Financial Interests of Nonprofit Organizations 

for Purposes of 18 U.S.C. § 208 

Under 18 U.S.C. § 208, a nonprofit organization does not have a “financial interest” in a particular 

matter solely by virtue of the fact that the organization spends money to advocate a position on the 

policy at issue in the matter.

January 11, 2006

MEMORANDUM OPINION FOR THE GENERAL COUNSEL 

OFFICE OF GOVERNMENT ETHICS

The primary criminal statute dealing with financial conflicts of interest, 18 

U.S.C. § 208 (2000), prohibits a federal employee from participating in certain 

governmental matters if he or she is an officer or director of an organization that 

has a “financial interest” in the “particular matter.” You have asked whether a 

nonprofit organization has a financial interest in a particular matter solely by 

virtue of the fact that the organization spends money to advocate a position on the 

policy at issue in the matter.1 We conclude that a nonprofit organization does not 

have such a “financial interest” merely because it spends money on advocacy.

I. 

Section 208(a) forbids an officer or employee in his official capacity from 

participating “personally and substantially” in (among other things) any “particular 

matter in which, to his knowledge, . . . [an] organization in which he is serving as 

officer [or] director . . . has a financial interest.” If the organization has a “financial interest,” a federal employee serving on the board of the organization must 

recuse himself from any involvement in that particular matter, unless he can take 

advantage of a waiver or exemption issued under 18 U.S.C. § 208(b). Your 

question concerns employees who serve on the boards of nonprofit organizations 

that engage in advocacy with respect to particular matters pending before the 

employees’ agencies. The question recently has arisen in two contexts.

In the first context, an official is considering service on the board of the Senior 

Executives Association (“SEA”). SEA describes itself as “a nonprofit professional 

association that promotes ethical and dynamic public service by fostering an 

outstanding career executive corps, advocates the interests of career federal 

executives (both active and retired), and provides information and services to SEA 

members.” See Senior Executives Association, About SEA, http://seniorexecs.org 

1

 Letter for Daniel Levin, Acting Assistant Attorney General, Office of Legal Counsel, from 

Marilyn L. Glynn, Acting Director, Office of Government Ethics (Sept. 20, 2004) (“OGE Letter”).

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Financial Interests of Nonprofit Organizations for Purposes of 18 U.S.C. § 208

(last visited June 2, 2005). In “advocat[ing] the interests of career federal executives,” id., “SEA has taken and continues to take and advance positions” on certain 

issues involving the pay of federal employees in the senior executive service, 

Letter for Marilyn L. Glynn, Acting Director, Office of Government Ethics

(“OGE”), from William L. Bransford, General Counsel, SEA, Re: Membership on 

a Professional Association’s Board by an Executive Branch Official at 1 (Aug. 9, 

2004) (“SEA Letter”). The official contemplating service on the SEA board 

already serves on “his Department’s Executive Resources Board, which has, 

among other functions, responsibility for formulating or contributing to the 

formulation of the Department’s recommendation” to the Office of Personnel 

Management (“OPM”) regarding the senior executive service pay system. SEA 

Letter at 1. If, therefore, the official joins the SEA board, and if SEA has a 

“financial interest” in a matter involving senior executive pay (e.g., the establishment of a new system of pay), the official (absent a waiver) would have a criminal 

conflict of interest if he participated in the Executive Resources Board’s consideration of the issue.

In the second context, employees of the National Oceanic and Atmospheric 

Administration (“NOAA”) are serving in their private capacities as Councilors of 

the American Meteorological Society (“AMS”). Letter for Marilyn L. Glynn, 

Acting Director, Office of Government Ethics, from Barbara S. Fredericks, 

Assistant General Counsel for Administration, Department of Commerce, Re:

Request for Guidance on the Application of 18 U.S.C. § 208 (Sept. 10, 2004) 

(“Commerce Letter”). “AMS is a . . . nonprofit organization that promotes the 

development and dissemination of information and education on atmospheric and 

related oceanic sciences.” Id. at 1. A Councilor of AMS “serv[es] on the governing 

body of the organization, which is the equivalent to service as a member of a 

board of directors,” and, therefore, we assume (without deciding) that a Councilor 

would be a “director” or “officer” within the meaning of section 208(a). AMS 

issues “policy statements . . . on issues in which NOAA has an interest, such as 

meteorological drought, atmospheric ozone, and hurricane research and forecasting.” Id. The NOAA employees serving as Councilors of AMS “likely will 

participate in [the] consideration of these issues on a policy level in the course of 

performing their official duties at NOAA.” Id. at 1–2. Once again, absent a waiver, 

they would be disqualified under the criminal conflict of interest statute from such 

participation if AMS has a financial interest in these matters.2

2 In analyzing these issues, we have obtained the views of the Department of the Interior, the 

Department of Agriculture, the Department of Health and Human Services, the Environmental 

Protection Agency, the National Science Foundation, and the National Aeronautics and Space 

Administration, in addition to the views of OGE and the Department of Commerce. See Letter for 

Steven G. Bradbury, Acting Assistant Attorney General, Office of Legal Counsel, from Sue Ellen 

Wooldridge, Solicitor, Department of the Interior, Re: Financial Interests Under 18 U.S.C. § 208 (Mar. 

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Opinions in the Office of Legal Counsel in Volume 30

II. 

We conclude that nonprofit organizations such as SEA and AMS do not have a 

financial interest in a particular matter solely by virtue of spending money to 

advocate a position on the policy under consideration in that matter.3

A.

Section 208(a), in essentially its present form, was enacted in 1962 as part of a 

general revision of criminal laws on conflicts of interest. Pub. L. No. 87-849, 76 

Stat. 1119, 1124 (1962). The earlier version of the law provided criminal penalties 

for any federal official who was “directly or indirectly interested in the pecuniary 

profits or contracts of any corporation, joint-stock company, or association, or of 

any firm or partnership or other business entity,” and who was “employed or 

act[ed] as an officer or agent of the United States for the transaction of business 

with such business entity.” 18 U.S.C. § 434 (1958). The revision of 1962 extended 

the reach of the statute in several respects. Nevertheless, the current text of section 

208(a), under the most natural interpretation, indicates that the prohibition does 

not apply to the policy interest that a nonprofit organization has in a government 

decision. Section 208(a) provides that, absent a waiver under section 208(b), 

whoever, being an officer or employee of the executive branch of the 

United States Government, . . . participates personally and substantially as a Government officer or employee, through decision, approval, disapproval, recommendation, the rendering of advice, investigation, or otherwise, in a judicial or other proceeding, application, 

10, 2005); Letter for Steven G. Bradbury, Acting Assistant Attorney General, Office of Legal Counsel, 

from Nancy S. Bryson, General Counsel, Department of Agriculture, Re: Advocacy of Non-Profit 

Organizations and 18 U.S.C. 208(a) (Mar. 16, 2005); Letter for Steven G. Bradbury, Acting Assistant 

Attorney General, Office of Legal Counsel, from Ann R. Klee, General Counsel, Environmental 

Protection Agency (Mar. 16, 2005); Letter for Steven G. Bradbury, Acting Assistant Attorney General, 

Office of Legal Counsel, from Lawrence Rudolph, General Counsel, and Charles S. Brown, Assistant 

General Counsel and Designated Agency Ethics Official, National Science Foundation (Mar. 16, 2005);

Letter for Steven G. Bradbury, Acting Assistant Attorney General, Office of Legal Counsel, from R. 

Andrew Falcon, Acting Associate General Counsel for General Law, With the approval of Michael C. 

Wholley, General Counsel, National Aeronautics and Space Administration (Mar. 22, 2005); Letter for 

Steven G. Bradbury, Acting Assistant Attorney General, Office of Legal Counsel, from Edgar M. 

Swindell, Associate General Counsel for Ethics and Designated Agency Ethics Official, Department of 

Health and Human Services (May 19, 2005). 3 We do not address here the interest that a for-profit entity, owing a duty to promote the financial 

interests of its owners, might have in a matter on which it engages in advocacy on behalf of itself or its 

clients or that might arise if an entity (whether for-profit or nonprofit) receives, or expects to receive, 

payment specifically for its advocacy. Thus, the possible interest of a lobbying firm or law firm is 

beyond the scope of this opinion.

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Financial Interests of Nonprofit Organizations for Purposes of 18 U.S.C. § 208

request for a ruling or other determination, contract, claim, controversy, charge, accusation, arrest, or other particular matter in which, 

to his knowledge, he, . . . [or] [an] organization in which he is serving as officer, director, trustee, general partner or employee, . . . has 

a financial interest[,]

has committed a crime punishable by fine and imprisonment. 18 U.S.C. § 208(a).

A disqualifying interest under the statute, therefore, is a “financial interest” “in” a 

“particular matter.” See Ethics Issues Raised by the Retention and Use of Flight 

Privileges by FAA Employees, 28 Op. O.L.C. 237, 239 (2004) (“FAA Opinion”).

As ordinarily understood, the interests that AMS and SEA as organizations 

have in the matters you describe are policy interests in the questions being 

addressed by the government, not financial interests in the resolution of those 

questions. An “interest” in the sense of a “conflict of interest” is an “advantage or 

profit of a financial nature.” Black’s Law Dictionary 828 (8th ed. 2004). For 

example, an individual has an interest “[i]n a suit or action” when he has “[a] 

relation to the matter in controversy, or to the issue of the suit, in the nature of a 

prospective gain or loss, which actually does, or presumably might, create a bias 

or prejudice in the mind inclining the person to favor one side or the other.” 33 

C.J. Interest 262 (1924) (footnotes omitted). And an interest is a financial one 

when it is pecuniary—when it “pertain[s] to monetary receipts and expenditures.”

Random House Dictionary of the English Language 719 (2d ed. 1987) (emphasis 

added). However, AMS and SEA care about these matters, and spend money to 

advocate in favor of their preferred outcome, because they support or oppose 

certain policies, not because the policies at issue will have a financial or pecuniary 

impact on AMS and SEA as organizations. An organization that has no financial 

reason to prefer one outcome over another would not commonly be referred to as 

having a “financial interest” in the particular matter.

OGE’s regulatory interpretation of section 208 reinforces this view. OGE’s 

regulations interpret the words “financial interest” “in” “a particular matter” to 

require a link between a governmental matter and a pecuniary gain or loss to the 

employee or specified entity. A disqualifying financial interest is “the potential for 

gain or loss to the employee, or other person specified in section 208, as a result of 

governmental action on the particular matter.” 5 C.F.R. § 2640.103(b) (2005).4 See

FAA Opinion, 28 Op. O.L.C. at 239–40; OGE, Letter to Designated Agency Ethics 

Official, Informal Advisory Ltr. 85x10, 1985 WL 57309, at *2 (July 15). Thus, for 

example, section 208 does not require an employee of the Department of Interior 

who owns transportation bonds issued by the State of Minnesota to recuse himself 

4 Our Office concurred in OGE’s regulatory definition. See 61 Fed. Reg. 66,830, 66,830 (Dec. 18, 

1996); 28 C.F.R. § 0.25(i) (2004).

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Opinions in the Office of Legal Counsel in Volume 30

from all matters involving the State of Minnesota, only matters that hold the 

potential for pecuniary gain or loss to the employee. See 5 C.F.R. § 2640.103(b) 

(example 1).

This Office’s opinions have drawn a distinction between a “financial interest” 

and interests that do not involve a pecuniary gain or loss from the resolution of a 

question. For example, a 1970 opinion by then-Assistant Attorney General 

Rehnquist distinguished between the policy interest that an association representing coal producers had in various Federal Power Commission natural gas proceedings—“an interest of a non-financial kind in the outcome of . . . [the] proceedings” 

that implicated the coal association’s “major purpose”—and a financial interest in 

those proceedings, which the coal association did not have. Memorandum for John 

W. Dean, III, Counsel to the President, from William H. Rehnquist, Assistant 

Attorney General, Office of Legal Counsel, Re: Commissioner Carl E. Bagge’s 

Continued Service as Commissioner of the Federal Power Commission Until 

February 1, 1971 at 4 (Dec. 10, 1970) (“Rehnquist Opinion”).

Against this interpretive backdrop, we cannot conclude that SEA or AMS has a 

financial interest in the particular matters that are the focus of advocacy by the 

organizations, as opposed to a mere policy interest in the questions being addressed by the government. The organizations’ advocacy expenditures do not 

constitute a gain or a loss. They do not arise from the pursuit of any financial or 

economic interests, but only from the pursuit of certain policy goals.5

Nor is there any other apparent basis on which to conclude that either organization has a financial interest. In particular, while SEA’s members may reap a gain or 

suffer a loss as a result of a new pay system, the potential for a gain or loss to SEA 

members as individuals does not disqualify SEA as an organization. Furthermore, 

whether or not a federal employee’s interest in his own federal compensation 

generally constitutes a disqualifying financial interest under section 208, OGE has 

issued an exemption, in most circumstances, for the “financial interest aris[ing] from 

Federal Government . . . salary or benefits.” See 5 C.F.R. § 2640.203(d) (2005).6

5 This conclusion is bolstered by the several examples in OGE’s regulations of situations where a 

“financial interest” might arise, none of which resembles expenses for mere advocacy. The regulation 

states that a “disqualifying financial interest might arise from ownership of certain financial instruments or 

investments such as stock, bonds, mutual funds, or real estate,” or “might derive from a salary, indebtedness, job offer, or any similar interest.” 5 C.F.R. § 2640.103(b) (2005). OGE’s regulations also provide

illustrations that give other examples of “financial interests,” such as land ownership, the “volume and 

profitability of [a] doctor’s private practice,” and a grant of funds, id. §§ 2635.402(b)(2) (example 1), 

2640.103(b) (examples 2, 3), and none of these interests, too, resembles a mere expenditure on advocacy.

See also Roswell B. Perkins, The New Federal Conflict-of-Interest Law, 76 Harv. L. Rev. 1113, 1133 

(1963) (a research grant to a nonprofit organization is a “financial interest”). 6 In issuing this exemption, OGE noted the “somewhat differing interpretations” of section 208 that 

have been advanced regarding a federal employee’s interest in his own compensation. See 60 Fed. Reg. 

44,706, 44,707 (Aug. 28, 1995).

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Financial Interests of Nonprofit Organizations for Purposes of 18 U.S.C. § 208

Because an SEA member may participate in matters involving the pay system for 

senior executives (so long as he does not make determinations that individually or 

specially affect his own salary and benefits, or determinations that individually or 

specially affect the salary and benefits of another person specified in section 208, see 

5 C.F.R. § 2640.203(d)), we cannot say that SEA has a financial interest by virtue of 

its members’ interests.

Any other financial consequences for SEA or AMS that may flow from these 

matters are speculative. If OPM reached a decision regarding pay for senior 

executives that accorded with SEA’s proposals and arguments, the possibility that 

SEA had influenced that outcome might attract potential members to join SEA, 

thus possibly increasing its resources, but OPM’s rejection of the proposals and 

arguments might have the same effect, since potential members who agree with 

SEA’s position might then believe that they should do more to support an 

organization advancing that position. In either case, SEA might gain members.

Conversely, while the failure of SEA’s position might lead some members to drop 

their membership, success might also lead some members to believe that the main 

purpose of their membership had been achieved and that they could leave the 

organization. In either case, SEA might lose members. Or perhaps the success or 

failure of SEA’s positions would have no effect at all on membership. The same 

reasoning could be applied to AMS’s advocacy of scientific or research-related 

policies that government agencies might adopt or reject.7

 

7 We previously considered somewhat similar issues in the Rehnquist Opinion. There, a commissioner of the Federal Power Commission (“FPC”) had accepted future employment with the National 

Coal Association (“NCA”), a trade association of coal producers. NCA “engage[d] in typical trade 

association activity—lobbying, research, gathering of statistical data.” Id. at 1. The Rehnquist Opinion

stated that the Commissioner

has not accepted a position with a coal producer, but with NCA, which neither markets nor produces coal. It is the financial interest of NCA which determines disqualification under section 208. Certainly NCA has an interest of a non-financial kind in the 

outcome of various FPC natural gas proceedings: the outcome of these proceedings 

may have an impact on coal production, and the stimulation of such production is 

NCA’s major purpose. We do not believe, however, that NCA’s interest in any given 

rate or certification proceeding can fairly be characterized as a “financial interest,” 

within the meaning of section 208.

Id. at 4. The Rehnquist Opinion went on to consider the argument that NCA would have a “financial 

interest” in gas proceedings because “NCA’s assessments against members are based upon their coal 

production, and NCA’s total income will therefore vary as coal production varies.” Id. at 5. It 

concluded, however, “that this relationship is too tenuous and speculative to be regarded as a ‘financial 

interest’ of the type prohibited by section 208.” Id. Even if the Commissioner were going to work for a 

coal producer, “the impact of any particular natural gas proceedings on the coal producer would vary 

from case to case, and would depend on the competitive relationships between the producers involved,” 

and “[t]he interest of NCA in such proceedings is even more remote.” Lower gas rates might mean 

lower coal prices rather than greater coal production, and in any event there would be no “necessary 

correlation between natural gas rates in a particular area and the total membership production upon 

which NCA’s income rests.” Id. (emphasis in original). There, as here, any effect on the financial 

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The Executive Branch has long taken the position, however, that an employee 

or other person covered by section 208 has a financial interest in a particular 

matter only when government action in the particular matter will have a “direct 

and predictable effect” on the employee’s financial interest. See, e.g., 5 C.F.R. 

§ 2640.103(a) (2005); Advisory Committees—Food and Drug Administration—

Conflicts of Interest (18 U.S.C. § 208), 2 Op. O.L.C. 151, 155 (1978). A 1963 

memorandum from the President to the heads of the executive departments and 

agencies, issued just a few months after section 208 took effect, stated that a 

special government employee “should in general be disqualified from participating 

as such in a matter of any type the outcome of which will have a direct and 

predictable effect upon the financial interests covered by the section.” Memorandum to the Heads of Executive Departments and Agencies from the President, 28 

Fed. Reg. 4539, 4543 (May 7, 1963) (emphasis added). This same interpretation 

was incorporated in the Federal Personnel Manual shortly thereafter. See id. ch. 

735, app. C, at 4 (1988 ed.; added 1965).

The direct-and-predictable effect test also finds support in the traditional legal 

understanding of what it means to have an “interest” in a proceeding. For example, 

a financial interest in a proceeding for purposes of judicial disqualification 

traditionally has required a proximate link between the proceeding and the 

financial interest. “[A] judge is disqualified,” one court explained, “in any 

litigation where he has any certain, definable, pecuniary, or proprietary interest 

which will be directly affected by the judgment that may be rendered.” In re 

Honolulu Consol. Oil Co., 243 F. 348, 352 (9th Cir. 1917) (emphasis added). “The 

term ‘interested in the case’ means a direct interest in the case or matter to be 

adjudicated so that the result must, necessarily, affect his personal or pecuniary 

loss or gain.” Ex parte Largent, 162 S.W.2d 419, 426 (Tex. Crim. App. 1942) 

(emphasis added); see also Goodspeed v. Great W. Power Co. of Cal., 65 P.2d 

1342, 1345 (Cal. Dist. Ct. App. 1937) (“It means an interest direct, proximate, 

inherent in the instant event.”) (emphasis added).8 Thus, while it has been 

suggested that the direct-and-predictable effect test is a gloss on the statutory text, 

the test reflects a fair construction of the statute’s terms in light of their established 

meaning at the time Congress enacted section 208.9

interests of an organization’s members would not necessarily affect the finances of the organization 

itself. 8 In Part II.B.1, we further discuss both the traditional understanding of “interest,” as it bears on 

judicial disqualification and other matters relating to litigation, and the application in those contexts of 

a test similar to the “direct and predictable” effect test. 9 OGE relies “on what appears to be a plain reading of 18 U.S.C. § 208.” “In cases where an outside 

organization stipulates that it is spending money to advocate its interests before the Government,” OGE 

explains, “it is difficult to conclude that the organization does not have a financial interest that would 

be affected directly and predictably by the Government matter.” OGE Letter at 3. Furthermore, in 

OGE’s “‘long-standing view,’” “the outcome of a ‘particular matter,’ such as a rulemaking proceeding 

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Financial Interests of Nonprofit Organizations for Purposes of 18 U.S.C. § 208

OGE’s regulations define a “direct effect” as “a close causal link between any 

decision or action to be taken in the matter and any expected effect of the matter 

on the financial interest.” 5 C.F.R. § 2635.402(b)(1)(i) (2005). While “[a]n effect 

may be direct even though it does not occur immediately,” it is not direct “if the 

chain of causation is attenuated or is contingent upon the occurrence of events that 

are speculative or that are independent of, and unrelated to, the matter.” Id. A 

matter will have a “predictable effect,” according to OGE’s regulations, if “there is 

a real, as opposed to a speculative possibility that the matter will affect the 

financial interest,” id. § 2635.402(b)(1)(ii), though the regulations do not require 

that “the magnitude of the gain or loss” be known or that the dollar amount be 

substantial, id. Here, we do not believe that a nonprofit organization’s expenditure 

of money to advocate a policy position establishes that the government’s action 

will have a “direct effect” on a financial interest of the organization. 

B.

Two other considerations support the conclusion that organizations do not have 

a financial interest in a matter simply because they expend money on advocacy.

First, no pecuniary gain or loss to the organization will flow from a particular 

action or outcome in the matters, rather than from the process by which the 

government considers the matters. Second, neither organization at issue here falls 

within the class of persons upon which these matters are focused, even though 

such a connection is typical where an organization has a financial interest. These 

two considerations, while not essential to an analysis under section 208 or 

dispositive of the issues under that provision, offer additional support for our 

conclusion.

1.

The significance of whether financial consequences will flow from a particular 

action or outcome in the matter is reflected in the 1963 presidential memorandum 

that gave rise to the direct-and-predictable effect test. The presidential memorandum references matters “the outcome of which will have a direct and predictable 

effect upon the financial interests covered by the section.” 28 Fed. Reg. at 4543 

(emphasis added); see also Federal Personnel Manual ch. 735, app. C, at 4.

affecting the members of an industry, ‘can have a direct and predictable effect on the financial interests 

of an industry trade association’ because it prompts the association ‘to expend resources to undertake a 

lobbying effort.’” Id. (quoting OGE, Letter to an Alternate Designated Agency Ethics Official, Informal 

Advisory Ltr. 98x2, 1987 WL 1007766, at *2 (Mar. 5). For the reasons set out above, we cannot agree 

that these expenditures alone constitute a “financial interest” of the organization or association.

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Several of our opinions have described the test in terms of the outcome. For 

example, the Rehnquist Opinion concluded that a trade association representing coal 

producers had “an interest of a non-financial kind in the outcome of various [Federal 

Power Commission] natural gas proceedings” because “the outcome of these 

proceedings may have an impact on coal production, and the stimulation of such 

production is [the National Coal Association’s] major purpose,” but that the interest 

in these proceedings did not qualify as a financial interest. Id. at 4 (emphases added).

A 1976 opinion issued by this Office explained that “we have taken the position in 

the past that a Federal employee does not have a ‘financial interest’ in a particular 

matter coming before him unless there is a reasonable possibility that the resolution 

of the particular matter would have a ‘direct and predictable effect’ on an organization in which he owns an interest or holds or is seeking a position.” Memorandum 

for Kenneth A. Lazarus from Leon Ulman, Deputy Assistant Attorney General, 

Office of Legal Counsel, Re: Proposed Appointment of Chairman of the President’s 

Committee on Science and Technology at 3 (July 12, 1976) (emphasis added). A 

1977 opinion determined whether an employee had a financial interest in a matter 

involving real property by asking whether the employee had “a financial interest in 

the outcome of the quiet title action.” Conflict of Interest—Litigation Involving a 

Corporation Owned by Government Attorney, 1 Op. O.L.C. 7, 7 (1977) (emphasis 

added). And an opinion issued two years later concluded that an Assistant Secretary 

of Agriculture was unlikely to have a financial interest in matters involving the union 

that employed her husband, but explained that, “if a situation did arise in which the 

outcome of a matter might have a direct and predictable effect on his income from 

the union or on any other personal financial interest, then [the Assistant Secretary] 

would have to refrain from participating in it.” Conflict of Interest—Financial 

Interest (18 U.S.C. § 208)—Husband and Wife, 3 Op. O.L.C. 236, 238 (1979) 

(emphasis added).

Similarly, OGE’s regulations define “financial interest” as “the potential for 

gain or loss to the employee, or other person specified in section 208, as a result of 

governmental action on the particular matter,” 5 C.F.R. § 2640.103(b) (emphasis 

added), and describe the necessary “direct effect” as “a close causal link between 

any decision or action to be taken in the matter and any expected effect of the 

matter on the financial interest,” id. § 2640.103(a)(3)(i) (emphasis added). See

FAA Opinion at 240; OGE, Informal Advisory Letter 85x10, 1985 WL 57309, 

at *2. In each of the examples of a disqualifying financial interest described in the 

regulations, the employee stood to gain or lose depending on the outcome of the 

matter or some particular action to be taken. For instance, an employee’s ownership of transportation bonds issued by the State of Minnesota does not create a 

disqualifying interest in Minnesota’s application for wildlife funds because 

“approval or disapproval of the grant”—i.e., the outcome of the particular 

matter—“will not in any way affect the current value of the bonds or have a direct 

and predictable effect on the State’s ability or willingness to honor its obligation to 

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Financial Interests of Nonprofit Organizations for Purposes of 18 U.S.C. § 208

pay the bonds when they mature.” 5 C.F.R. § 2640.103(b) (example 1) (emphasis 

added).

A focus on particular actions or outcomes, moreover, reflects the traditional 

legal understanding of the terms “interest in a matter,” “interest in a proceeding,” 

and similar terms (e.g., “interest in a case” or “interest in an action”), which

provided the background against which Congress legislated when it enacted 

section 208 in 1962. See Morissette v. United States, 342 U.S. 246, 263 (1952). In 

particular, the law governing the analogous issue of mandatory judicial recusal 

historically focused on whether the judge or similar officer had an interest in the 

case or proceeding, which was understood to mean “a financial . . . interest that 

could be affected by the outcome of the case.” Jeffrey M. Shaman et al., Judicial 

Conduct and Ethics § 4.20, at 148–49 (3d ed. 2000) (emphasis added). It required 

“a definite, material, financial stake in the direct outcome of the particular case.”

Goodspeed, 65 P.2d at 1345; see also Worth v. Benton Cnty. Cir. Ct., 89 S.W.3d 

891, 896 (Ark. 2002) (“[T]o be a disqualifying interest, the prospective liability, 

gain, or relief to the judge must turn on the outcome of the suit.”); Williams v. 

Viswanathan, 65 S.W.3d 685, 689–90 (Tex. App. 2001) (citing cases dating back 

more than a century to support this rule).10

The same meaning attached in other contexts, as well. For example, an “interest 

in the matter” for purposes of a statutory right to intervene was traditionally 

understood to mean an interest “in the matter in litigation and of such a direct and 

10Congress enacted the first judicial disqualification statute in 1792. That statute, which remained 

in effect in substantially the same form until 1974, required that “in all suits and actions in any district 

court of the United States, in which it shall appear that the judge of such court is, any ways, concerned 

in interest, or has been of counsel for either party, it shall be the duty of such judge” to disqualify 

himself. Act of May 8, 1792, ch. 36, § 11, 1 Stat. 275, 278–79; see also Act of Mar. 3, 1911, ch. 231, 

§ 21, 36 Stat. 1087, 1090 (amending the statute to include as additional grounds for disqualification 

bias or prejudice, which, unlike pecuniary interest, was not a recognized ground for disqualification at 

common law); Act of June 25, 1948, ch. 646, § 455, 62 Stat. 907, 908 (extending the statute to justices 

and appellate court judges; rephrasing as “any case in which he has a substantial interest”). These 

words were interpreted by reference to English common law, see Spencer v. Lapsley, 61 U.S. (20 

How.) 264 (1857), and were understood to refer to a direct pecuniary interest in the outcome of the 

matter. See, e.g., In re Honolulu Consol. Oil Co., 243 F. 348, 353 (9th Cir. 1917) (a judge is disqualified under section 455 where he is “concerned in interest in the result of th[e] suit”); In re Grand Jury 

Investigation, 486 F.2d 1013, 1016 (3d Cir. 1973) (judge not substantially interested in a case because, 

among other reasons, he did not have “a special interest in the outcome of th[e] case”). The judicial 

disqualification statute was rewritten in 1974 to reflect the new Canon 3C of the Model Code of 

Judicial Conduct adopted in 1972. Under the new statute (still codified at 28 U.S.C. § 455 (2000)), a 

judge must disqualify himself if, among other reasons, “[h]e knows that he, individually or as a 

fiduciary, or his spouse or minor child residing in his household, has a financial interest in the subject 

matter in controversy [for example, in an in rem proceeding] or in a party to the proceeding, or any 

other interest that could be substantially affected by the outcome of the proceeding.” Id. § 455(b)(4) 

(emphasis added). “Financial interest” as used in section 455 is a term of art that means, with certain 

exceptions, “ownership of a legal or equitable interest, however small, or a relationship as director, 

adviser, or other active participant in the affairs of a party.” Id. § 455(d)(4).

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immediate character that the intervenor will either gain or lose by the direct legal 

operation and effect of the judgment.” Bernheimer v. Bernheimer, 196 P.2d 813, 

814 (Cal. Dist. Ct. App. 1948). A potential appellant was “interested in a suit” if it 

had “a direct and substantial interest in the outcome.” People ex rel. Poage v. 

Walsh, 174 N.E. 881, 882 (Ill. 1931). And a disqualifying interest for purposes of 

determining a witness’s interest in an adjudication of a will was “a legal or 

pecuniary interest in the outcome of the suit.” Fortner v. McCorkle, 50 S.E.2d 250, 

252 (Ga. Ct. App. 1948). “[T]he test” was “whether the witness will gain or lose 

by the direct legal operation and effect of the judgment.” State v. Robbins, 213 

P.2d 310, 315 (Wash. 1950).11

The Supreme Court’s opinion in Tumey v. Ohio illustrates well the historical 

distinction between the financial consequences flowing from a proceeding and the 

financial consequences flowing from the outcome of a proceeding. In Tumey, the 

Court held that it violated due process for a mayor to preside over a case in 

mayor’s court where the mayor would receive payment for his services only if he 

convicted the defendant—i.e., where the mayor had a “direct pecuniary interest in 

the outcome” of the case. 273 U.S. 510, 535 (1927). In determining what constituted “due process of law,” the Court examined the common law of judicial 

disqualification, and found “no cases at common law” whereby “inferior judicial 

officers were dependant upon the conviction of the defendant for receiving their 

compensation.” Id. at 524. However, there were cases at common law where a 

judge would have a pecuniary stake in the case that did not depend on the outcome 

of the case, for example where a judge received daily wages collected from the 

parties regardless of the outcome. Id. at 524–25. A direct pecuniary interest in the 

outcome of the case, by contrast, was disqualifying at common law, and thus could 

not be regarded as due process of law. Id. at 526, 531. See also In re Murchison, 

349 U.S. 133, 136 (1955) (“no man can be a judge in his own case and no man is 

permitted to try cases where he has an interest in the outcome”) (emphasis added).

Section 208 was enacted against the background of this traditional understanding of what it means to have an interest in a matter. Even if an expenditure on 

advocacy could constitute a “financial interest” in a particular proceeding, it would 

be, at most, a financial interest in the process by which the matter is considered 

11 See also, e.g., Spencer v. Wilsey, 71 N.E.2d 804, 809 (Ill. App. Ct. 1947) (“The interest which 

will render a witness incompetent [under a ‘dead man’s statute’] must be such an interest in the 

judgment or decree that a pecuniary gain or loss will come to him directly as the immediate result of 

the judgment or decree.”); Weber v. City of Cheyenne, 97 P.2d 667, 669 (Wyo. 1940) (“‘Interest,’ 

within the meaning of this rule [for determining real party in interest], means material interest, an 

interest in issue and to be affected by the decree, as distinguished from mere interest in the question 

involved, or mere incidental interest.”); cf. Alleghany Corp. v. Breswick & Co., 353 U.S. 151, 173 

(1957) (“interested party” for purposes of statutory right to be heard in an agency proceeding was “a 

legal right or interest that will be injuriously affected by the order,” i.e., the action to be taken in or 

outcome of the proceeding).

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Financial Interests of Nonprofit Organizations for Purposes of 18 U.S.C. § 208

rather than in the outcome of the proceeding. The absence of any pecuniary 

interest by SEA or AMS in a particular decision, action, or outcome in the matters 

at issue reinforces the conclusion that section 208 does not apply to their expenditures on advocacy.

One might argue that placing weight on the decision or outcome at issue is 

inconsistent with the examples of particular matters specifically enumerated in 

section 208(a). The statute refers to “a judicial or other proceeding, application, 

request for a ruling or other determination, contract, claim, controversy, charge, 

accusation, arrest, or other particular matter.” Although it is true that some of the 

matters specified can be intermediate steps in a larger proceeding, that does not 

contradict our conclusion that it is the potential outcome that typically will 

determine whether section 208 can be invoked. The statute covers even “particular 

matters” that may be terminated before all the possible steps in a process have 

occurred, but all of the steps, if they occur, typically make up a single “particular 

matter.” See United States v. Jewell, 827 F.2d 586, 587–88 (9th Cir. 1987).

The view that intermediate steps would be separate “particular matters” would 

undercut our understanding of the term “particular matter” for purposes of related 

statutes. For example, 18 U.S.C. § 207 (2000 & Supp. II 2002) imposes a permanent post-employment ban on representing a party in a “particular matter” in 

which an individual participated as a government employee. Were a charge and a 

criminal trial different particular matters, an employee who prepared the charge 

against a company could, after leaving the government, defend the company at the 

trial of that charge without violating section 207, on the theory that the charge and 

the trial were not the same particular matter. The term “particular matter” has not 

been construed to compel such a surprising and unwarranted result. See 5 C.F.R. 

§ 2637.201(c)(4) (2005) (“The same particular matter may continue in another 

form or in part.”); id. (example 2) (an application for a wiretap and the prosecution 

of a person overheard during the wiretap are part of the same particular matter).

Our reading of these words, moreover, makes good sense: Section 208 specifically 

enumerates charges, accusations, and arrests in order to give examples of matters 

that are “particular” in the sense of being focused on specific individuals or 

entities or a discrete and identifiable class of individuals and entities, not to 

suggest that various intermediate steps in an overall proceeding constitute discrete 

particular matters.12

12 It is possible to have a financial interest in an intermediate step in a matter without having an 

interest in the final outcome. For example, a person who has a contractual right to a fee if the 

government initiates a rulemaking would have a financial interest in that intermediate step, without 

regard to the outcome. Because the intermediate step would be part of a larger matter, however, such a 

person would have an interest in that entire, larger matter.

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2.

Typically, moreover, a person or entity that has a financial interest in a matter 

will be within the category of persons or entities on which the “particular matter” 

is focused. Although we do not conclude that this fact must be present if section 

208 is to apply, its absence with respect to SEA and AMS is further confirmation 

of our conclusion that section 208 does not apply here.

A “particular matter” includes “only matters that involve deliberation, decision, 

or action that is focused upon the interests of specific persons, or a discrete and 

identifiable class of persons.” 5 C.F.R. § 2640.103(a)(1); see also Memorandum 

for C. Boyden Gray, Counsel to the President, from J. Michael Luttig, Acting 

Assistant Attorney General, Office of Legal Counsel, Re: Applicability of 18 

U.S.C. § 208 to General Policy Deliberations, Decisions, and Actions Relating to 

Iraq’s Recent Invasion of Kuwait at 3 (Aug. 8, 1990) (same). The term encompasses matters that involve specific parties, such as a government enforcement 

action against a specific organization, as well as matters of general applicability 

that are narrowly focused on the interests of a discrete industry, such as the meat 

packing industry or the trucking industry. See 5 C.F.R. § 2640.103(a)(1) (example 

3); id. § 2635.402(b)(3) (example 2).

The definition of “particular matter” provides a useful tool in analyzing the 

difficult question of what qualifies as a direct and predictable effect of a decision 

or outcome in a matter. OGE’s regulations explain that,

[i]f a particular matter involves a specific party or parties, generally 

the matter will at most only have a direct and predictable effect . . . 

on a financial interest of the employee in or with a party, such as the 

employee’s interest by virtue of owning stock. There may, however, 

be some situations in which, under the above standards, a particular 

matter will have a direct and predictable effect on an employee’s financial interests in or with a nonparty. For example, if a party is a 

corporation, a particular matter may also have a direct and predictable effect on an employee’s financial interests through ownership of 

stock in an affiliate, parent, or subsidiary of that party. Similarly, the 

disposition of a protest against the award of a contract to a particular 

company may also have a direct and predictable effect on an employee’s financial interest in another company listed as a subcontractor in the proposal of one of the competing offerors.

Id. § 2635.402(b)(1) note (emphasis added). Logic dictates that the same principle 

operates even when a particular matter is not limited to specific parties, but 

extends to a discrete and identifiable class of persons. In most circumstances, the 

outcome of a particular matter will not have a direct and predictable effect on a 

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Financial Interests of Nonprofit Organizations for Purposes of 18 U.S.C. § 208

nonprofit organization outside of the discrete and identifiable class of persons or 

entities upon which the proceeding is focused.

In view of this guidance, it stretches section 208 beyond its limit to conclude 

that SEA and AMS have financial interests in particular matters that are simply the 

focus of their advocacy. If an organization were to spend money to issue a press 

release containing its views on a lawsuit to which it was not a party, we could not 

say, consistent with this guidance, that it would have a financial interest in the 

case. The parties to the case might have a financial interest; others whose financial 

interests would be affected by a particular decision or outcome in the case might 

have a financial interest; but the rest of the public at large, including non-profit 

organizations that have policy interests in the case, would not have a financial 

interest simply by virtue of expressing a view about the case, even if such an 

organization expends resources to express that view. The same reasoning applies 

here. The executive pay matter in which SEA has an advocacy interest is not 

directed at nonprofit organizations like SEA; it is focused on federal employees in 

the Senior Executive Service. Nor are the science policies described in Commerce’s letter focused on regulation of nonprofit organizations like AMS.

III. 

A. 

Nor does this Office’s FAA Opinion compel us to conclude that section 208 

applies here. The FAA Opinion, to be sure, describes a “financial interest” as “an 

interest ‘pertaining to monetary receipts and expenditures,’” 28 Op. O.L.C. at 239 

(citation omitted), and the nonprofit organizations here are making monetary 

expenditures for advocacy. That opinion also states that “one has a financial 

interest in a governmental matter only when the particular matter can affect one’s 

finances—i.e., one’s monetary receipts and expenditures.” Id. at 240. The FAA 

Opinion correctly stated that a required expenditure can give rise to a financial 

interest. But, in that opinion, it was the outcome of a particular matter that we 

suggested could give rise to a financial interest in the matter, under circumstances 

that would surely qualify as a “loss” to the employee (being forced to pay for air 

travel previously provided free of charge). Specifically, we suggested that an FAA 

employee who had flight privileges with an airline would have a financial interest 

in a matter that could result in an airline’s losing its ability to fly.

Indeed, one might argue that the FAA Opinion construed the words “financial 

interest” too broadly. Under one possible definition of “financial interest,” a 

monetary expenditure alone would never qualify because a financial interest is a 

“property interest,” such as an equity stake in something. See Black’s Law 

Dictionary 828 (8th ed. 2004) (second definition of “interest,” defining the word 

to mean “[a] legal share in something; all or part of a legal or equitable claim to or 

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right in property <right, title, and interest>”); The American Heritage Dictionary 

of the English Language 912 (4th ed. 2000) (an “interest” is, among other things, 

“[a] right, claim, or legal share: an interest in the new company”). We do not 

believe, however, that the statute uses “interest” exclusively in this sense of the 

word. Section 208(a) requires a “financial interest” “in” a “matter,” as opposed to 

a “financial interest” in property or a party, and one does not typically refer to a 

“legal share” in a matter. Compare 18 U.S.C. § 208(a) (requiring a determination 

whether an employee has a financial interest in a matter) with 18 U.S.C. § 434 

(1958) (section 208(a)’s predecessor, requiring a determination whether an 

employee has an “interest[] in the pecuniary profits or contracts of any corporation . . . or other business entity”). Nor would the narrower definition cover some 

seemingly obvious examples of a financial interest, such as the interest of a 

defendant in a potential judgment against him in a tort action.

We believe, instead, that section 208(a) incorporates a broader understanding of 

“interest”—a concern based upon the potential for pecuniary gain or loss. 5 C.F.R. 

§ 2640.103(b). An interest in a matter, then, is “[a] relation to the matter in 

controversy . . . in the nature of a prospective gain or loss, which actually does, or 

presumably might, create a bias or prejudice in the mind inclining the person to 

favor one side or the other.” 33 C.J. Interest 262 (1924) (footnotes omitted).

Whatever the precise formulation (which we need not resolve here), an expenditure, just like a stock or a bond, can give rise to an interest in a matter, but, as 

noted, only if a particular action or outcome in the matter holds the potential for a 

financial gain or a loss to the organization. Only then will the organization have a 

sufficient financial reason for wanting a particular result in the matter.13

13 For the difference between the two definitions of “interest,” one involving a share in property and 

the other a relation giving rise to prospective gain or loss, see Restatement (First) of Property § 5 

(1936) (in effect when section 208 was enacted) (“Note on the Use of the Word Interest in the 

Restatement: Throughout all the Restatements the word ‘interest’ is used to denote one of three things: 

a legal relation, a human desire, and return for the use of money. When the word is used in the last 

sense the context clearly indicates the meaning. With this exception throughout all the Restatements, 

except the restatement of Torts, ‘interest’ is used as defined in this Section; that is, as a word denoting a 

legal relation or relations. In restating the law of Torts it has been found necessary to use the word 

‘interest’ to denote any human desire. (See Restatement of Torts § 1). The two different meanings of 

the word correspond to existing differences in common and legal usage. When it is said that ‘A has sold 

his interest in Blackacre,’ the word is used as it is used in this and other Restatements except the 

Restatement of Torts; when it is said that ‘A has an interest in being free from bodily harm’ the word is 

used as it is used throughout the Restatement of the Law of Torts.”); 33 C.J. Interest 261–62 (1924) 

(“As applied to property. The chief use of the term ‘interest’ seems to be to designate some right 

attached to property which either cannot, or need not, be defined with precision. It means such a right 

in or to a thing capable of being possessed or enjoyed as property which can be enforced by judicial 

proceedings . . . . In a suit or action. A relation to the matter in controversy, or to the issue of the suit, in 

the nature of a prospective gain or loss, which actually does, or presumably might, create a bias or 

prejudice in the mind inclining the person to favor one side or the other; such relation to the matter in 

issue as creates a liability to pecuniary loss or gain from the event of a suit; the benefit which a person 

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Neither is our conclusion inconsistent with the general understanding that an 

organization has a financial interest in a matter when it formally intervenes to 

assert the financial interests of its members. The Rehnquist Opinion stated that 

“[i]f a pending proceeding [before the FPC] involved intervention by NCA as in 

[Natural Gas Pipeline Co. of Am., 33 F.P.C. 545 (1965)], or [Great Lakes Gas 

Transmission Co., 37 F.P.C. 1070 (1967)], participation by [the Commissioner] in 

the Commission’s consideration and decision would obviously be ruled out.”

Rehnquist Opinion at 4 n.3. Earlier, the Rehnquist Opinion described the financial 

interest of coal producers in natural gas rates and then cited the two FPC proceedings as support for the proposition that “[t]he interest of coal producers in natural 

gas rate and certification proceedings has in past years (though not recently) been 

manifested by their direct intervention, through NCA, in such proceedings.” Id.

at 4. The Rehnquist Opinion thus treated such formal intervention as a means by 

which the members of the outside organization asserted their financial interests, 

with the outside organization standing in the shoes of the members. In these 

circumstances, the outside organization, as the surrogate for its members, could 

well be found to have a “financial interest” in the proceeding, and a government 

employee to whom section 208(a) imputes the financial interest of the outside 

organization would therefore have to recuse himself.

This understanding of formal intervention, however, has no application in the 

present context. According to Commerce’s letter, AMS does not intervene in 

governmental proceedings involving science policy; it merely issues policy 

statements. Even if AMS were to intervene in some sufficiently formal manner, 

AMS’s members are not financially interested. They have only a policy interest in 

the questions being addressed by the government, not a financial or pecuniary 

interest in the resolution of those questions. AMS, therefore, would not be 

representing the financial interests of its members. SEA, by contrast, submitted 

comments in the informal rulemaking involving the establishment of a new pay 

system for senior executives, and SEA resembles a typical trade association in that 

it advocates on behalf of the financial interests of its members. However, we need 

not decide whether SEA’s submitting comments in an informal rulemaking 

constitutes a sufficiently formal intervention to impute the financial interests of its 

members to SEA, because, as we explained above, SEA’s members themselves do 

not have a disqualifying financial interest in matters regarding the pay system for 

senior executives. A federal employee’s interest in his own federal compensation 

has in the matter about to be decided and which is in issue between the parties.”) (footnotes omitted); 

Persky v. Greever, 202 S.W.2d 303, 306 (Tex. Civ. App. 1947) (“The word ‘interest’ has more than 

one meaning, depending upon the manner of its use and the context of the sentence, phrase of grouped 

words, or subject matter under consideration. An interest may well be said to exist in an action which 

creates or determines a liability or pecuniary loss or gain, depending upon the result of a trial in 

court.”).

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Opinions in the Office of Legal Counsel in Volume 30

generally does not constitute a disqualifying financial interest under section 208, 

because OGE has issued an exemption, over a wide range of circumstances, for the 

“financial interest aris[ing] from Federal Government . . . salary or benefits”—the 

sort of financial interest that SEA might assert on behalf of its members. 5 C.F.R. 

§ 2640.203(d). Given that an SEA member may participate in matters involving 

the pay system for senior executives (so long as he does not make determinations 

that individually or specially affect his own salary and benefits, or determinations 

that individually or specially affect the salary and benefits of another person 

specified in section 208, 5 C.F.R. § 2640.203(d)), we cannot say that SEA itself 

would have a disqualifying financial interest merely by virtue of representing its 

members’ interests. 

B. 

Concluding that section 208 encompasses a nonprofit organization’s expenditures on advocacy would have untoward consequences. If expenditures on 

advocacy alone gave rise to a financial interest that implicates section 208(a), the 

statute would disqualify an employee whenever an organization in which the 

employee is a director makes any expenditure, even a minimal one, with respect to 

an issue that might come before him in his official capacity.14 If, for example, an 

organization had a meeting to consider whether to take a position on the issue and 

spent some small amount of money—indeed, perhaps if two salaried employees of 

the organization, during the time for which the organization pays them, briefly 

discussed the possibility of taking a position, or if the organization did nothing 

more than issue a press release—a federal employee who serves on the organization’s board would be disqualified from his agency’s work on that issue (at least 

absent a waiver). By logic, the same principle, moreover, would apply to spending 

on advocacy by individual federal employees, as well as organizational spending.

Were an employee to purchase a bumper sticker or yard sign expressing an 

opinion on a policy at issue in a governmental matter, that employee might have a 

financial interest in the matter under such reasoning.

It seems unlikely that Congress intended for this criminal conflict-of-interest 

statute to reach so far. What led to the regulation of financial interests was the 

economic temptation to put a finger on the scale that exists when an employee has 

a financial reason to prefer a particular outcome. But when a government actor has 

no financial temptation, however slight, to prefer one outcome over another, the 

financial justification for requiring recusal disappears. And, while there are many 

potential non-financial reasons for requiring a government actor to recuse 

14 The statute would apply, however, only if the employee had knowledge of the organization’s 

financial interest. 18 U.S.C. § 208(a) (covering particular matters “in which, to [the employee’s] 

knowledge . . . [an] organization in which he is serving as . . . director . . . has a financial interest”).

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himself—bias, prejudice, social relationship with the parties, etc.—section 208 

singles out only financial interests. “The simplest reason,” explained the influential Bar Association Report that led to the enactment of section 208, “is that it is 

better to control whatever fraction of improper behavior is attributable to economic motives than to control none. The second reason is that regulatory schemes have 

to be administered. Restrictions on outside economic affiliations can be written 

with reasonable particularity and enforced with moderate predictability.” Association of the Bar of the City of New York, Conflict of Interest and Federal Service

17 (1960). Both reasons suggest that section 208 does not reach the advocacy 

expenditures at issue here.

At any rate, even if section 208 were ambiguous with respect to the question 

presented, because section 208 is a penal statute, the law requires that it receive a 

strict construction. United States v. Chem. Found., Inc., 272 U.S. 1, 18 (1926) 

(interpreting section 208’s predecessor). This rule is “not merely a convenient 

maxim of statutory construction,” but “is rooted in fundamental principles of due 

process which mandate that no individual be forced to speculate, at peril of 

indictment, whether his conduct is prohibited,” Dunn v. United States, 442 U.S. 

100, 112 (1979), and in the separation of powers principle that “‘legislatures and 

not courts should define criminal activity,’” Ratzlaf v. United States, 510 U.S. 135, 

148–49 (1994) (quoting United States v. Bass, 404 U.S. 336, 348 (1971)). And the 

rule surely applies here, where construing the words “financial interest in a 

particular matter” to include mere policy-motivated expenditures on advocacy 

would expand the criminal conflict of interest law beyond its traditional application.

Accordingly, we conclude that SEA and AMS do not have financial interests in 

the matters you have described.

IV. 

Although section 208(a) may not apply in these circumstances, government 

employees are under a separate duty to “avoid any actions creating the appearance 

that they are violating the law or . . . ethical standards.” 5 C.F.R. § 2635.101(b)(14) 

(2005) (emphasis added); see Exec. Order No. 12674, § 101(n) (Apr. 12, 1989), 

3 C.F.R. 215 (1989 Comp.), as amended by Exec. Order No. 12731 (Oct. 17, 1990), 

3 C.F.R. 306 (1990 Comp.); see also 5 C.F.R. § 2635.502 (2005). Among the 

relevant ethical standards is an obligation to “act impartially and not give preferential 

treatment to any private organization or individual,” 5 C.F.R. § 2635.101(b)(8), and 

a prohibition against an employee’s use of “his public office . . . for the private gain

of . . . persons with whom the employee is affiliated in a nongovernmental capacity, 

including nonprofit organizations of which the employee is an officer or member,” 

id. § 2635.702. Citing the predecessor version of these provisions, Exec. Order No. 

11222, § 201(c) (May 8, 1965), 3 C.F.R. 130, 131 (1965 Supp.), the Rehnquist 

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Opinion observed that “[w]hile [the Commissioner] in our judgment cannot be 

viewed as having the type of financial interest covered by 18 U.S.C. 208, the fact 

remains that NCA does have a direct non-financial interest in any matters affecting 

coal in its competitive fight with natural gas” and that “even assuming all good faith 

on [the Commissioner’s] part, his participation in the direct regulation of the chief 

competitor of NCA’s members is likely to suggest an inference of preferential 

treatment or loss of independence which could be difficult to dispel.” Id. at 6–7.

Here, too, when an outside organization on whose board a government employee 

serves is actively advocating a position, particularly where it devotes a large portion 

of its budget to such advocacy, the employee’s official participation in his agency’s 

work on the same issue may “suggest an inference of preferential treatment or loss of 

independence” giving rise to an appearance of partiality for purposes of the ethical 

rules.

As we wrote in the FAA Opinion, OGE takes the view that it “‘is not in a position to decide for an agency whether a reasonable person would question the 

impartiality of [an] employee’s participation in a particular matter,’” FAA 

Opinion, 28 Op. O.L.C. at 244–45 (quoting OGE, Letter to an Agency Ethics 

Advisor, Informal Advisory Ltr. 00x4, 2000 WL 33407281, at *3 (Apr. 11)), and 

“[t]he same generally holds for this Office; the question of an appearance problem 

is best left to the employee and the agency based on the facts of a particular case,” 

id. at 245. Nevertheless, we note that, on the facts presented to us, there is a 

substantial question whether it would create the appearance of a conflict for an 

agency employee who is a director of SEA to participate in an official capacity in 

deciding on recommendations for the agency’s senior executive pay system. SEA 

apparently is engaged in a broad and active campaign involving communications 

directly to the agencies of the federal government, in which SEA advances 

positions about the system for senior executive pay. For example, when OPM 

issued a notice of proposed rulemaking to prescribe the standards for senior 

executive pay, 69 Fed. Reg. 45,536 (July 29, 2004), SEA filed a set of comments 

in response. See Comments of the Senior Executives Association on the Proposed 

Rule Regarding “Senior Executive Service Pay and Performance Awards and 

Aggregate Limitation on Pay” (undated). SEA lists its “Current Objectives” on its 

website, and advocacy about the new senior executive pay system used to be the 

first objective on the list, see Senior Executives Association, http://seniorexecs.org

(last visited June 2, 2005), and remains one of the objectives, see id. (last visited 

Jan. 11, 2006).15 At the same time, the Executive Resources Board on which the 

15 To the extent that SEA represents its members’ interests in the pay system, a director’s official 

role in the matter might not raise an appearance problem, because the regulatory exemption for an 

employee’s actions affecting his own pay or benefits “constitute[s] a determination that the interest of 

the Government in the employee’s participation outweighs the concern that a reasonable person may 

question the integrity of agency programs or operations.” 5 C.F.R. § 2635.501 note (2005). But, apart 

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Financial Interests of Nonprofit Organizations for Purposes of 18 U.S.C. § 208

employee has served in his official capacity makes recommendations regarding the 

senior executive pay system. SEA Letter at 1. If an outside organization in which 

an employee is a director has been advocating its views directly to the federal 

government on a matter that the organization has identified as especially significant, there is a significantly heightened risk that the employee, by taking a 

personal and substantial role in the same matter, will at least appear less than 

independent in his judgments for purposes of 5 C.F.R. § 2635.101(b), and that 

risk, along with other factors such as the importance of the particular employee’s 

role in the government’s deliberations, calls for serious consideration by the 

employee’s agency.16

STEVEN G. BRADBURY

Acting Assistant Attorney General

Office of Legal Counsel

from this representation of its members’ financial interests, SEA as an organization has a substantial 

policy interest in the SES pay system that raises a separate concern about the appearance of an SEA 

director’s taking part in such agency deliberations. 16 In contrast, AMS appears in some instances only to have issued public statements about matters 

identified in the Commerce Letter, rather than directly communicating with federal agencies. See

Commerce Letter at 2 n.2.

83