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[House Hearing, 106 Congress]
[From the U.S. Government Publishing Office]

 
           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
                                 ______

                    U.S. GOVERNMENT PRINTING OFFICE
65-930 CC                   WASHINGTON : 2000

                     COMMITTEE ON GOVERNMENT REFORM

                     DAN BURTON, Indiana, Chairman
BENJAMIN A. GILMAN, New York         HENRY A. WAXMAN, California
CONSTANCE A. MORELLA, Maryland       TOM LANTOS, California
CHRISTOPHER SHAYS, Connecticut       ROBERT E. WISE, Jr., West Virginia
ILEANA ROS-LEHTINEN, Florida         MAJOR R. OWENS, New York
JOHN M. McHUGH, New York             EDOLPHUS TOWNS, New York
STEPHEN HORN, California             PAUL E. KANJORSKI, Pennsylvania
JOHN L. MICA, Florida                PATSY T. MINK, Hawaii
THOMAS M. DAVIS, Virginia            CAROLYN B. MALONEY, New York
DAVID M. McINTOSH, Indiana           ELEANOR HOLMES NORTON, Washington, 
MARK E. SOUDER, Indiana                  DC
JOE SCARBOROUGH, Florida             CHAKA FATTAH, Pennsylvania
STEVEN C. LaTOURETTE, Ohio           ELIJAH E. CUMMINGS, Maryland
MARSHALL ``MARK'' SANFORD, South     DENNIS J. KUCINICH, Ohio
    Carolina                         ROD R. BLAGOJEVICH, Illinois
BOB BARR, Georgia                    DANNY K. DAVIS, Illinois
DAN MILLER, Florida                  JOHN F. TIERNEY, Massachusetts
ASA HUTCHINSON, Arkansas             JIM TURNER, Texas
LEE TERRY, Nebraska                  THOMAS H. ALLEN, Maine
JUDY BIGGERT, Illinois               HAROLD E. FORD, Jr., Tennessee
GREG WALDEN, Oregon                  JANICE D. SCHAKOWSKY, Illinois
DOUG OSE, California                             ------
PAUL RYAN, Wisconsin                 BERNARD SANDERS, Vermont 
HELEN CHENOWETH, Idaho                   (Independent)
DAVID VITTER, Louisiana

                      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             ELIJAH E. CUMMINGS, Maryland
CONSTANCE A. MORELLA, Maryland       ELEANOR HOLMES NORTON, Washington, 
JOHN L. MICA, Florida                    DC
DAN MILLER, Florida                  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

                            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

           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, professional 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 
welcome 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.
    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 
fund-raiser 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.
    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:]
    [GRAPHIC] [TIFF OMITTED] T5930.001
    
    [GRAPHIC] [TIFF OMITTED] T5930.002
    
    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.
    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 computer-based 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 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 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:]
    [GRAPHIC] [TIFF OMITTED] T5930.003
    
    [GRAPHIC] [TIFF OMITTED] T5930.004
    
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    [GRAPHIC] [TIFF OMITTED] T5930.008
    
    [GRAPHIC] [TIFF OMITTED] T5930.009
    
    [GRAPHIC] [TIFF OMITTED] T5930.010
    
    [GRAPHIC] [TIFF OMITTED] T5930.011
    
    [GRAPHIC] [TIFF OMITTED] T5930.012
    
    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 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.
    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:]
    [GRAPHIC] [TIFF OMITTED] T5930.013
    
    [GRAPHIC] [TIFF OMITTED] T5930.014
    
    [GRAPHIC] [TIFF OMITTED] T5930.015
    
    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 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 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 matter 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 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 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 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.
    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 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 
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 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 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.
    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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