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[Federal Register Volume 62, Number 48 (Wednesday, March 12, 1997)]
[Rules and Regulations]
[Pages 11307-11314]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-6160]

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Rules and Regulations
                                                Federal Register
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Federal Register / Vol. 62, No. 48 / Wednesday, March 12, 1997 / 
Rules and Regulations

[[Page 11307]]

OFFICE OF GOVERNMENT ETHICS

5 CFR Part 2638

RIN 3209-AA07

Executive Agency Ethics Training Program Regulation Amendments

AGENCY: Office of Government Ethics (OGE).

ACTION: Interim rule with request for comments.

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

SUMMARY: This interim rule amends the OGE executive branchwide 
regulation on ``Executive Agency Ethics Training Programs'' to enable 
agencies to better focus their training resources on training employees 
in sensitive positions while ensuring that all executive branch 
employees receive sufficient training to enable them to understand the 
ethical responsibilities concomitant with their Government positions. 
While the current OGE regulation generally requires agencies to provide 
annual ``verbal'' ethics briefings to covered employees, the interim 
rule, once effective, will permit agencies to fulfill this requirement 
for most covered employees by means of a written briefing, provided 
generally that the employees receive verbal briefings at least once 
every three calendar years. Annual ethics briefings for employees who 
file public financial disclosure forms, however, will generally still 
have to be verbal and, starting next year (1998), will additionally be 
subject to a further requirement that a qualified individual be present 
during and after the briefings. This will focus agency ethics training 
resources upon employees in sensitive positions, while simultaneously 
freeing significant resources for use in other parts of the agency's 
ethics training program. Because this rule is being published as an 
interim rule, agencies will be able to take advantage of this 
flexibility in conducting their annual ethics briefings for part of the 
current 1997 training year as well as in future years. As noted, the 
provision requiring qualified individual personal presence for public 
filer briefings will not take effect until 1998.

DATES: This interim regulation is effective May 12, 1997, except for 
Sec. 2638.704(d)(2)(ii) and Examples 1 through 3 following that 
paragraph, which will become effective on January 1, 1998. Comments by 
agencies and the public are invited and are due on or before April 11, 
1997.

ADDRESSES: Office of Government Ethics, Suite 500, 1201 New York 
Avenue, NW., Washington, DC 20005-3917, Attention: John C. Condray. 
Comments may also be sent electronically to OGE's Internet E-mail 
address at [email protected] (for E-mail messages, the subject line should 
include the following reference--``Comments on interim training 
regulation amendments''). Copies of the two OGE memorandums discussed 
in the Supplementary Information section may be obtained, without 
charge, by contacting Mr. Condray at OGE.
Those documents are also available on OGE's electronic bulletin board 
TEBBS (''The Ethics Bulletin Board Service''). Information about TEBBS 
may also be obtained from Mr. Condray. Information concerning this 
interim rule, the OGE memorandums and other OGE regulations and 
publications, is also available on OGE's World Wide Web site at http://www.access.gpo.gov/usoge.

FOR FURTHER INFORMATION CONTACT: John C. Condray, Office of the General 
Counsel and Legal Policy, Office of Government Ethics; telephone: 202-
208-8000, extension 1152; TDD: 202-208-8025; FAX: 202-208-8037.

SUPPLEMENTARY INFORMATION:

A. Background and Analysis of Interim Rule Changes

    Section 301 of Executive Order 12674 on Principles of Ethical 
Conduct, as modified by Executive Order 12731 (hereinafter referred to 
as Executive Order 12674), requires all executive branch agencies to 
ensure that all of their employees review the regulations that govern 
their conduct. Section 301 also requires agencies to provide mandatory 
annual briefings on ethics and standards of conduct for all employees 
appointed by the President, all employees in the Executive Office of 
the President, all officials required to file public or confidential 
financial disclosure reports, all employees who are contracting 
officers and procurement officials, and any other employees designated 
by the agency head. Agencies are also required to coordinate with the 
Office of Government Ethics (OGE) in developing annual ethics training 
plans. In accordance with these requirements, and consistent with its 
authority under the Ethics in Government Act of 1978, as amended, 5 
U.S.C. appendix, OGE promulgated a final rule implementing these 
requirements on April 7, 1992. See 57 FR 11886-11891, as corrected at 
57 FR 15219 (April 27, 1992). The current version of this rule is 
codified at subpart G of 5 CFR part 2638, entitled ``Executive Agency 
Ethics Training Programs'' (the ``Training Regulation'').
    In the nearly five years since the Training Regulation became 
effective, OGE has received a number of comments from ethics officials 
at the agency level. Partly in response to these comments, OGE has 
twice revised portions of the regulation. See 57 FR 58399-58400 
(December 10, 1992), as corrected at 57 FR 61612 (December 28, 1992), 
and 59 FR 12145-12149 (March 16, 1994).
    While the basic structure of the Training Regulation as currently 
in effect is regarded as sound, some agencies have voiced concerns over 
the requirement that all employees covered by the annual training 
requirement (a total of approximately 387,000 executive branch 
employees) receive annual verbal briefings. These commenters indicated 
that providing the resources to meet this requirement prevents their 
agencies from devoting resources to other desirable ethics training 
goals. These include: developing specific programs for employees who 
occupy sensitive positions and face more difficult conflicts issues; 
providing resources to increase the effectiveness of the initial ethics 
orientation received by all employees; and providing update training 
for those employees who are not required to receive annual briefings. 
The latter category is particularly troublesome, as agencies pointed 
out that under the Training Regulation an employee could receive an 
initial ethics orientation and then no other ethics information during 
the rest of his or her

[[Page 11308]]

Government career. Of course, the Training Regulation is a minimum 
standard, and agencies are encouraged to go beyond the minimum standard 
when feasible. But OGE is sensitive to the concern that the Training 
Regulation might be preventing agencies from developing programs to 
address these concerns by dictating too strictly the use of scarce 
agency resources.
    Because of the need to provide agencies with the ability to more 
efficiently use their resources as soon as possible, and in particular 
because of the need to provide this relief for agencies during the 1997 
calendar year training cycle, OGE is making these interim rule 
amendments effective 90 days after the publication of this rule, on May 
12, 1997, except for the ``personal presence'' requirement for public 
filer briefings which, as noted above, will take effect on January 1, 
1998. This course of action should allow agencies adequate time to 
prepare for the new, amended regulatory provisions and, once they 
become effective, to conduct a good portion of their 1997 ethics 
training in accordance with the various more flexible requirements. 
Thus, agencies will have greater flexibility in allocating their 
training resources while still ensuring that the requirements of 
Executive Order 12674 are met.

Annual Ethics Briefings

    The most significant changes made in the interim rule will affect 
the requirement that agencies provide certain ``covered employees,'' as 
specified in section 301 of E.O. 12674 and restated at Sec. 2638.704(b) 
of the Training Regulation, with annual ethics training. The interim 
rule will divide covered employees into two categories: (1) those who 
are ``covered employees'' because they file public financial disclosure 
reports (SF 278s); and (2) all other covered employees. While agencies 
will still be required to provide all covered employees with annual 
ethics training, now to be called ``briefings,'' the presentation 
requirements for the briefing will vary depending on which of the two 
categories of ``covered employee'' an employee falls under. Under the 
interim rule, public SF 278 filers will generally have to receive a 
verbal ethics briefing every year (as is the case under the current 
version of the Training Regulation). In addition, starting in calendar 
year 1998, the annual briefings for public filers will have to be 
offered with the presence of a qualified individual able to answer 
questions. All other covered employees will generally only have to 
receive a verbal ethics briefing at least once every three calendar 
years, with no requirement that a qualified individual be present. 
Written ethics briefings will be required for those calendar years 
where such employees do not receive a verbal ethics briefing.
    The Office of Government Ethics has decided to distinguish between 
the level of annual ethics training provided for public financial 
disclosure filers and all other covered employees for the following 
reasons. Public filers occupy positions that involve policy-making. 
Congress has made the determination that individuals occupying these 
positions should disclose their financial interests on reports that are 
publicly available in order to promote public confidence in the 
integrity of the policy-making process. The Office of Government Ethics 
believes that the sensitivity and authority of these positions justify 
the heightened standard for annual ethics briefings as well. Not only 
does the authority concomitant with their positions create increased 
risks from a conflicts perspective, but the sensitivity and visibility 
of their positions increase the consequences of any real or apparent 
violation of ethics laws and regulations. From a practical standpoint, 
these individuals are easily identifiable. Agencies should be tracking 
the numbers and locations of employees in these positions as part of 
the management of their public financial disclosure systems. Although 
OGE believes that only public filers need receive the heightened 
briefings, comment is invited on this issue.
    These interim rule amendments also retain the feature that allows 
an agency to count time spent in a verbal ethics briefing provided to 
the employee in accordance with new Sec. 2638.704(d)(2) or (d)(3)(ii) 
against the requirement that an agency provide the employee with one 
hour of official duty time for the initial ethics orientation, if the 
briefing and orientation occur in the same calendar year. This provides 
an agency with an incentive to provide an incoming employee with a 
verbal ethics briefing early in the employee's Government service. The 
term ``verbal'' will also be added to Sec. 2638.703(a)(3) on ethics 
orientation in the interim rule to avoid any confusion on this point. 
Providing such verbal training quickly is also helpful to new 
employees, because it will enable them to understand and apply the 
rules that govern their conduct to the activities they undertake as 
part of their everyday official duties.
    In contrast, time spent in a written annual ethics briefing will 
not count against the time requirement for an initial ethics 
orientation taking place in the same year. A written annual ethics 
briefing need only include a brief reminder of the restrictions 
contained in the Standards of Ethical Conduct, and then can move on to 
focus on other specialized ethics topics (for example, post-employment 
restrictions). Thus, it may not provide a comprehensive summary of the 
Standards as is contemplated for the initial ethics orientation. 
Agencies should note, however, that if an initial ethics orientation 
were also to meet the content requirements for a written annual ethics 
briefing due in the same calendar year, it could serve as both the 
initial ethics training and as the written annual ethics briefing for 
covered employees receiving their annual ethics briefing in accordance 
with Sec. 2638.704(d)(2)(iii)(A)(2), (d)(2)(iii)(B), (d)(3)(i) or 
(d)(3)(iii) of the interim rule (see the discussion below). This 
interrelationship between the initial ethics orientation and annual 
ethics briefing requirements will enable agencies to make the best use 
of agency resources and employee time by combining initial and annual 
ethics briefings where such a combination is feasible.

Annual Ethics Briefings for Public Filers

    As with the current Training Regulation, Sec. 2638.704(d)(2)(i) of 
the interim rule states that agencies must supply employees who file 
Standard Form 278 Executive Branch Personnel Public Financial 
Disclosure Reports (SF 278s) with an annual verbal ethics briefing that 
is a minimum of one hour of official duty time in duration. Beginning 
next year, the interim rule amendments will require executive agencies 
to take the extra step of providing the personal presence of a 
``qualified individual,'' as defined at redesignated paragraph (b) of 
Sec. 2638.702 in the interim rule, during and immediately following the 
briefing in order to respond to questions or concerns on the part of 
public filers receiving the briefing. Note that the qualified 
individual will not have to be physically present to fulfill this 
forthcoming requirement. The key is that those covered employees 
receiving the training have immediate and direct access to the 
qualified individual so that they may raise and resolve questions that 
arise during the briefing. The examples used in the regulation text, 
e.g., an ethics briefing provided through means of video conferencing 
where the qualified individual can respond to employee questions 
directly as part of the training even though the qualified individual 
is not physically present at

[[Page 11309]]

the training site, illustrate this point. This increased level of 
training will be required, starting in 1998, for the approximately 
21,000 executive branch employees who file public financial disclosure 
reports. These employees constitute approximately 5.4 percent of the 
nearly 387,000 employees currently receiving annual ethics briefings, 
based on agency responses to OGE's 1995 ethics program questionnaires.
    The qualified individual provision is similar to the requirement 
initially imposed when the Training Regulation was first promulgated in 
1992, though that requirement entailed physical presence and was much 
broader in scope since it applied to all employees covered by the 
annual training requirement. As we indicated in the preamble to the 
publication of the April 1992 final rule document, OGE believes that 
the presence of an individual qualified to answer questions at the 
annual ethics briefing is the best way to address employee questions 
and concerns raised by the training. See 57 FR 11886, 11889 (April 7, 
1992). Concerns over the ability of agencies to meet this requirement 
for all annual ethics briefings provided to the large number of 
employees subject to the annual briefing requirement, however, led OGE 
to conclude that while having a qualified individual present is often 
the most effective means of providing training, providing the most 
effective training was not a realistic minimum standard for all 
agencies to provide to all covered employees. The Office of Government 
Ethics accordingly dropped this requirement in a set of 1994 interim 
amendments to the Training Regulation in favor of requiring ``verbal'' 
training, either in person or by telecommunications, computer-based 
methods or recorded means. See 59 FR 12145, 12146-12147 (March 16, 
1994).
    This interim rule strikes a new balance between feasibility 
concerns and the desirability of having a qualified individual able to 
respond immediately to questions raised during the ethics briefing. 
These interim rule amendments will thus only require that a qualified 
individual be present during and immediately following the annual 
ethics briefings provided to those covered employees who hold the most 
senior and responsible positions, i.e., public SF 278 filers. The 
delayed effective date of January 1, 1998 for this requirement will 
allow agencies sufficient time to prepare for its imposition. The 
limited nature of the class affected (public SF 278 filers only) 
significantly offsets the feasibility concerns that led to the 1994 
amendments that deleted the original across-the-board in-person 
requirement. These concerns are further addressed in this interim rule 
by providing agencies with the option of conducting the required annual 
ethics briefing for the vast majority of covered employees who are not 
SF 278 filers through the use of a written ethics briefing for up to 
two out of every three years.
    Moreover, the interim rule will retain the exception permitting 
agencies to provide the annual ethics training by a verbal briefing to 
public filers without the presence of a qualified individual (even when 
that new requirement becomes effective next year) or by written means 
(starting once the new rule becomes effective May 12, 1997. The basic 
exception is found at 5 CFR 2638.704(d)(2)(i) of the current rule and 
Sec. 2638.704(d)(2)(iii)(A) of this interim rule. Pursuant to the 
interim rule exception, the Designated Agency Ethics Official or his or 
her designee can make a written determination that circumstances make 
it impractical to provide the required verbal briefing to a particular 
public SF 278 filer employee or a group of such employees in accordance 
with paragraphs (d)(2)(i) and (d)(2)(ii) of the new rule. In those 
cases, the annual ethics briefing could be provided, without the 
presence of a qualified individual, by telecommunications, computer-
based methods or recorded means or by written means, provided that a 
minimum of one hour of official duty time is set aside for employees to 
attend the presentation or review the written materials.
    5 CFR 2638.704(d)(2)(ii) of the current Training Regulation allows 
agencies to provide the annual ethics training to covered employees who 
are special Government employees by means of written briefings or other 
means at the agency's discretion. The interim rule includes an 
equivalent section, at Sec. 2638.704(d)(2)(iii)(B), for special 
Government employees who are public SF 278 filers. Agencies should note 
that public filer special Government employees receiving their annual 
ethics training under this exception must receive a minimum of one hour 
of official duty time for their written briefings. As with the current 
Training Regulation, special Government employees who are expected to 
work fewer than 60 days in a calendar year would not generally be 
subject to this one-hour minimum requirement, as they are usually not 
required to file public financial disclosure reports.

Annual Ethics Briefings for Other Covered Employees

    As noted, agencies currently must generally provide all covered 
employees with a one-hour verbal briefing every calendar year. The 
interim rule amendments will provide significant new flexibility to 
agencies in training covered employees who do not file public financial 
disclosure reports. Under new Sec. 2638.704(d)(3), agencies will be 
able to meet the annual briefing requirement for such employees by 
providing them with written ethics briefings on an annual basis for up 
to two out of every three calendar years. Unlike the written briefings 
to be allowed in circumstances qualifying for an exception for public 
filers under the interim rule, there will be no minimum official duty 
time requirement for written ethics briefings provided under this 
section. The Office of Government Ethics believes that imposing a one-
hour written briefing requirement for covered employees who are not SF 
278 filers would be too burdensome for agencies administratively. Given 
the large number of employees eligible to receive written briefings, 
OGE believes that it would be very difficult for agencies to keep track 
of the time each affected individual employee spends reviewing the 
written ethics briefing materials. Nonetheless, agencies will still be 
required to provide such employees with sufficient official time to 
review the written materials provided. Moreover, at least once every 
three years, unless excepted, such covered employees would have to 
receive a verbal ethics briefing of one hour in duration. However, the 
verbal briefings provided to such employees will not require the 
personal presence of a qualified individual during and immediately 
following the briefing.
    The interim rule amendments retain, as to the once-every-three-
years verbal briefing requirement for certain nonpublic filer covered 
employees, the exceptions currently found at Sec. 2638.704(d)(2) of the 
Training Regulation. These exceptions will permit agencies, at their 
discretion, to fulfill the annual briefing requirement through the use 
of written materials every year where: (1) there is a written 
determination by the DesignatedAgency Ethics Official, or his or her 
designee, that circumstances make it impractical to provide a verbal 
briefing once every three years for a particular employee or group of 
employees; or (2) for special Government employees expected to work 
fewer than 60 days in a calendar year as well as uniformed service 
officers who serve on active duty for 30

[[Page 11310]]

or fewer consecutive days. See Sec. 2638.704(d)(3)(iii)(A), 
(d)(3)(iii)(B) and (d)(3)(iii)(C). As to the second exception listed, 
OGE is not currently aware of any situation where a special Government 
employee subject thereto would receive an appointment greater than two 
years in duration, thus requiring a verbal ethics briefing under the 
general rule of the interim amendments. This particular exception may 
therefore be unnecessary. Although retained in the interim amendments, 
OGE requests that any agencies that have covered special Government 
employees meeting the definition in this exception notify us during the 
comment period.
    The interim rule amendments, at new Sec. 2638.704(d)(3)(iii)(D), 
provide that agencies may also provide written briefings only for 
employees who are ``covered'' by the annual training requirement solely 
because of discretionary designation by their agencies pursuant to 
renumbered Sec. 2638.704(b)(6), including any such discretionarily 
designated micro-purchasers. See the discussion below.
    The interim rule, consistent with OGE practice to date in 
administering the Training Regulation, will not require agencies to use 
a particular system to track which method of training (written or 
verbal) has been provided to such covered employees. The Office of 
Government Ethics will instead continue the practice of allowing 
agencies to adopt their own means of tracking, both for the agencies' 
own records and for OGE oversight purposes.

Annual Ethics Briefings for ``Contracting Officers''; Separate Category 
for Prior ``Procurement Officials'' Dropped

    Numerous statutory and regulatory changes have occurred recently in 
the area of Federal acquisition requirements, including procurement 
integrity provisions. Of particular significance to the Training 
Regulation was the enactment last year of a complete revision to the 
procurement integrity law at 41 U.S.C. 423 and the issuance in early 
January of this year of final implementing Federal Acquisition 
Regulation (FAR) provisions thereunder. See section 4304(a) of the 
National Defense Authorization Act for Fiscal Year 1996, Pub. L. No. 
104-106, and 62 FR 226-233 (January 2, 1997). The amended procurement 
law sets forth revised restrictions applicable to certain agency 
officials involved in the contracting process and also revises the 
related definitions, including those directly relevant to the Training 
Regulation.
    In accordance with section 301(c) of Executive Order 12674 (issued 
in 1989 and modified in 1990 by E.O. 12731), the Training Regulation 
has specified two categories of contracting personnel who are ``covered 
employees'' subject to the annual ethics training requirement--
``contracting officers'' and ``procurement officials.'' See current 5 
CFR 2638.704(b)(5) and (b)(6). This interim rulemaking will update the 
Training Regulation provisions regarding annual training of agency 
officials involved in contracting functions in light of the procurement 
changes.
    First, the old term ``procurement official'' (prior 41 U.S.C. 
423(p)(3)), as referenced in E.O. 12674, is no longer found or defined 
in the amended procurement integrity statute nor the above-cited 
implementing FAR rule. There is only a reference to ``procurement 
officers'' [emphasis added] in the heading of one of the procurement 
integrity statutory restrictions, at amended paragraph (c) of 41 U.S.C. 
423 regarding actions required of certain agency officials when 
contacted by offerors regarding non-Federal employment. That amended 
provision indicates that a ``procurement officer'' is an agency 
official who is participating personally and substantially in a Federal 
agency procurement for a contract in excess of the simplified 
acquisition threshold. The simplified acquisition threshold is defined 
in 48 CFR 2.101, as revised, as $100,000, except for certain limited 
contracts outside the United States, where the threshold is $200,000. 
For purposes of the demanding annual ethics briefing requirement under 
theTraining Regulation, OGE has decided that the residual, informal 
reference to ``procurement officers'' [emphasis added] in section 
423(c) of the amended procurement integrity statute is, thus far, too 
uncertain a concept, particularly when coupled with the removal of the 
``Procurement Integrity Certification for Procurement Officials'' 
(Optional Form 333) requirement in the above-cited FAR final rulemaking 
under the amended procurement integrity law.
    Therefore, OGE has decided to remove the separate covered employee 
category for ``procurement officials'' from Sec. 2638.704(b). The 
Office of Government Ethics notes that many agency employees involved 
in contracts over the simplified acquisition threshold will be 
otherwise covered as contracting officers or confidential financial 
disclosure report filers. Agencies may also discretionarily designate 
certain of them to receive annual briefings if they deem it 
appropriate. See Sec. 2638.704(b)(4), (b)(5) and (b)(6) of this interim 
rule.
    In contrast, the new procurement integrity definition of 
``contracting officer'' in amended 41 U.S.C. 423(f)(5) is similar to 
the old definition at prior section 423(p)(4) of the law. The specific 
category for annual training of ``contracting officers,'' at 
Sec. 2638.704(b)(5) of the Training Regulation, will therefore be 
retained with a reference to the new procurement law provision. There 
is one related important development brought about by the passage of 
the Federal Acquisition Streamlining Act of 1994 (FASA), Pub. L. No. 
103-355. Among the steps taken by FASA to simplify acquisition 
procedures was the creation of simplified procedures for ``micro-
purchases,'' defined as those acquisitions of supplies or services 
(except construction), the aggregate amount of which does not exceed 
$2,500 ($2,000 for construction). An interim rule implementing this 
portion of FASA was published as Federal Acquisition Circular (FAC) 90-
24, 59 FR 64784-64788 (December 15, 1994), with the Federal Acquisition 
Regulatory Council adopting a final rule, with changes to the interim 
rule, as published as part of FAC 90-40, 61 FR 39189-39199 (July 26, 
1996). See 41 U.S.C. 428(f) and 48 CFR 2.101, as revised. To maximize 
the benefit of these simplified procedures, agency heads are encouraged 
to delegate micro-purchase authority to individuals who will be using 
the supplies or services being purchased. See 48 CFR 1.603(b), as 
revised. Under the July 1996 final rule in FAC 90-40, individuals 
delegated micro-purchase authority are now not required to be 
``contracting officers'' for the purposes of the Federal Acquisition 
Regulation. See 48 CFR 1.603(b), as revised. (Under the prior, interim 
FAR rule, micro-purchase authority holders were deemed contracting 
officers (see 48 CFR 13.601(d) (1996 edition), now removed).)
    In order to harmonize the Training Regulation with the goals of 
FASA which encourages agencies to delegate micro-purchase authority 
widely, OGE will not require agencies to provide annual briefings to 
micro-purchasers who are not contracting officers. (Of course, 
contracting officers who are also ``micro-purchasers'' will still need 
to receive annual training based on their contracting officer status.) 
Individual agencies may, if they deem it appropriate based on conflict 
of interest concerns, discretionarily designate some or all of their 
micro-purchasers who are not contracting officers (or otherwise in a 
specifically covered category of

[[Page 11311]]

employees, see Sec. 2638.704(b)) as covered employees subject to annual 
briefings under the discretionary designation provision at renumbered 
and revised Sec. 2638.704(b)(6) (old 5 CFR 2638.704(b)(7)). In such 
cases, the interim rule at new Sec. 2638.704(d)(3)(iii)(D) will permit 
agencies to provide annual briefings for any such discretionarily 
designated non-``contracting officer'' micro-purchasers solely through 
distribution of written materials (without the requirement for verbal 
briefings at least once every three years). This exception for written 
briefings will likewise apply to any other employees who are ``covered 
employees'' for annual ethics training purposes solely because of 
discretionary designation by their agencies pursuant to new 
Sec. 2638.704(b)(6).

Other Issues

    The Office of Government Ethics is also amending 5 CFR 2638.701. 
This change will add language explicitly including the Standards of 
Ethical Conduct for Employees of the Executive Branch, 5 CFR part 2635 
(``Standards''), and any agency supplemental regulation thereto, as 
items that employees must be made aware of through agency ethics 
training programs. The interim rule will also explicitly reference the 
conflict of interest statutes, 18 U.S.C. chapter 11. These interim rule 
changes will not substantively change the requirements of subpart G; an 
agency meeting the requirements of 5 CFR 2638.703 and 2638.704 will 
continue to fulfill the general requirement of Sec. 2638.701. Reference 
to the Standards and supplemental regulations thereto were left out of 
Sec. 2638.701, when it was originally published in the Federal Register 
in April 1992, because they had not been published at that time. The 
change in the interim rule will update the Sec. 2638.701 reference.
    The interim rule amendments will also make certain other, minor 
changes to the Training Regulation. Executive Order 12674 requires 
agencies to coordinate with OGE in developing annual agency ethics 
training plans. The current Training Regulation, at 5 CFR 
2638.702(a)(3), provides that agencies are to file this written plan 
for annual ethics training with OGE by August 31 of each calendar year. 
The interim rule, at revised and redesignated Sec. 2638.702(c), will 
formally eliminate the requirement that agencies file their plans with 
OGE on an annual basis. While the filing requirement was useful during 
the initial stage of the implementation of the Training Regulation, the 
utility of the measure has declined as agencies have become proficient 
in planning and providing the required ethics training. For this 
reason, OGE sent a memorandum to Designated Agency Ethics Officials 
(DAEO) on July 6, 1995 (DO-95-028), indicating that agencies should 
continue to develop written plans for annual ethics training, 
coordinating with OGE where necessary, but should maintain the plans at 
the agency rather than filing them each year with OGE. As noted in that 
memorandum, such coordination can include: consulting with OGE 
concerning upcoming OGE training materials, including videotapes, that 
may be useful in administering an agency's training program; contacting 
OGE's Ethics Information Center to obtain training materials from other 
executive branch agencies that may be adapted to the agency's needs; or 
consulting with OGE concerning other issues or problems an agency is 
facing in providing ethics training. The interim rule will codify that 
change in policy.
    Even though agencies will no longer be required to file their 
annual ethics training plans with OGE, agencies remain subject to the 
requirement of Executive Order 12674 and the Training Regulation that 
they develop annual agency ethics training plans. See the OGE 
memorandum to DAEOs of January 6, 1997 (DO-97-002). The Office of 
Government Ethics will include the plans as a program element subject 
to the periodic agency ethics program reviews that OGE conducts. The 
plans should be completed by January 1 of the calendar year that they 
cover. The interim rule will slightly adjust the information required 
in the plan to conform to the changes in the structure of the annual 
ethics briefing and will require agencies to include a brief narrative 
description of the agency's annual ethics briefings. The Office of 
Government Ethics anticipates that a typical narrative will be only one 
or two paragraphs in length, and will include information concerning 
the projected content of the briefings, the method of presentation to 
be used, and the anticipated number of employees who will receive 
different types of presentations if the agency plans to use a number of 
different methods.
    Since these interim rule amendments to the Training Regulation take 
effect on May 12, 1997, except for Sec. 2638.704(d)(2)(ii) and Examples 
1 through 3 following that section, which will take effect on January 
1, 1998, OGE will allow agencies to count any 1997 calendar year 
training already completed under the current version of the Training 
Regulation before the effective date of these interim rule amendments. 
Thus, agencies will not have to redo any 1997 ethics training properly 
conducted under the 5 CFR part 2638, subpart G training requirements 
effective at the time of training. The new, generally liberalized 
training requirements should be followed for the remainder of 1997.
    While the interim rule amendments will substantially alter 
Sec. 2638.704, on annual agency ethics training (designated as ``annual 
ethics briefings'' under the interim revision), they will not 
significantly alter Sec. 2638.703, initial agency ethics orientation. 
Some commenters have indicated a desire that OGE amend the Training 
Regulation to require that the initial ethics orientation be verbal 
instead of allowing the use of written materials. The Office of 
Government Ethics encourages agencies to strengthen the initial ethics 
orientation, and believes that verbal training is generally more 
effective than using written materials. However, OGE believes that the 
current fiscal situation makes it unreasonable to require agencies to 
provide employees receiving their initial ethics orientation with 
verbal training. Such a requirement will be particularly difficult for 
those agencies with widely scattered facilities. The other changes to 
subpart G contained in the interim rule should provide agencies with 
the ability to shift some of their ethics training resources to provide 
a more comprehensive initial ethics orientation for their new 
employees. The Office of Government Ethics notes that many agencies 
have already made some effort to expand the scope of their initial 
ethics orientations.
    The most recent results available from OGE's Annual Agency Ethics 
Program Questionnaire (for CY 1995) showed that only 24 of 125 
responding agencies provided their employees with nothing more than a 
copy of the Standards and an hour of official duty time for their 
ethics orientation. In addition to the potential for providing a more 
comprehensive initial ethics orientation, the changes made by the 
interim rule amendments will also place agencies in a better position 
to provide those employees who do not receive annual ethics briefings 
with periodic ethics-related updates or training to ensure that all 
employees better understand the statutes and regulations that govern 
their conduct.
    For these reasons, the interim rule only makes minor changes to 
Sec. 2638.703. The interim rule will amend Sec. 2638.703(a)(3) to 
reflect changes to the annual ethics training requirement. The interim 
rule will also amend Sec. 2638.703(b)(2), substituting ``each 
employee'' for ``employees'' to bring the

[[Page 11312]]

section into conformity with the language used in other parts of the 
section. The interim rule will add agency supplemental regulations to 
those materials that must be included with a copy of the Standards 
furnished for purposes of review only in accordance with 
Sec. 2638.703(b)(1), as well as requiring that any agency supplemental 
ethics regulations be included in a summary provided to employees under 
Sec. 2638.703(b)(2). Each of these subsections is also being amended to 
include the relevant agency supplemental regulations among the 
materials whose complete text must be retained and readily accessible 
in an employee's immediate office area for an agency to use these 
exceptions to Sec. 2638.703(a)(1).
    In addition to the above changes, the interim rule amendments also 
substitute the term ``ethics briefing'' for the term ``ethics 
training'' in Sec. 2638.704 and in cross-references throughout subpart 
G. The new language parallels the language used in E.O. 12674, but does 
not represent a substantive change in the regulation.
    As stated earlier, the goal of these interim rule amendments is to 
enable agencies to more efficiently use the resources that are 
currently available to the ethics training programs. Should these 
changes result in a diminishing level of resources for ethics training, 
OGE of course might have to seek to further amend the Training 
Regulation to reimpose the current across-the-board verbal briefing 
requirement.

B. Matters of Regulatory Procedure

Administrative Procedure Act

    Pursuant to sections 553 (b) and (d) of title 5 of the United 
States Code, I find good cause for waiving the general notice of 
proposed rulemaking. Because the changes made by these interim rule 
amendments to the Training Regulation will enable agencies to more 
efficiently use their resources to provide required Government ethics 
orientation and annual briefings to their employees, it is essential to 
the administration of the executive branch ethics program that the 
changes made by this interim rule become effective in time for agencies 
to implement them during the course of their calendar year 1997 
training cycle. However, this is an interim rule which will generally 
become effective on May 12, 1997, with a delayed effective date of 
January 1, 1998 for new Sec. 2638.704(d)(2)(ii) and Examples 1 through 
3 following that section. Moreover, this rule provides for a 30-day 
comment period. All interested persons are invited to submit written 
comments to OGE on these interim rule amendments, to be received on or 
before April 11, 1997. The Office of Government Ethics will review all 
comments received and consider any modifications which appear warranted 
to these amendments in adopting a final rule in this matter.

Executive Order 12866

    In promulgating these interim amendments to the executive 
branchwide Government ethics training regulation, the Office of 
Government Ethics has adhered to the regulatory philosophy and the 
applicable principles of regulation set forth in section 1 of Executive 
Order 12866, Regulatory Planning and Review. This interim rule has also 
been reviewed by the Office of Management and Budget under that 
Executive Order.

Regulatory Flexibility Act

    As Director of the Office of Government Ethics, I certify under the 
Regulatory Flexibility Act (5 U.S.C. chapter 6) that this interim rule 
will not have a significant economic impact on a substantial number of 
small entities because it affects only Federal executive branch 
agencies and their employees.

Paperwork Reduction Act

    The Paperwork Reduction Act (44 U.S.C. chapter 35) does not apply 
to this interim rule because it does not contain information collection 
requirements that require the approval of the Office of Management and 
Budget.

List of Subjects in 5 CFR Part 2638

    Administrative practice and procedure, Conflict of interests, 
Government employees, Reporting and recordkeeping requirements.

    Approved: February 4, 1997.
Stephen D. Potts,
Director, Office of Government Ethics.

    Accordingly, for the reasons set forth in the preamble, the Office 
of Government Ethics is amending subpart G of part 2638 of chapter XVI 
of title 5 of the Code of Federal Regulations as follows:

PART 2638--[AMENDED]

    1. The authority citation for part 2638 continues to read as 
follows:

    Authority: 5 U.S.C. App. (Ethics in Government Act of 1978); 
E.O. 12674, 54 FR 15159, 3 CFR, 1989 Comp., p. 215, as modified by 
E.O. 12731, 55 FR 42547, 3 CFR, 1990 Comp., p. 306.

Subpart G--Executive Agency Ethics Training Programs

    2. Section 2638.701 is revised to read as follows:

Sec. 2638.701  Executive agency ethics training programs; generally.

    Each executive branch agency shall maintain a program of ethics 
training designed to ensure that all of its employees are aware of: the 
Federal conflict of interest statutes, located at chapter 11 of title 
18 of the United States Code; the Principles of Ethical Conduct, found 
in part I of Executive Order 12674, as modified; the Standards of 
Ethical Conduct for Employees of the Executive Branch, codified at 5 
CFR part 2635, and any agency supplemental regulation thereto; and how 
to contact agency ethics officials when the employee needs advice 
concerning ethics issues. As a minimum, each agency program shall 
consist of the initial ethics orientation required by Sec. 2638.703 of 
this subpart and the annual ethics briefing required by Sec. 2638.704 
of this subpart. For purposes of this subpart, the term ``employee'' 
shall include special Government employees (as defined in 18 U.S.C. 
202(a)) and officers of the uniformed services.
    3. Section 2638.702 is amended by removing paragraph (b), removing 
the paragraph designation (a), and redesignating paragraphs (a)(1), 
(a)(2) and (a)(3) as new paragraphs (a), (b), and (c), respectively; 
further redesignating in newly designated paragraph (b), paragraphs (i) 
through (v) as paragraphs (b) (1) through (5), respectively; removing 
the word ``training'' and adding the word ``briefing'' in newly 
designated paragraphs (b) introductory text and (b)(5); and revising 
newly redesignated paragraph (c) to read as follows:

Sec. 2638.702  Responsibilities of the designated agency ethics 
official; review by the Office of Government Ethics.

* * * * *
    (c) Develop each year a written plan for annual ethics training to 
be conducted by the agency. The written plan for annual ethics training 
shall be completed by the beginning of the calendar year covered by the 
plan. In developing their written plans for annual ethics training, 
agencies shall coordinate with OGE where necessary. The plan shall 
contain a brief narrative description of the agency's annual ethics 
training, and shall also include:
    (1) An estimate of the total number of agency employees who will be 
provided annual ethics briefings, including:

[[Page 11313]]

    (i) An estimate of the number of public filers described in 
Sec. 2638.704(b)(3) of this subpart who must be provided annual ethics 
briefings, including:
    (A) An estimate of the number of public filers to whom annual 
ethics briefings will be presented verbally with a qualified individual 
present in accordance with Sec. 2638.704(d)(2)(ii) of this subpart;
    (B) An estimate of the number of public filers to whom annual 
ethics briefings will be presented under the exception provided at 
2638.704(d)(2)(iii)(A) of this subpart; and
    (C) An estimate of the number of special Government employees who 
are public filers to whom the annual ethics briefing will be presented 
in accordance with the exception provided at 2638.704(d)(2)(iii)(B) of 
this subpart; and
    (ii) An estimate of the number of covered employees other than 
public filers described in Sec. 2638.704(b)(3) of this subpart who must 
be provided annual ethics briefings, including:
    (A) An estimate of the number of covered employees who will receive 
a verbal annual ethics briefing in accordance with 2638.704(d)(3)(ii) 
of this subpart;
    (B) An estimate of the number of covered employees who will receive 
a written ethics briefing in accordance with 2638.704(d)(3)(i) of this 
subpart;
    (C) An estimate of the number of covered employees who will receive 
a written ethics briefing in accordance with the exception provided at 
Sec. 2638.704(d)(3)(iii)(A) of this subpart;
    (D) An estimate of the number of special Government employees and 
the number of officers in the uniformed services who will receive a 
written ethics briefing in accordance with the exceptions provided at 
Sec. 2638.704 (d)(3)(iii)(B) and (d)(3)(iii)(C) of this subpart; and
    (E) An estimate of the number of covered employees who will receive 
a written ethics briefing in accordance with the exception provided at 
Sec. 2638.704(d)(3)(iii)(D) of this subpart; and
    (2) Any other information that the designated agency ethics 
official believes will facilitate OGE's review of the agency's ethics 
training program.
    4. Section 2638.703 is amended by revising the second sentence of 
paragraph (a)(3) and revising paragraphs (b)(1) and (b)(2) to read as 
follows:

Sec. 2638.703  Initial agency ethics orientation.

    (a) * * *
    (3) * * * If the agency provides verbal ethics training during 
official duty time, including a verbal ethics briefing provided in 
accordance with Sec. 2638.704(d) of this subpart, or a nominee or other 
new entrant receives verbal ethics training provided by the Office of 
Government Ethics or the White House Office, the period of official 
duty time set aside for individual review may be reduced by the time 
spent in such training.
    (b) * * *
    (1) Furnishing each employee a copy of the Standards of Ethical 
Conduct for Employees of the Executive Branch at part 2635 of this 
chapter, and any supplemental regulation of the concerned agency, for 
the purposes of review only, provided that copies of the complete text 
of part 2635 and any supplemental regulation of the concerned agency 
are retained and readily accessible in the employee's immediate office 
for use by several employees; or
    (2) Providing each employee with materials that summarize part I of 
Executive Order 12674, as modified by Executive Order 12731, 3 CFR, 
1990 Comp., p. 306, the Standards of Ethical Conduct for Employees of 
the Executive Branch at part 2635 of this chapter, and any supplemental 
regulation of the concerned agency. To ensure that all employees have 
access to all of the information contained in these documents, an 
agency using this alternative must ensure that copies of the complete 
text of part 2635 and the agency's supplemental regulation thereto (if 
any) are retained and readily accessible in the employees' immediate 
office area.
    5. Section 2638.704 is amended by removing the word ``training'' 
and adding the word ``briefings'' in its place in paragraph (b)(4), 
revising the section heading and paragraphs (a), (b)(5) and (d), 
removing paragraph (b)(6), redesignating paragraph (b)(7) as new 
paragraph (b)(6) and revising the text thereof, and revising the 
introductory text of paragraph (c), to read as follows:

Sec. 2638.704  Annual ethics briefings.

    (a) Annual ethics briefings. Executive branch agencies must provide 
each employee identified in paragraph (b) of this section with an 
ethics briefing every calendar year. This briefing must meet the 
content requirements contained in paragraph (c) of this section and the 
presentation requirements contained in paragraph (d) of this section.
    (b) * * *
    (5) Contracting officers within the meaning of 41 U.S.C. 423(f)(5); 
and
    (6) Other agency employees designated by the head of the agency or 
his or her designee based on a determination that such briefings are 
desirable in view of their particular official duties.
    (c) Content. Agencies are encouraged to vary the emphasis and 
content of annual agency ethics briefings from year to year as 
necessary within the context of their ethics programs. The emphasis and 
content are generally a matter of each agency's sole discretion. 
However, each briefing must include, as a minimum:
* * * * *
    (d) Presentation. The annual ethics briefing shall be presented in 
accordance with the following requirements:
    (1) A qualified individual, as defined in Sec. 2638.702(b) of this 
subpart, shall:
    (i) Present the briefing, if the briefing is presented in person;
    (ii) Prepare the recorded materials or presentation, if the 
briefing is presented by telecommunications, computer-based methods or 
recorded means; or
    (iii) Prepare the written ethics briefing, if the annual ethics 
briefing requirement is satisfied through the use of a written ethics 
briefing in accordance with paragraphs (d)(2)(iii)(A)(2), 
(d)(2)(iii)(B), (d)(3)(i) or (d)(3)(iii) of this section.
    (2) Annual briefings for filers of public financial disclosure 
reports. (i) The annual ethics briefings for covered employees 
described at paragraph (b)(3) of this section shall be verbal, either 
in person or by telecommunications, computer-based methods or recorded 
means. Employees must be provided a minimum of one hour of official 
duty time for this briefing.
    (ii) A qualified individual, as defined in Sec. 2638.702(b) of this 
subpart, shall be present during and immediately following the 
presentation. The qualified individual need not be physically present 
at the training site to meet this requirement. To meet the ``presence'' 
requirement, the covered employees receiving the briefing must have 
direct and immediate access to the qualified individual.
    Example 1 to paragraph (d)(2)(ii): An agency provides annual ethics 
briefings for public filers in a regional office by establishing a 
video conference link between a qualified individual in the 
headquarters office and the regional office. Because the link provides 
for direct and immediate communication between the qualified individual 
and the employees receiving the briefing, this arrangement meets the 
presence requirement even though the qualified

[[Page 11314]]

individual is not physically located in the room where the briefing is 
received.
    Example 2 to paragraph (d)(2)(ii): The agency described in the 
preceding example provides a briefing through a videotaped briefing 
instead of through a video conference link. The employees viewing the 
videotape are provided with a telephone at the training site and the 
telephone number of a qualified individual who is standing by during 
and immediately following the training to answer any questions. The 
briefing fulfills the physical presence requirement because the 
employees receiving the briefing have direct and immediate access to a 
qualified individual.
    Example 3 to paragraph (d)(2)(ii): The physical presence 
requirement would not be met if the facts of Example 2 were varied so 
that the employees receiving the briefing did not have immediate access 
to the qualified individual, either because there was no phone provided 
at the training site or because the qualified individual was not 
standing by to respond to any questions raised. Merely providing the 
phone number of the qualified individual, without providing access to 
that individual who is standing by to answer questions raised during 
the briefing, does not provide the employees receiving the training 
with the direct and immediate access to the qualified individual 
necessary to satisfy the presence requirement.
    (iii) Exceptions. An agency may provide the annual ethics briefing 
for employees described in paragraph (b)(3) of this section by means 
other than as specified in paragraphs (d)(2)(i) and (d)(2)(ii) of this 
section only under the following circumstances:
    (A) Where the Designated Agency Ethics Official, or his or her 
designee, has made a written determination that circumstances make it 
impractical to provide the annual verbal ethics briefing with a 
qualified individual present, to a particular employee or group of 
employees in accordance with paragraphs (d)(2)(i) and (d)(2)(ii) of 
this section. In such cases, the annual ethics briefing may be provided 
without the presence of a qualified individual, provided that a minimum 
of one hour of official duty time is set aside for employees to attend 
the presentation or review the written materials, either by:
    (1) Telecommunications, computer-based methods or recorded means; 
or
    (2) Written means.
    Example 1 to paragraph (d)(2)(iii)(A): The State Department has one 
public filer (the Ambassador) in the American Embassy in Ulan Bator, 
Mongolia. Because of the difference in time zones and the uncertainty 
of an ambassador's schedule, the designated agency ethics official for 
the State Department is justified in making a written determination 
that circumstances make it impractical to provide the annual ethics 
training as a verbal briefing, either with or without the presence of a 
qualified individual. The required annual ethics briefing can therefore 
be provided by written means in accordance with 
Sec. 2638.704(d)(2)(iii)(A)(2). Note that an initial ethics orientation 
provided in the same calendar year in accordance with Sec. 2638.703 of 
this subpart will meet this annual written ethics briefing requirement, 
provided the materials meet the content requirements stated at 
paragraph (c) of this section.
    (B) In the case of special Government employees who are covered 
employees under paragraph (b)(3) of this section, an agency may 
(without the presence of a qualified individual) provide the annual 
ethics briefing by written or other means at the agency's discretion, 
provided that a minimum of one hour of official duty time is set aside 
for employees to attend the presentation or review the written 
materials.
    (3) Annual ethics briefings for all other covered employees. (i) An 
agency may satisfy the annual ethics briefing requirement for covered 
employees other than those described at paragraph (b)(3) of this 
section for up to two out of every three calendar years through the 
distribution of a written ethics briefing to those employees. In such 
case, while not required to provide a minimum of one hour of official 
duty time, an agency must provide employees receiving their annual 
ethics briefings under this paragraph with sufficient official duty 
time to review the written materials provided. Note that an initial 
ethics orientation provided in the same calendar year in accordance 
with Sec. 2638.703 of this subpart will meet this annual ethics 
briefing requirement (as well as that of Sec. 2638.704(d)(3)(iii) of 
this section), provided the materials meet the content requirements 
stated at paragraph (c) of this section.
    (ii) Except as permitted under paragraph (d)(3)(iii) of this 
section, the ethics briefing for covered employees other than those 
described at paragraph (b)(3) of this section shall be presented 
verbally at least once every three years, either in person or by 
telecommunications, computer-based methods or recorded means. Employees 
must be provided a minimum of one hour of official duty time for this 
verbal briefing. Unlike the annual ethics briefing described at 
paragraph (d)(2) of this section, for covered employees described at 
paragraph (b)(3) of this section, a qualified individual need not be 
present during and immediately following the verbal presentation 
provided under this paragraph.
    (iii) Exceptions. An agency can provide covered employees receiving 
their annual ethics briefings under this paragraph (d)(3) with written 
briefings only, in accordance with paragraph (d)(3)(i) of this section, 
every year without the verbal ethics briefing as described at paragraph 
(d)(3)(ii) of this section at least once in any three calendar year 
period, under the following circumstances:
    (A) Where the Designated Agency Ethics Official, or his or her 
designee, has made a written determination that circumstances make it 
impractical to provide an ethics briefing verbally once every three 
calendar years to a particular employee or group of employees in 
accordance with paragraph (d)(3)(ii) of this section;
    (B) In the case of special Government employees who are expected to 
work fewer than 60 days in a calendar year;
    (C) In the case of officers in the uniformed services who serve on 
active duty for 30 or fewer consecutive days; or
    (D) Where a particular employee or group of employees are covered 
employees solely because of agency discretionary designation pursuant 
to paragraph (b)(6) of this section.

[FR Doc. 97-6160 Filed 3-11-97; 8:45 am]
BILLING CODE 6345-01-U
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