings.

Mr. CUMMINGS. Mr. Walden, you talked about the special Government employees and I’m trying to go back to why we’re here

with regard to reauthorization. Mr. Potts’ office didn’t do anything

wrong, did they, to your knowledge?

Mr. WALDEN. To my knowledge I don’t have any criticism with

the advice OGE has given under the special Government employee

concept.

Mr. CUMMINGS. You were talking about certain investigations

and I was jotting down notes real quick. Do we—since we’re talking

about authorization, Mr. Potts, you know the investigations he was

talking about that he felt you should be involved in. What were

those, Mr. Walden? Remind me.

Mr. WALDEN. I believe that going back to the allegations in, I believe 1994, involving the conduct between the Treasury Department and the White House, the Office of Government Ethics did

look into the conduct of Treasury employees. I think it would have

been more appropriate for the Office of Ethics to be asked to look

at both the conduct of the Treasury Department employees and

White House employees.

With regard to the White House Travel Office, after the initial

criticism of the firings of the Travel Office officials, the White

House conducted a management review. It was not done by the

White House Counsel’s office. There were some people in the Counsel’s office who were involved in those things. I think that a review

by the Office of Government Ethics would have received a lot more

credibility from the public than the White House management review received. And I also think with regard to Secretary Espy, the

White House conducted a review of the allegations against Secretary Espy but that report contained no findings or conclusions.

I believe that if the Office of Government Ethics had been asked

to do such a review, we would have gotten a more thorough comprehensive report.

Mr. CUMMINGS. So you think the—you think with that report,

Mr. Espy would have gone through the same things that he went

through? Based on—this is sort of hindsight, I know. But I’m just

curious. That Espy case is one which—it really bothers a lot of people because—and I’m just wondering, I mean, it seemed as if just

from what I’ve read that if it had gotten—that no matter what, it

probably would have reached an independent counsel stage no matVerDate 11-MAY-2000 12:24 Aug 29, 2000 Jkt 000000 PO 00000 Frm 00032 Fmt 6633 Sfmt 6633 C:\DOCS\65930.TXT HGOVREF1 PsN: HGOVREF1
29

ter what. That’s from my reading as a lawyer, but I’m just wondering do you think it would have been a different result?

Mr. WALDEN. I’m not sure and perhaps not, Mr. Cummings. We

no longer have an independent counsel law, so that shouldn’t happen in the future. My concern all along was having the public understand what the facts indicated, that Secretary Espy had violated

the ethics laws. I was not as concerned as to whether there were

violations of criminal law. I thought there were violations of ethics

laws and that was somewhat muddled in the appointment of the

independent counsel. If I were in the Department of Justice or an

independent counsel, I might not have sought to indict Secretary

Espy. I thought it would be sufficient that he forfeited his office because of violations of ethics laws. But that again was muddled because of I think an inadequate White House Counsel’s report.

Mr. CUMMINGS. With the doing away with the Office of Independent Counsel, does that put, you think, more of a burden on the Ethics Office in any way?

Mr. WALDEN. Not directly because the Ethics Office cannot conduct investigations of allegations of violations of criminal law.

That’s for the Department of Justice to do. Of course, inspectors

general also can conduct preliminary investigations of criminal activity. I think that the vacuum left by the demise of the independent counsel law will be filled and should be filled by increased oversight by Congress as well as the Department of Justice, which

would step in the shoes of independent counsel.

Mr. CUMMINGS. One of the things that you said is you think that

the Ethics Office should come before the Congress with regard to

oversight on a yearly basis; is that right?

Mr. WALDEN. Yes.

Mr. CUMMINGS. And what should we be looking for? In other

words, when they come before us, they come before us every year,

if you were sitting here and you had a sheet, a list of things that

you want to check on, what kind of things would you be looking

for and why?

Mr. WALDEN. I would ask the Office of Government Ethics how

things are faring in the executive branch, whether the authorities

they have are sufficient, whether the laws they interpret are unclear and deserve clarification. I might want to amplify my prepared remarks by saying that 20 years from now, I might not advocate a yearly oversight hearing but I think the ethics landscape

still is unsettled. We have some new laws and until the Federal

work force operates under an ethics system that’s basically settled

for a number of years, I think it would benefit Congress as well as

OGE to have a regular exchange with Congress and yearly hearings once a year would fulfill that need.

Mr. CUMMINGS. The post-employment restrictions I think, section

207.

Mr. WALDEN. Yes.

Mr. CUMMINGS. And you talked about the guidelines needed. In

the State of Maryland, we had a situation where—I used to sit on

the committee that dealt with ethics—we had a situation where the

legislature for whatever reason just refused to make clear what the

ethics laws were because there were all kinds of scenarios and so

you had the loopholes, but clarification would have—could have

30

cleared it up and so year after year people would come in, legislators would come in with various proposals and then we found—

then we had some people who were convicted criminally of violations that were kind of serious and one of their defenses consistently was, well, it wasn’t clear. And I say all that to say I take it

you have a similar concern?

Mr. WALDEN. Yes, I do. And if memory serves, one of the first

prosecutions under the post-employment restrictions law involving

a Reagan administration official was overturned on appeal because

the court of appeals found that the statute was ambiguous or didn’t

clearly proscribe the conduct. I think that’s post-employment restrictions. It might be lobbying. I don’t know. If it was post-employment restrictions, it illustrates the concern that when an ethics law

is not clear it can’t be understood. If it’s not understood, you cannot

expect reasonable people to follow it. And the matrix of post-employment restrictions right now is way too complex. High level officials are subject to maybe six or seven different proscriptions. Each

of them has different language and then if you’re a lawyer, you’re

subject to your local bar rules, which are more onerous than the

Federal law.

Mr. CUMMINGS. So now, Mr. Potts, if you have someone who

questions what they are about to do, what happens? Do you give

them an advisory opinion or something?

Mr. POTTS. We will. It can be just informal oral advice or an

issue comes up that we expect to come up repeatedly and in addition if it’s a question that probably is cross-cutting across various

departments and agencies, we would issue a written informal advisory opinion. Those are published and also made known throughout

the ethics community through what we call paeograms. These are

communications to the ethics community that would describe the

actions that we’ve taken or the opinions that we’ve issued.

Mr. CUMMINGS. Now, do you agree with Mr. Walden on this clarification of 207? I think he mentioned another section too, 209?

Mr. WALDEN. The clarification most needed I think is the special

Government employee section, which is section 202. Section 209,

supplementation of salary, I think just needs the interpretation

guidance, but section 207 is definitely post-employment restrictions.

Mr. CUMMINGS. Do you agree with that?

Mr. POTTS. We do agree with the 202. In other words, we think

and supported previously legislation to clarify and put those criteria in the statute. So we would support that for sure. On the 209,

the supplementation of salary provision, I don’t see any need for

any legislation on that right now. We made an attempt probably

5 years ago to clarify and simplify 207, which is the post-employment. It is extremely complicated and for a person who really sincerely wants to make sure that he or she conforms to that law; it

is not easy to do it because it’s really tricky. And so it requires constant professional advice about what you can and can’t do, especially if you’ve been in the procurement area.

In any event, we made a proposal that was presented and the result was that some legislation was passed that made it a little

more complicated rather than simplifying it. We felt like we got our

fingers burned a little bit. We felt in that instance our attempt to

31

do good ended up doing some bad. I would strongly say if that is

an area where the Congress would get involved, it really could

make a difference. I might ask for my general counsel to add some

comments because she’s been very much involved in our consideration of what might be done to really improve 207 insofar as these

post-employment restrictions are concerned.

Ms. GLYNN. I just wanted to make a couple of——

Mr. SCARBOROUGH. If we could ask you to just state your name

for the record.

Ms. GLYNN. My name is Marilyn Glynn. I’m the General Counsel

at the Office of Government Ethics. We agree that 18 U.S.C. 207,

the rules on post-employment, are terribly complex. What OGE has

tried to do is to simplify them for the average employee who has

to comply with them. We’ve done a couple of education and training

ventures. We’ve prepared a video that can be shown to agency employees describing that puts the post-employment rules in a setting

very much like this. It’s a congressional hearing. Folks like yourselves are peppering some poor former Government employee with

questions about his post-employment activities. The video is an attempt to engender sympathy for the poor employee who can’t possibly understand what this all about. We’ve also created pamphlets

and educational materials that try to describe these rules in simple

fashion. These materials urge employees to come and get advice in

particular situations.

In connection with the 209 rule to which Mr. Walden made reference, we do have pending for review and have for some time, a

draft interpretive regulation at Department of Justice. Hopefully

we’ll receive clearance on that shortly and publish a rule that can

assist employees in understanding their obligations.

Mr. CUMMINGS. I just don’t want anyone to—I mean, as I’m listening to you and I’m trying to put myself in a position of a lawyer

to a client, I’m going to tell you, even after I’ve read all the regs

and the rules and everything, you know what I’d do? I’d march

them right straight to you and I’d sit down with them and say look,

this is my client’s situation. I want something in writing. I’m serious. Because if you are saying it’s complicated, if you’re saying it’s

complicated, then my God. I can imagine a lawyer and particularly

someone who doesn’t even have a lawyer has got to be, you know,

going crazy. I mean, just—so anyway, it’s something we need to

take a look at.

Finally, I know we don’t have anything to do with money in this

committee but I’m just curious, Mr. Walden talked about a number

of these investigations and what have you. Do you have enough

money to do what needs to be done in your office?

Mr. POTTS. Our current budget is comfortable. Actually, if you go

back during my term, we really assumed some additional responsibilities from the Executive order of President Bush. We had to

ramp up and we got to the point at one point where we had about

100 employees. But most, probably over half of our people were

hired within the 12 months or so following those additional responsibilities. So we had a lot of green people. And what we found was

after some time we began operating where the knowledge curve enabled us to become more efficient. Then we just allowed attrition

to bring us down to where we are now, at about 80. We really are

32

doing now with about 80 what a few years ago it took about 100

people to do because they were inexperienced and green and

weren’t attuned to their jobs. But so now we’ve been able to get

down to a level that we are comfortable, assuming that we don’t

have any change in our responsibilities. I think we are at a good

level right now.

Mr. CUMMINGS. Just one other question. You talk about the first

and the fourth year. Help me with the fourth year piece. I understand the first year and I think I understand the fourth year but

it seems like the first year is the big one.

Mr. POTTS. That’s right.

Mr. CUMMINGS. Talk about the fourth year.

Mr. POTTS. The fourth year. The reason that’s a problem is there

are people that are leaving and they have to file financial disclosure statements. In other words, termination reports and we have

to review those. And of course that gets to be a big volume. But

also there is a flurry of activity in new appointees to fill. Even

though it’s for a very short term, there is a big bulge of people that

are getting appointed in the last few months. Already we see that

starting up.

Mr. CUMMINGS. And you’ve got to turn it around quickly.

Mr. POTTS. Got to turn it around quickly, right. So there is that

sort of bulge. It’s not as bad as the first year of a Presidential term

but still, there is this bulge in the first year. Then it goes down

and then it kicks back up, particularly in this financial disclosure

review area.

Mr. CUMMINGS. So this is—when do you leave office?

Mr. POTTS. My term ends August 15 of next year.

Mr. CUMMINGS. I don’t know whether we’ll see you again before

then but I want to thank you for all you’ve done.

Mr. POTTS. Well, thank you.

Mr. CUMMINGS. For our country. I really mean that.

Mr. POTTS. I appreciate that.

Mr. CUMMINGS. I’ve heard a lot of great things about your efforts

in that office. So often I think what happens is our public employees don’t get the thanks which they deserve because you give so

much for so little but so much benefit to the American people. So

I just wanted to take this moment and thank you.

Mr. POTTS. I appreciate it. Believe me, it’s been an honor to

serve. I wouldn’t have had it any other way.

Mr. SCARBOROUGH. Thank you, Mr. Cummings. I’ve got to say

I’ve heard great things about you also and the record today is going

to reflect that you’re a perfect fit for the Office of Government Ethics because you were asked a very un-Republican question. That

was, did you have enough money for your agency? I wrote it down

because it’s a bit historical today. You said, quote, we are comfortable and second, you said we are, quote, at a good level. Only

the Director of the Office of Government Ethics would say that. I

thank you for that.

Let me ask you in your agency’s review of oversight of other

agencies, you talk about best practices. Could you illustrate a few

agencies on the upside that have constantly shown best practices

and also a couple of agencies maybe that have had some trouble

operating to the high standards of the best.

33

Mr. POTTS. Yes. We give awards at our annual conference agencies who have gotten in effect a clean program review; in other

words, a review where we really don’t have any recommendations

that something has to be changed. We might make some suggestions about things that could be a little better or whatever. I would

say over the last few years the various Defense Department components have had this sort of outstanding records. Not without exception, but for the most part our reviews of the various Defense Department components have resulted in a lot of clean reviews.

Mr. SCARBOROUGH. You have speculated or do you have any reports as to where that is? Is that a military culture? What do you

and your other people that work with you put that down to?

Mr. POTTS. I think first of all it is partly culture but I think it’s

also money. In other words, I think they have the resources. Once

they get the assignment, they have the resources and by gosh, they

go out and do it. We have also I had a list of——

Mr. SCARBOROUGH. You can submit those for the record. That’s

fine.

Mr. POTTS. One department, for example, that’s had a very good

program is the Department of Education. Secretary Riley has taken

a personal interest in the program and has showed that personal

leadership, which really is one of the things that is the hallmark

of virtually any good program, that the head of the agency is out

front talking about ethics and how important it is. So that is very

key.

On the positive side, let me mention a couple of others: The

International Trade Commission, the General Services Administration, the Federal Communications Commission, Federal Deposit Insurance Corporation, Overseas Private Investment Corporation.

Those are some that in this past year were reviewed that had excellent programs.

In the last year, we had several agencies that were deficient. It

coincided with the downsizing of the agencies and particularly for

two of the cabinet departments, Interior and Agriculture, we had

to issue formal notices of deficiency. Both of those were agencies

where the ethics program is run through the personnel shops and,

in answer to your question as to why, I think what happened was

the personnel shops were getting chopped a lot during that period

for a lot of other reasons. They were just the ones that felt the

sharpest edge of the ax. With the ethics program being part of that,

they just all of a sudden didn’t have the resources, and they were

really scrambling to keep their program going. I’ll say in both instances after the notice of deficiency, we worked with them and

they have gotten their act together. We have already rescinded the

notice of deficiency for the Department of Interior, having gone

back in and being satisfied they have the program back on track.

Department of Agriculture has taken heroic measures. They’ve

created a new Office of Government Ethics within the Department

of Agriculture. They consulted with us and hired as to someone

who had managerial experience as well as ethics program background. And they have made great progress, but they’re not quite

there yet. But the situation in Agriculture frankly is more complicated because they have all of these different components.

They’re scattered all around, literally around the world and it’s

34

been harder for them to get their hands around it. They’re going

to get there and we’ll be right along helping them.

Mr. SCARBOROUGH. Since the White House is graded on its own

scale as a separate agency, where do they fit on that scale?

Mr. POTTS. They got a very good report when we reviewed their

programs. The last review was 1996 and 1992, so we’ve had them

on a 4-year cycle. They’ll be coming up next year.

Mr. SCARBOROUGH. What about your dealings with the Justice

Department? Have you referred more or fewer cases to the Justice

Department of late than let’s say you’d done 5 or 6 years ago?

Mr. POTTS. The cases that come to us for referral are really kind

of haphazard. In other words, if a person is really knowledgeable,

they wouldn’t really come to us thinking that we’re going to take

it and then send it over to Justice. So it’s kind of just haphazard

as to how things happen to come over the transom or we become

aware of some particular situation. But things like that do happen

and when they happen, if it’s clearly criminal in nature and especially if it’s something that seems to be ongoing, we would send it

over to Justice and expect the FBI to investigate it. If it’s more of

an administrative nature, then we would send it to the Inspector

General where that person worked for the investigation.

Mr. SCARBOROUGH. Let me ask you some questions that either

one of you can answer because it may sound a bit political. You

may be more comfortable, Mr. Walden, in responding. I was wondering, obviously we have the First Lady, who’s considering a run

for the Senate campaign, and when the President—whenever Air

Force One goes somewhere and campaigns, there’s always a portion

of the use of Air Force One and the security arrangements, other

factors associated with the office that recognizes political expenses

and billed to campaign. I was curious, do you think under the set

of laws that we have right now if Mrs. Clinton decides to campaign

for Federal office next year, would she be subject to the same regulations regarding the appointment of expenditures? Should she be?

Mr. WALDEN. If Mrs. Clinton qualifies for a candidate as defined

in the Federal Election Commission regulations, then that would

trigger the reimbursement provisions under Federal law and Federal standards. There are additional questions involving how many

people travel on government airplanes and which persons are necessary to travel for official reasons. When the President or the Vice

President travels for a political activity, there are still a small set

of individuals who must accompany the President or the Vice President at all times and we had a term for them in the Bush White

House ‘‘Official travelers.’’ We kept a list of those people. Those

people would travel with the President even to attend a political

event, but they could not participate in the political event and

there was no reimbursement required of the Bush-Quayle campaign. With regard to the First Lady, I would simply ask, does the

First Lady require—how many people if anybody, does the First

Lady require in terms of official travelers? There are obvious reasons why the President has to have his staff secretary, military

aides, and a few other people always with him because the President is always President. The First Lady may always be First Lady

but not in the same sense as the President is always the President.

So I think those issues are difficult and I think that the White

35

House, working with OGE and perhaps the Federal Election Commission, should work out a set of standards and protocols so there

won’t be any questions.

Mr. SCARBOROUGH. In your opinion should the First Lady or the

Vice President’s wife or the Vice President’s husband be subject to

the same ethics laws as the President and Vice President? We’re

getting into a new era. First Ladies have always been engaged but

obviously in the future I think that they’re going to be more so. Hillary Clinton has been a trend setter of sorts and I think you’re

going to see more and more professional First Ladies or First Men

in the future. Do you think she has sort of opened the door a little

bit to what the future is going to be and does that also raise some

concerns regarding closing the loophole on first spouses?

Mr. WALDEN. I actually recommend that Congress tackle the

issue and do so in the next year or two. I would recommend that,

to the extent the first spouse observes the traditional responsibilities of First Ladies, that is, quasi-diplomatic, going to state events

or funerals or charitable activities, that would not make that First

Lady or first spouse a special Government employee or regular employee. But Mrs. Clinton was charged to chair the Health Care

Task Force. She was, within the White House, Donna Shalala, and

I don’t know why the ethics laws wouldn’t apply to her unless Congress made the legislative judgment that Congress made years ago

with regard to the President, the Vice President, and Members of

Congress that they would not be subject to the conflict of interest

laws. When Congress did so, I think there was a recognition that

the public scrutiny on the President and Vice President and Members was such that Members of Congress and the President and

Vice President would follow general ethics principles because they

wanted to stay out of hot water and not have ethics allegations distract from their duties. I’m not sure the same consideration applies

to First Ladies. It might because First Ladies, first spouses, are

within that same bubble within the White House that gets enormous scrutiny. What I believe is that under current law the First

Lady crossed over the line and should have been considered an employee under 18 U.S.C. 202, the special Government employee definition that’s in that statute.

Now, the court of appeals in a litigation challenging the Health

Care Task Force’s meetings under the Federal Advisory Committee

Act, said that Mrs. Clinton was the functional equivalent of a government employee, thereby allowing the task force to close its

meetings to the public because all of the members of the task force

had to be full-time government employees. But the court of appeals

dropped a footnote and said, we’re not going to decide whether the

First Lady is a government employee for purposes of the ethics

laws.

That’s the big question. I don’t think it was answered appropriately or completely by the White House Counsel at the time.

When Representative Clinger asked the White House Counsel,

whether the Federal Advisory Committee Act law should be

changed to make sure that the First Lady would be considered part

of the government so that the meetings could be withheld from the

public, the White House Counsel said, we don’t need legislation because she’s not a government employee under Justice Department

36

opinions. But the Justice Department precedent relied upon involved Mrs. Reagan’s charitable fundraising and that is not comparable to the responsibilities that Mrs. Clinton has exercised.

Again, I don’t want to fault Mrs. Clinton. I want to fault the system and the management within the White House that did not appreciate the difficult issues that were presented, the public criticisms that would result, and attempt to work out a system where

everybody would be happy.

Mr. SCARBOROUGH. I think on the specific issue of the Health

Care Task Force to me, it’s a very clear example of somebody that

should have been—had that classification. I think that is black and

white. While I’m not surprised that the Justice Department came

to the opinion that they did, I think that opinion is laughable because she was engaged in activities that would affect one-sixth to

one-seventh of the Nation’s economy based on what the Federal

Government did, what the administration did. So for me—I say all

that not just to make a political speech but to say that one seems

easy to me.

What is not so easy are some middle grounds that we may tread

on in future administrations with first spouses. So in a situation

not quite so clearcut, but if you think I’m terribly wrong in my assessment, you can correct me. But let’s say we have an administration in the future that is a bit more subtle than the First Lady.

Do you think that first spouses should have the same ethical laws

attached to them as the President and Vice President?

Mr. POTTS. I think Greg put it very well. First of all, I think it

is complicated because we are in this transition period about the

role of the First Lady, and I agree with your comments, Mr. Scarborough, that we should expect that to probably continue. Therefore, I think it would really be a wise thing for the Congress to

take a look at this and then establish some ground rules because

I would agree with Greg that if a spouse is playing the traditional

role, there isn’t any reason for him or her to fall under the ethics

laws. But if the spouse is in there really performing a government

function or running a task force or something like that where it

really is substantive, then all those rules really should kick in.

Now, let me just add a couple of thoughts. One is that, the President and the Vice President because they are elected executive

branch officials are not subject to the same conflict rules as other

people in the branch. But they do have to make public, for example, all of their gifts. They have to show what the gift is, who gave

it and an estimate as to its value, so the public can be informed

about the gifts and make individual judgments about whether that

is improperly influencing the President. And so I would say those

rules for a First Lady would be appropriate if she is getting into

the same area.

One other comment is that with regard to the travel of the First

Lady, sometimes security issues arise. For example, in the Bush

administration, there was a time when there were a lot of concerns

about terrorist activity. President Bush had said there were certain

people that he wanted to use government transportation only. Not

only for their own protection but also, he didn’t want them on a

civilian airliner where other innocent people might get killed. So

they were required, even for personal uses, as well as much less

37

political or government, to use government transportation. Then

there was a formula by which they had to reimburse the government when they used government transportation for personal purposes.

So I don’t know whether that’s the situation with the First Lady

right now or what the situation is but it’s just something to bear

in mind. Where there are reports from the CIA or the FBI that

there is some imminent threat, I think things are tightened up and

some officials that normally would travel commercially are directed

to start using government equipment only.

Mr. SCARBOROUGH. Let me ask you one final question. Back in

1989 Congress passed a law that banned honoraria for writing,

speaking. And they also banned that for Federal employees, which

I think a couple of years later, the courts ruled that to be unconstitutional. I know Mr. Walden has suggested that you all clarify

issues regarding honoraria and I thought I read that you all had

been working on it and was wondering what sort of progress is

being made on that or if you even think it’s necessary. Is it something you’d like to see done before you leave next year?

Mr. POTTS. Let me just comment and then I’ll ask Ms. Glynn to

comment.

First of all, it was clear to us after that honoraria ban law was

passed that we thought it was unconstitutional, and we went back

and tried to get some corrective legislation passed to deal with our

concerns. It was not any big surprise when it was challenged. After

the Government lost in the lower courts and was going up to the

Supreme Court, we met with the Solicitor General and said, our

opinion is this is a loser. It’s a waste of time to go up there and

fight it. But I think they felt since it had been enacted by Congress,

they had an obligation to try to uphold it. So anyway, it was not

a big surprise to us that it was held unconstitutional.

But let me ask Ms. Glynn to sort of explain what we have done

subsequently as a result of that.

Ms. GLYNN. We did amend our regulations to drop references to

the prohibition on receipt of honoraria but there is a continuing

trend in the courts toward expanding employee’s rights in this

area. We have a rule, in addition to that former prohibition on receipt honoraria, that prohibits employees from accepting compensation for any teaching, speaking, or writing that’s related to their

duties. In a challenge by a group of employees from the EPA, the

D.C. Court of appeals ruled that a provision of that rule was unconstitutional. It was the provision that relates specifically to accepting reimbursement of travel expenses from outside sources for

speaking about your Government job.

So we have informed the Federal work force that they are now

free, if they’re below the non-career senior employee level, to accept

reimbursement of travel expenses from outside sources for speeches

about their government jobs. And we’re amending the rule to reflect that.

This is an area that’s developing along a line that gives us some

concern, frankly, because the courts seem to be opening up the door

toward permitting more acceptance of compensation for talking

about your government job. The courts’ rulings are going in a direction that gives us concern.

38

Mr. POTTS. Let me just add—I don’t want to take up too much

of the committee’s time, but this is a very interesting area. I was

at a conference at which the head of the British civil service was

also there. I was describing this case in which our regulation had

been held unconstitutional because of basically how it had been applied. This particular EPA employee was getting reimbursed expenses to make a speech criticizing the EPA. When I got through

describing it, I could see the look on his face was just like I must

be lying; can’t possibly be true. And I said, well I can see this is

hard to swallow. He said, well, first of all the whole philosophy of

the British civil service is one of loyalty to whoever is elected and

in power, that you can’t have a civil servant going out and undermining government policy. They get fired immediately for being

disloyal. And I said, well, you don’t have a first amendment. We

do. And again, even as close as we are with Britain and we think

of ourselves as cousins, yet there is a very fundamental difference

in government structure because we do have that first amendment

right. In this case, I have to say that I thought it was stretching

the first amendment to say that this person was entitled to get reimbursed expenses for expressing his view.

We were saying we don’t have any problem with the individual

saying whatever he or she wants to say whenever and wherever.

However, we don’t think they’re entitled to get reimbursed the expenses. We have a real ethics problem there because you had a situation where a person couldn’t get paid for talking about their job.

Well, the obvious end run around that was to say, oh, well, OK you

can’t get paid for talking about your job but we want you to come

out to Hawaii. We have a suite for you on Waikiki Beach. We have

lavish meals and entertainment. All we’re going to do is reimburse

you those expenses. So that’s what we were focused on to try to

prevent. We’ve now had to change that rule and that loophole has

opened up because of this first amendment case.

Mr. SCARBOROUGH. That whole situation about flying to Hawaii

for this conference, I know it shocks the conscience of all Members

of Congress. That sort of thing wouldn’t go on here. I’m sure also

that some Members of Congress might like the court’s expansive

interpretation of the first amendment also for purposes of accepting

honoraria but I don’t think that’s going to happen soon.

I have no more questions. I want to thank both of you for coming. Director Potts, again we certainly appreciate your service. And

Mr. Walden, thank you for coming again. We’re honored to have all

of you as well as you, Ms. Glynn. We appreciate the testimony. We

certainly want to assure you that we will work with you any way

we can to work on a reauthorizing bill that can be drafted and

passed in September.

Mr. POTTS. Thank you very much.

Mr. WALDEN. Thanks for the invitation.

Mr. SCARBOROUGH. Thank you. We’re adjourned.

[Whereupon, at 12:24 p.m., the subcommittee was adjourned.]

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