[Federal Register Volume 61, Number 4 (Friday, January 5, 1996)]
[Proposed Rules]
[Pages 394-402]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-116]



      
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Proposed Rules
                                                Federal Register
________________________________________________________________________

This section of the FEDERAL REGISTER contains notices to the public of 
the proposed issuance of rules and regulations. The purpose of these 
notices is to give interested persons an opportunity to participate in 
the rule making prior to the adoption of the final rules.

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Federal Register / Vol. 61, No. 4 / Friday, January 5, 1996 / 
Proposed Rules

[[Page 394]]


OFFICE OF PERSONNEL MANAGEMENT

5 CFR Parts 731, 732, and 736

RIN 3206-AB92


Suitability, National Security Positions, and Personnel 
Investigations

AGENCY: Office of Personnel Management.

ACTION: Proposed rule.

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SUMMARY: The Office of Personnel Management (OPM) is proposing changes 
to rules on personnel suitability, national security positions, and 
personnel investigations which OPM previously issued as an interim rule 
with a request for comments. OPM has received and considered public 
comments and is now publishing for comment proposed changes. The 
proposed rule incorporates many of the suggestions received, makes 
additional changes based on the recent abolishment of the Federal 
Personnel Manual (FPM), and continues the distinctions in the interim 
rule between national security investigations and investigations to 
determine suitability for non-sensitive positions. OPM will issue a 
final rule after review of the comments received on this proposed rule.

DATES: Comments must be submitted on or before February 20, 1996.

ADDRESSES: Send written comments to John J. Lafferty, Deputy Associate 
Director for Investigations, Office of Personnel Management, Post 
Office Box 886, Washington, DC, 20044-0886.

FOR FURTHER INFORMATION CONTACT:
John J. Lafferty, (202) 376-3800.

SUPPLEMENTARY INFORMATION: OPM promulgated the current suitability and 
personnel security regulations as an interim rule with a request for 
comments in the Federal Register (56 FR 18650-18656, April 23, 1991). 
Comments were received from 16 sources, including individuals, Federal 
agencies, Federal employee unions, and public interest organizations. 
The following summarizes the principal comments, suggestions and 
proposed actions to be taken, as well as information added because of 
the abolishment of the FPM.
Part 731

Section 731.102  Implementation

    Because of the abolishment of the FPM, a new section has been added 
to the regulations outlining OPM's and agencies' responsibilities under 
the Computer Security Act of 1987 and OMB Circular A-130.

Section 731.103  Delegation to Agencies

    The interim regulations provided that OPM could, in its discretion, 
delegate to agencies authority for adjudicating suitability. In 
accordance with recommendations of the National Performance Review 
(NPR), the proposed regulations delegate to agencies all suitability 
adjudication authority, except in cases of material intentional false 
statement or deception or fraud in examination or appointment.
    Several commenters on the interim regulations were concerned that 
the provision for delegation to agencies of suitability determination 
authority did not extend all of the same procedural protections that 
are applicable in OPM-adjudicated cases.
    OPM has revised the regulations to make clear that all procedural 
rights applicable in OPM-adjudicated cases pertain to agency 
adjudications. This should alleviate concerns expressed regarding 
``administrative due process'' for cases involving delegated 
suitability determination authority.

Section 731.201  Standard

    Section 731.201 has been revised to clarify that removal is not the 
only option that may be pursued for an employee found unsuitable. The 
Director of OPM has authority under Civil Service Rule 5.3(a)(a) to 
instruct agencies ``to separate or take other action'' against an 
employee found unsuitable (emphasis supplied), and agencies will have 
the same authority under delegated suitability adjudication authority.

Section 731.202  Criteria

    OPM received favorable comments on the substitution of a more 
clearly job-related criterion for ``alcohol abuse,'' in lieu of the 
prior standard of ``habitual use of intoxicating beverages to excess.'' 
However, a number of negative comments were received regarding certain 
other criteria. One commenter thought that ``refusal to furnish 
testimony as required by Sec. 5.4 of this chapter'' was too broad and 
should be qualified by language making clear that the provision was not 
intended to require testimony protected by the U.S. Constitution or the 
Whistleblower Protection Act or the Inspector General Act. No change is 
proposed in response to this comment. OPM believes it is self-evident 
that none of OPM's regulations should or would be interpreted or 
applied in any manner that would violate the Constitution or specific 
statutory mandates.
    Another commenter, while opining that ``knowing and willful 
engagement in acts or activities designed to overthrow the U.S. 
Government by force'' was ``more stringent'' than ``current criteria,'' 
nevertheless urged elimination of this criterion altogether on First 
Amendment grounds. OPM does not consider it necessary to adopt this 
suggestion because OPM does not believe that the criterion authorizes 
constitutionally forbidden questions concerning ``political 
associations'' or ``broad inquiries into loyalty.'' The phrase ``acts 
or activities designed to overthrow the U.S. Government by force'' 
properly focuses on illegal acts, and prevents inquiry into an 
applicant's or employee's political beliefs or associations. Mere 
advocacy of the use of violence as an avenue of political reform is not 
penalized under the standard.
    Other comments were received concerning the proposed illegal drug 
use criterion. One commenter thought that ``substantial'' 
rehabilitation was too vague, and that ``complete'' rehabilitation 
should be required; one commenter thought that both ``use'' and 
``substantial'' were too vague, calling for purely subjective 
judgments, and that the entire standard was defective because not job-
related; another commenter asked how the illegal drug use criterion 
could be reconciled with the Drug Abuse Office and Treatment Act. OPM 
does not believe that the illegal drug use criterion would be 
interpreted or applied in a manner that would contravene the Drug Abuse 
Office and Treatment Act, and suggests 

[[Page 395]]
that ``substantial'' rehabilitation is a suitable standard, to be 
assessed in light of the evidence in a particular case.
    OPM has proposed two additions to the ``specific factors'' in 
subsection (b): Misconduct or negligence in prior employment has been 
broadened to include current employment as well as prior employment, 
and the intentional false statement factor has been changed to read 
``material intentional false statement.'' The latter change accords 
with longstanding OPM practice (as reflected in the former FPM) that a 
falsification must be ``material'' in order to justify debarment, 
removal, or other appropriate action.

Section 731.203  Due Process

    OPM has set forth a new and separate provision governing ``due 
process'' protections applicable in suitability cases, as distinguished 
from due process provisions applicable in national security cases under 
Sec. 732.301. Based on objections received from many commenters 
regarding the use of confidential information in suitability 
adjudications, and consistent with judicial precedent, OPM proposes to 
ensure that information furnished by confidential sources may not be 
used by agencies in adjudicating suitability.

Section 731.302  Designation of Public Trust Positions and 
Investigative Requirements [This Section Was Entitled ``Risk 
Designation and Investigative Requirements'' in the Interim 
Regulations]

    OPM received a number of comments questioning the lack of 
specificity in paragraphs (a) and (b) of Sec. 731.302. Commenters were 
concerned about the lack of guidance to agencies, especially with 
respect to assessing ``risk levels'' of positions covered under 
Sec. 731.302. OPM has deleted all references to ``risk levels'' in the 
proposed regulation, and has set forth specific criteria for 
determining public trust positions. In addition, the regulation makes 
clear that agency heads, not OPM, are responsible for the designation 
of public trust positions within their agencies.
    A number of commenters opposed the reinvestigation requirement for 
public trust positions set forth in Sec. 731.302(c), pointing out that 
there is no clear statutory foundation for imposing a reinvestigation 
requirement for current employees occupying positions not affecting 
national security; rather, the authorities empowering OPM to conduct 
suitability investigations speak solely in terms of ``applicants.'' 
Because of the lack of statutory or other authority for reinvestigating 
the character and fitness of current employees who do not occupy 
positions affecting national security, OPM proposes to delete from the 
final regulations the reinvestigation requirement for public trust 
positions. Agencies wishing to conduct reinvestigations may explore 
their enabling legislation to determine whether they have the authority 
to conduct reinvestigations on their own initiative.

Section 731.303  Actions by OPM and Other Agencies

    OPM received a number of comments concerning Sec. 731.303(c), which 
provides that suitability disqualification actions are not considered 
actions under part 752 or Secs. 315.804-806 of part 315. The primary 
concern seemed to be that by withdrawing suitability-based removal 
actions from the statutory protections associated with other adverse 
actions, employees would be denied the protection of collective 
bargaining agreements and attendant grievance and arbitration 
procedures.
    OPM does not consider it appropriate to amend the regulation in 
question along the lines suggested for two reasons. First, the 
questioned provision is not new (except to the extent that removals of 
probationary employees are included). Suitability-based removals have 
always been exempted from agency-initiated removal procedures; see 5 
CFR Sec. 731.302(c) (1991). Second, suitability actions are taken under 
authority delegated to OPM by the President. These actions are taken by 
OPM in the exercise of its government wide function of safeguarding the 
appointment process to positions in the competitive service. They are 
not chapter 75 adverse actions at all. Accordingly, chapter 75 of title 
5 does not apply to suitability actions. Such actions also are not 
subject to the negotiated grievance procedure, which is limited to 
disputes between agencies in their capacity as employers and employees 
in recognized bargaining units.

Section 731.304  Debarment

    One commenter thought that the provision giving OPM discretion to 
debar a person found unsuitable from reapplying for a competitive 
service position for up to 3 years was unclear in failing to clarify 
whether a new determination of suitability after expiration of a 
debarment period would trigger the same procedural protections as are 
afforded upon an initial suitability determination. Another commenter 
felt that debarment for 3 years was too long, and that debarment for up 
to 1 year would be a more reasonable standard.
    OPM applies the same procedural protections upon subsequent 
redeterminations of suitability as it applies in initial 
determinations. In order to make this clear, a clarifying phrase to 
this effect has been added to Sec. 731.304(b). OPM does not believe it 
is necessary to change the permissible debarment period, since OPM 
exercises discretion in each case, giving due weight to the 
``additional factors'' set forth in Sec. 731.202(c).
Subpart D--Suitability Actions
    Two commenters recommended extending due process protections under 
part 731 to excepted service employees, since recent amendments to 5 
U.S.C. Sec. 7511 grant appeal rights in adverse action cases to most 
employees in the excepted service. This suggestion cannot be adopted 
since OPM does not have authority to extend part 731 requirements to 
the excepted service.
    Commenters also suggested that Sec. 731.403 be amended to limit an 
agency's discretion to set the time and place of an employee's oral 
answer, to require agencies to provide employees paid time to prepare 
an answer, and to require that agencies answering an OPM proposed 
action notice also provide it to the employee. OPM does not believe it 
is appropriate to limit the discretion to set the time and place of 
oral responses, in light of the NPR's recommendation that agencies by 
given more latitude in suitability determinations. Similarly, it should 
be up to each agency to determine whether it wishes to excuse an 
individual or class of individuals for brief periods of time for the 
purpose of preparing answers and appeals in suitability actions.
    OPM has, however, assumed an additional obligation in 
Sec. 731.402(b): Copies of notices of proposed actions must now be sent 
both to respondents' residences and to their duty stations, in order to 
ensure actual receipt of such notices by respondents.

Section 731.501  Appeal to the Merit Systems Protection Board

    OPM published a final rule revoking the section establishing the 
OPM Review Panel, concluding, as several commenters predicted, that the 
OPM Review Panel did not serve a useful independent review function (60 
FR 13613) March 14, 1995.
    Under OPM's interim rule that established the Review Panel, 
appellants were retained in a pay status while their appeals were 
pending with the Panel, but if the Panel affirmed OPM's decisions, the 
appellants' agencies were directed to remove the appellants within 5 
days of receipt of 

[[Page 396]]
the Panel's decision by the agency. With the elimination of the Panel, 
the appellants' employing agencies not have the option of retaining 
appellants in a pay status pending adjudication of their appeals to the 
MSPB.
Part 732

Section 732.102  Definition and Applicability

    Several commenters suggested that the definition of national 
security positions be changed by broadening ``activities of the 
Government'' to include ``the conduct of foreign relations.'' It was 
also suggested that the degree of involvement in national security 
activities necessary to support a national security designation be 
spelled out, and that the meaning of ``regular'' access to classified 
information be clarified.
    OPM proposes to broaden the definition of national security 
positions to include ``positions primarily concerned with sensitive 
diplomatic relations with other countries,'' believing that ``conduct 
of foreign relations'' is too broad a phrase and might, for example, 
invite national security position designations for positions beyond 
those involved in trade negotiations, such as those involving only 
trade promotion.
    OPM has not adopted the suggestion that the degree of involvement 
in national security activities necessary to support a national 
security position designation be spelled out, since OPM believes that 
agencies are in the best position to judge whether particular positions 
might have an adverse effect on national security within the meaning of 
E.O. 10450.
    OPM proposes to retain the word ``regular'' in connection with 
access to classified national security information, so that it is clear 
that irregular, infrequent, or occasional access to such information 
does not justify a national security position designation.

Section 732.201  Sensitivity Level Designations and Investigative 
Requirements

    This section incorporates definitions of sensitivity levels and 
related guidance from the abolished FPM.

Section 732.202  Waivers and Exceptions to Investigative Requirements

    One commenter suggested that positions covered by 
Sec. 732.202(b)(1) be identified as ``non-sensitive'' and that this 
section be moved to part 731. This suggestion misconstrues the meaning 
and purpose of Sec. 732.202(b)(1). The positions described in that 
section are related to national security, and are thus ``sensitive'' 
positions; but, because of their temporary or seasonal nature, agencies 
are permitted under E.O. 10450 to request that OPM exempt them from the 
investigative requirements of that order. (Paragraph (b) of 
Sec. 732.202 has been revised to clarify that the specified positions 
may be exempted from the investigative requirements of E.O. 10450 only 
upon request of the head of the agency concerned.)
    OPM also proposes to remove Sec. 732.202(b)(2) from the final 
regulations, since there is no authority in E.O. 10450 for this 
provision as it appeared in the interim regulations.

Section 732.203  Periodic Reinvestigations

    One commenter suggested that periodic investigations in national 
security cases are unnecessary, on the ground that competent managers 
should make it their business to garner the same information through 
personal inquiries and observations. However, OPM proposes to retain 
the requirement for periodic reinvestigations in national security 
cases, since reinvestigations appear to be authorized under E.O. 10450, 
have been standard practice at least since 1965 pursuant to 
Presidential directive, and are contemplated by National Security 
Directive 63 (October 21, 1991) and E.O. 12968.
Subpart C--Due Process and Reporting

Section 732.301  Due Process

    OPM received a number of comments suggesting that procedural 
protections be strengthened for persons seeking security clearances, as 
well as a suggestion that the standards for granting or continuing 
security clearances be made uniform for Federal Government employees 
and for Federal Government contractors. With respect to the 
recommendation that OPM establish uniform governmentwide procedures for 
the granting, denial or revocation of security clearances, general 
authority in this area does not belong to OPM but is vested in 
individual agencies under E.O. 10450 and E.O. 12958.
Part 736
    Part 736 has been revised to make clear that its requirements apply 
only to suitability and national security investigations conducted 
under parts 731 and 732 and to national security investigations of 
individuals seeking or holding employment with Federal contractors. In 
addition, OPM proposes to make the following changes in personnel 
investigation requirements:

Section 736.104  Timing of Investigations

    Except for Special-Sensitive national security position, OPM has 
added a requirement that investigations for all positions subject to 
investigation be initiated within 14 days of placement in the position. 
This section implements the NPR's recommendation that background 
investigations be conducted promptly.

Section 736.201  Protecting the Identity of a Source

    Several commenters urged OPM to eliminate the use of confidential 
sources of information or, in the alternative, to impose tighter 
controls on the granting of pledges of confidentiality.
    OPM does not believe it is appropriate to eliminate the use of 
confidential sources altogether, since Congress specifically provided 
for the granting of confidentiality in appropriate circumstances in the 
Privacy Act of 1974. However, in Sec. 731.203, OPM has proposed that 
information furnished by confidential sources may not be used by 
agencies in adjudicating suitability in non-national security cases, 
and in Sec. 736.201, OPM has added a new provision that pledges of 
confidentiality under either part 731 or part 732 may be granted ``only 
in the most compelling circumstances and only upon specific request by 
the source.'' The latter requirement conforms to OMB's Privacy Act 
guidelines (40 FR 28949, 28974 (1975)).

Section 736.203  Use of the Polygraph

    Chapter 736 of the former FPM contained limitations upon using 
polygraphs in personnel investigations, based upon a July 29, 1966, 
interagency committee report approved by former President Lyndon B. 
Johnson. The restrictions previously contained in the FPM are carried 
over in their entirety in Sec. 736.203.
Subpart C--Maintenance of Information
    This section incorporates OPM requirements for the maintenance and 
handling of OPM investigative files formerly contained in the FPM.

E.O. 12866, Regulatory Review

    This rule has been reviewed by the Office of Management and Budget 
in accordance with E.O. 12866.

Regulatory Flexibility Act

    I certify that these regulations will not have a significant 
economic impact on a substantial number of small entities because they 
relate to internal personnel matters within the Federal Government.

[[Page 397]]


List of Subjects in 5 CFR Parts 731, 732, and 736

    Administrative practice and procedure, Government employees, 
National defense, Freedom of information, Investigations, Privacy.

    U.S. Office of Personnel Management.
James B. King,
Director.

    Accordingly, OPM proposes to amend 5 CFR parts 731, 732, and 736 as 
follows:
    1. Part 731 is revised to read as follows:

PART 731--SUITABILITY

Subpart A--Scope

Sec.
731.101  Purpose.
731.102  Implementation.
731.103  Delegation to agencies.

Subpart B--Suitability Determinations

731.201  Standard.
731.202  Criteria.
731.203  Due process.

Subpart C--Suitability Rating Actions

731.301  Jurisdiction.
731.302  Designation of public trust positions and investigative 
requirements.
731.303  Actions by OPM and other agencies.
731.304  Debarment.

Subpart D--Suitability Actions

731.401  Scope.
731.402  Notice of proposed action.
731.403  Answer.
731.404  Decision.

Subpart E--Appeal to the Merit Systems Protection Board

731.501  Appeal to the Merit Systems Protection Board.

Subpart F  Savings Provision

731.601  Savings provision.

    Authority: 5 U.S.C. 1302, 3301, 3302, 7301, 7701; E.O. 10577, 3 
CFR 1954-1958 Comp., p. 218; E.O. 12731, 3 CFR, 1990 Comp., p. 306.

Subpart A--Scope


Sec. 731.101  Purpose.

    The purpose of this part is to establish criteria and procedures 
for making determinations of suitability for employment in positions in 
the competitive service and for career appointments in the Senior 
Executive Service (hereinafter in this part, ``competitive service'') 
pursuant to 5 U.S.C. 3301 and E.O. 10577 (3 CFR, 1954-1958 Comp., p. 
218). Section 3301 of title 5, United States Code, directs 
consideration of ``age, health, character, knowledge, and ability for 
the employment sought.'' E.O. 10577 directs OPM to examine 
``suitability'' for competitive Federal employment. This part concerns 
only determinations of ``suitability'' based on an individual's 
character or conduct that may impact the efficiency of the service by 
jeopardizing an agency's accomplishment of its duties or 
responsibilities, or by interfering with or preventing effective 
service in the position applied for or employed in, and determinations 
that there is a statutory or regulatory bar to employment. 
Determinations made under this part are distinct from determinations of 
eligibility for assignment to, or retention in, sensitive national 
security positions made under E.O. 10450 (3 CFR, 1949-1953 Comp., p. 
936) or similar authorities.


Sec. 731.102  Implementation.

    (a) An investigation conducted for the purpose of determining 
suitability under this part may not be used for any other purpose 
except as provided in a Privacy Act system of records notice published 
by the agency conducting the investigation.
    (b) Under OMB Circular No. A-130 (effective January 22, 1992), the 
Director, OPM, is to maintain personnel security policies for Federal 
personnel associated with the design, programming, operation, 
maintenance, or use of Federal automated information systems. Agencies 
are instructed to establish and manage personnel security policies and 
procedures to assure an adequate level of security for Federal 
automated information systems. In accordance with OMB Circular A-130, 
agency policies and procedures for the security of Federal automated 
information systems must conform to OPM guidance. The Computer Security 
Act of 1987 (Public Law 100-235) provides additional requirements for 
Federal automated information systems.
    (c) Policies, procedures, criteria, and guidance for the 
implementation of this part shall be set forth in issuances of the OPM. 
Agencies exercising authority under this part by delegation from OPM 
shall conform to such policies, procedures, criteria, and guidance.


Sec. 731.103  Delegation to agencies.

    (a) OPM delegates to the heads of agencies authority for 
adjudicating suitability in all cases involving applicants for and 
appointees to competitive service positions in the agency, except that 
OPM retains jurisdiction in competitive service cases involving 
evidence of material, intentional false statement or deception or fraud 
in examination or appointment. Agencies must refer these cases to OPM 
for adjudication, or contact OPM for prior approval if an agency wants 
to take action under its own authority (5 CFR part 315 or 5 CFR part 
752).
    (b) Agencies exercising authority under this part by delegation 
from OPM must show by policies and records that reasonable methods are 
used to ensure adherence to regulations, standards, and quality control 
procedures established by OPM.
    (c) Paragraphs (a) and (b) of this section notwithstanding, OPM may 
exercise its jurisdiction under this part in any case when deemed 
necessary.
    (d) Any applicant or appointee who is found unsuitable by any 
agency having delegated authority from OPM under this part for any 
reason named in Sec. 731.202 may appeal to the Merit Systems Protection 
Board under the Board's regulations.

Subpart B--Suitability Determinations


Sec. 731.201  Standard.

    Subject to subpart C of this part, an applicant, appointee, or 
employee may be denied Federal employment, removed from a position, or 
be subjected to other appropriate action, only when the action will 
promote the efficiency of the service.


Sec. 731.202  Criteria.

    (a) General. In determining whether its action will promote the 
efficiency of the service, OPM or an agency to which OPM has delegated 
authority under Sec. 731.103 of this chapter, shall make its 
determination on the basis of:
    (1) Whether the conduct of the individual may reasonably be 
expected to interfere with, or prevent, efficient service in the 
position applied for or employed in; or
    (2) Whether the conduct of the individual may reasonably be 
expected to interfere with, or prevent, effective accomplishment by the 
employing agency of its duties or responsibilities; or
    (3) Whether a statutory or regulatory bar prevents the lawful 
employment of the individual in the position in question. Each agency 
is responsible for determining whether a statutory or regulatory bar 
prevents employment with that agency.
    (b) Specific factors. When making a determination under paragraph 
(a) of this section, any of the following reasons may be considered a 
basis for finding an individual unsuitable:
    (1) Misconduct or negligence in current or prior employment which 
would have a bearing on efficient service in the position in question, 
or would interfere with or prevent effective accomplishment by the 
employing agency of its duties and responsibilities;

[[Page 398]]

    (2) Criminal or dishonest conduct related to the duties to be 
assigned to the applicant or appointee, or to that person's service in 
the position or the service of other employees;
    (3) Material, intentional false statement or deception or fraud in 
examination or appointment;
    (4) Refusal to furnish testimony as required by Sec. 5.4 of this 
chapter;
    (5) Alcohol abuse of a nature and duration which suggests that the 
applicant or appointee would be prevented from performing the duties of 
the position in question, or would constitute a direct threat to the 
property or safety of others;
    (6) Illegal use of narcotics, drugs, or other controlled 
substances, without evidence of substantial rehabilitation;
    (7) Knowing and willful engagement in acts or activities designed 
to overthrow the U.S. Government by force;
    (8) Any statutory or regulatory bar which prevents the lawful 
employment of the person involved in the position in question.
    (c) Additional factors. In making a determination under paragraphs 
(a) and (b) of this section, OPM and agencies shall consider the 
following additional factors:
    (1) The nature of the position for which the person is applying or 
in which the person is employed,
    (2) The nature and seriousness of the conduct,
    (3) The circumstances surrounding the conduct,
    (4) The recency of the conduct,
    (5) The age of the person involved at the time of the conduct,
    (6) Contributing societal conditions,
    (7) The absence or presence of rehabilitation or efforts toward 
rehabilitation.


Sec. 731.203  Due process.

    When an agency makes an adjudicative decision under this part based 
on an OPM investigation or upon an investigation conducted pursuant to 
OPM-delegated authority, or when an agency, as a result of information 
in an OPM investigation or an investigation conducted pursuant to OPM-
delegated authority, changes a tentative favorable placement decision 
to an unfavorable decision, the agency must:
    (a) Insure that the records used in making the decision are 
accurate, relevant, timely, and complete to the extent reasonably 
necessary to assure fairness to the individual in any determination;
    (b) Insure that all applicable administrative due process 
requirements provided by law, the regulations in this part, and OPM 
policy guidance have been observed;
    (c) Consider all available information in reaching its final 
decision, except information furnished by a confidential source; and
    (d) Keep any record of the agency action required by OPM as 
published in its issuances.

Subpart C--Suitability Rating Actions


Sec. 731.301  Jurisdiction.

    (a) Appointments subject to investigation. (1) In order to 
establish an appointee's suitability for employment in the competitive 
service, every appointment to a position in the competitive service is 
subject to investigation by OPM or an agency conducting investigations 
under delegated authority from OPM, except:
    (i) Promotion;
    (ii) Demotion;
    (iii) Reassignment;
    (iv) Conversion from career-conditional to career tenure;
    (v) Appointment, or conversion to an appointment, made by an agency 
of an employee of that agency who has been serving continuously with 
that agency for at least 1 year in one or more positions under an 
appointment subject to investigation; and
    (vi) Transfer, provided the 1 year, subject-to-investigation period 
applied to the previous appointment has expired.
    (2) Appointments are subject to investigation to continue OPM's 
jurisdiction to investigate the suitability of an applicant after 
appointment and to authorize OPM or an agency acting under delegated 
authority to require removal or take other appropriate action when it 
finds the appointee is unsuitable for Federal employment. The subject-
to-investigation condition may not be construed as requiring an 
employee to serve a new probationary or trial period or as extending 
the probationary or trial period of an employee.
    (b) Duration of condition. The subject-to-investigation condition 
expires automatically at the end of 1 year after the effective date of 
appointment, except in a case involving material, intentional false 
statement or deception or fraud in examination or appointment, or 
refusal to furnish testimony.


Sec. 731.302  Designation of public trust positions and investigative 
requirements.

    (a) Definition of public trust positions. Public trust positions 
include positions involving policymaking, major program responsibility, 
law enforcement duties, or other duties demanding the highest degree of 
public trust; and positions involving access to or operation or control 
of unclassified confidential or financial records, with a relatively 
high risk for causing grave damage or realizing a significant personal 
gain.
    (b) Designation of public trust positions. Agency heads shall be 
responsible for designating public trust positions within the agency in 
accordance with the criteria set forth in paragraph (a) of this 
section.
    (c) Investigative requirements. Persons receiving an appointment 
made subject to investigation shall undergo a background investigation, 
the minimum scope and coverage of which shall be determined by OPM.


Sec. 731.303  Actions by OPM and other agencies.

    (a) For a period of 1 year after the effective date of an 
appointment subject to investigation under Sec. 731.301, an appointee 
may be removed or other appropriate action may be taken when OPM or an 
agency exercising delegated authority under this part finds that the 
appointee is unsuitable for any of the reasons cited in Sec. 731.202.
    (b) Thereafter, OPM may require that an employee be removed or 
other appropriate action be taken on the basis of either material, 
intentional false statement or deception or fraud in examination or 
appointment; or refusal to furnish testimony; or statutory or 
regulatory bar.
    (c) An action to remove an appointee or employee under this part is 
not an action under part 752, or Secs. 315.804 through 315.806 of this 
chapter.
    (d) When OPM instructs an agency to remove an appointee or employee 
under this part it shall notify the agency and the appointee or 
employee of its decision in writing.
    (e) Before OPM, or any agency having delegated authority from OPM 
under this part, shall take a final suitability action against an 
applicant, eligible, appointee, or employee under this part, the person 
against whom the action is proposed shall be given notice of the 
proposed action (including the availability for review, upon request, 
of the materials relied upon), an opportunity to answer, notice of the 
final decision on the action, and notice of rights of appeals.
    (f) Agencies are required to report to OPM all unfavorable 
adjudicative actions taken under this part, including all actions based 
on OPM reports of investigation.


Sec. 731.304  Debarment.

    (a) When OPM finds a person unsuitable for any reason named in 

[[Page 399]]
    Sec. 731.202, OPM, in its discretion, may deny that person examination 
for, and appointment to, a competitive service position for a period of 
not more than 3 years from the date of determination of unsuitability.
    (b) On expiration of a period of debarment, a person who has been 
debarred may not be appointed to any position in the competitive 
service until OPM has redetermined that person's suitability for 
appointment, in accordance with the procedures of this part.
    (c) Any authorities delegated to agencies by OPM under this part do 
not apply to or include OPM's debarment authority under paragraphs (a) 
and (b) of this section.
    (d) Any adjudication by an agency acting under delegated authority 
from OPM which indicates that debarment may be an appropriate action 
may be referred to OPM for its consideration.

Subpart D--Suitability Actions


Sec. 731.401  Scope.

    (a) Coverage. This subpart sets forth the procedures to be followed 
when OPM or an agency having delegated authority from OPM, acting under 
authority of this part, proposes to take or to instruct an agency to 
take, a final suitability ineligibility action, including removal, 
against an applicant, appointee or employee in the competitive service.
    (b) Definition. In this subpart, days means calendar days.


Sec. 731.402  Notice of proposed action.

    (a) OPM or the agency having delegated authority from OPM under 
this part shall notify the applicant, appointee, or employee 
(hereinafter, the ``respondent'') in writing of the proposed action and 
of the charges against the respondent. The notice shall state the 
reasons, specifically and in detail, for the proposed action. The 
notice shall also state that the respondent has the right to answer 
this notice in writing. If the respondent is an employee the notice 
shall further state that the employee may also make an oral answer, as 
specified in Sec. 731.403(a). The notice shall further inform the 
respondent of the time limits for answer as well as the address to 
which such answer should be made.
    (b) OPM shall send a copy of this notice to the agency, if any, 
that is involved. The notice shall be served upon the respondent by 
being mailed to the respondent's last known residence, and duty station 
if an employee, no less than 30 days prior to the effective date of the 
proposed action. If the respondent is employed in the competitive 
service on the date the notice is served, the respondent shall be 
entitled to be retained in pay status during the notice period.


Sec. 731.403  Answer.

    (a) Respondent's answer. A respondent may answer the charges in 
writing and furnish documentation and/or affidavits in support of the 
response. A respondent who is an employee may answer orally. The 
respondent may be represented by a representative of the respondent's 
choice, and such representative shall be designated in writing. To be 
timely, a written answer shall be made no more than 30 days after the 
date of the notice of proposed action. In the event that an employee 
requests to make an oral answer, OPM or the agency having delegated 
authority from OPM under this part shall determine the time and place 
thereof, and shall consider any answer that the respondent makes in 
reaching a decision.
    (b) Agency's answer. In actions proposed by OPM under Sec. 5.3 of 
this chapter, the agency may also answer the notice of proposed action. 
The time limit for filing an answer is 30 days from the date of the 
notice. OPM shall consider any answer that the agency makes in reaching 
a decision.


Sec. 731.404  Decision.

    The decision shall be in writing, dated, and inform the respondent 
of the reasons for the decision. Removal of appointees or employees 
will be effective 30 days following the date of the decision. The 
respondent shall also be informed that an adverse decision can be 
appealed in accordance with subpart E of this part. OPM shall notify 
the respondent and the agency of the decision.

Subpart E--Appeal to the Merit Systems Protection Board


Sec. 731.501  Appeal to the Merit Systems Protection Board.

    (a) Appeal to the Merit Systems Protection Board. An individual who 
has been found unsuitable for employment may appeal the decision to the 
Merit Systems Protection Board (the Board). An employee or appointee 
who appeals a removal directed by OPM shall notify the employing of the 
appeal at the time it is filed.
    (b) Appeal procedures. The procedures for filing an appeal with the 
Board are found at part 1201 of title 5, Code of Federal Regulations.
    (c) Pay status pending appeal. When an employee or appointee who 
has been found unsuitable for employment by OPM files an appeal to the 
Board, the employing agency may, at its option, retain the employee or 
appointee in an active duty status for the period, in which event the 
agency shall so notify the employee or appointee. If the agency elects 
to proceed with a suspension or removal ordered by OPM, part 752 of 
this chapter shall not apply.

Subpart F--Savings Provision


Sec. 731.601  Savings provision.

    No provision of the regulations in this part shall be applied in 
such a way as to affect any administrative proceeding pending on [THE 
EFFECTIVE DATE OF THE FINAL RULE]. An administrative proceeding is 
deemed to be pending from the date of the ``notice of proposed action'' 
described in Sec. 731.402.
    2. Part 732 is revised to read as follows:

PART 732--NATIONAL SECURITY POSITIONS

Subpart A--Scope

Sec.
731.101  Purpose.
732.102  Definition and applicability.

Subpart B--Designation and Investigative Requirements

732.201  Sensitivity level designations and investigative 
requirements.
732.202  Waivers and exceptions to investigative requirements.
732.203  Periodic reinvestigation requirements.

Subpart C--Due Process and Reporting

732.301  Due process.
732.302  Reporting to OPM.

    Authority: 5 U.S.C. 3301, 3302, 7312; E.O. 10450, 3 CFR, 1949-
1953 Comp., p. 936.

Subpart A--Scope


Sec. 732.101  Purpose.

    This part sets forth certain requirements and procedures which each 
agency shall observe in investigations for national security positions 
pursuant to Executive Order 10450--Security Requirements for Government 
Employment (3 CFR 1949-1953 Comp., p. 936), as amended.


Sec. 732.102  Definition and applicability.

    (a) For purposes of this part, the term national security position 
includes:
    (1) Those positions that involve activities of the Government that 
are concerned with the protection of the nation from foreign aggression 
or espionage, including development of defense plans or policies, 
intelligence or counterintelligence activities, and related activities 
concerned with the preservation of the military strength of the United 
States;

[[Page 400]]

    (2) Positions that are primarily concerned with sensitive 
diplomatic relations with other countries; and
    (3) Positions that require regular use of, or access to, classified 
national security information.
    (b) The requirements of this part apply to competitive service 
positions and to Senior Executive Service positions filled by career 
appointment within the Executive Branch. Nothing in this part prohibits 
agencies from applying these provisions, in their discretion, to 
excepted service positions within the Executive Branch.

Subpart B--Designation and Investigative Requirements


Sec. 732.201  Sensitivity level designations and investigative 
requirements.

    (a) For purposes of this part, the head of each agency shall 
designate, or cause to be designated, any position within the 
department or agency the occupant of which could bring about, by virtue 
of the nature of the position, a material adverse effect on the 
national security, as a sensitive position at one of three sensitivity 
levels: Special-Sensitive, Critical-Sensitive, or Noncritical-
Sensitive.
    (b) Definitions of sensitivity levels. For the purposes of this 
part: (1) A Special-Sensitive position is a position which the head of 
the agency determines to be in a level higher than Critical-Sensitive 
because of special requirements under authority other than E.O. 10450.
    (2) A Critical-Sensitive position is any position with potential 
for exceptionally grave damage to the national security.
    (3) A Noncritical-Sensitive position is any position with potential 
for some damage to serious damage to the national security.
    (c) National Security Directive 63. Standards for single scope 
background investigations are established by National Security 
Directive (NSD) 63, ``Single Scope Background Investigations,'' dated 
October 21, 1991. These investigations are used as the minimum 
investigative standard by all executive branch departments and agencies 
for granting individuals access to Top Secret (TS) national security 
information and Sensitive Compartmented Information (SCI).
    (d) Director of Central Intelligence Directive 1/14. The standards 
set for single scope background investigations established by NSD 63 
are further defined for SCI access in DCID 1/14, ``Personnel Security 
Standards and Procedures Governing Eligibility for Access to Sensitive 
Compartmented Information (SCI),'' effective January 22, 1992, and as 
subsequently amended.
    (e) Investigative requirements for each sensitivity level are 
provided in OPM issuances.


Sec. 732.202  Waivers and exceptions to investigative requirements.

    (a) Waivers.--(1) General. A waiver of the preappointment 
investigative requirement contained in section 3(b) of Executive Order 
10450 for employment in a sensitive national security position may be 
made only for a limited period and only under the following conditions:
    (i) In case of emergency if the head of the department or agency 
concerned finds that such action is necessary in the national interest; 
and
    (ii) When such finding is made a part of the records of the 
department or agency.
    (2) Specific waiver requirements. (i) The preappointment 
investigative requirement may not be waived for appointment to 
positions designated Special-Sensitive under this part.
    (ii) For positions designated Critical-Sensitive under this part, 
the records of the department or agency required by Sec. 732.202(a)(1), 
shall show what decision was made on obtaining prewaiver checks, as 
follows:
    (A) The nature of the emergency precluded obtaining prewaiver 
checks; or
    (B) Checks were initiated but not all responses were received 
within 5 days. The records shall also include a listing of all checks 
made and favorably completed.
    (iii) When waiver is authorized, the required investigation must be 
initiated within 14 days of placement of the individual in the 
position.
    (b) Exceptions to investigative requirements. Pursuant to section 
3(a) of E.O. 10450, the head of an agency may request that the 
following positions be exempted from the investigative requirements of 
E.O. 10450, providing that the employing agency conducts such checks as 
it deems appropriate to insure that the employment or retention of 
individuals in these positions is clearly consistent with the interests 
of the national security:
    (1) Positions that are intermittent, seasonal, per diem, or 
temporary, not to exceed an aggregate of 180 days in either a single 
continuous appointment or series of appointments; or
    (2) Positions filled by aliens employed outside the United States.


Sec. 732.203  Periodic reinvestigation requirements.

    The incumbent of each position designated Special-Sensitive or 
Critical-Sensitive under this part shall be subject to periodic 
reinvestigation of a scope prescribed by OPM 5 years after placement, 
and at least once each succeeding 5 years. The employing agency will 
use the results of such periodic reinvestigation to determine whether 
the continued employment of the individual in a sensitive position is 
clearly consistent with the interests of the national security.

Subpart C--Due Process and Reporting


Sec. 732.301  Due process.

    When an agency makes an adjudicative decision under this part based 
on an OPM investigation or upon an investigation conducted pursuant to 
OPM-delegated authority, or when an agency, as a result of information 
in an OPM investigation or an investigation conducted pursuant to OPM-
delegated authority, changes a tentative favorable placement or 
clearance decision to an unfavorable decision, the agency must:
    (a) Insure that the records used in making the decision are 
accurate, relevant, timely, and complete to the extent reasonably 
necessary to assure fairness to the individual in any determination;
    (b) Insure that all applicable administrative due process 
requirements provided by law, the regulations in this part, and OPM 
policy guidance have been observed;
    (c) Consider all available information in reaching its final 
decision;
    (d) Keep any record of the agency action required by OPM as 
published in its issuances; and
    (e) At a minimum, provide the individual concerned:
    (1) Notice of the specific reason(s) for the decision;
    (2) An opportunity to respond; and
    (3) Notice of appeal rights, if any.


Sec. 732.302  Reporting to OPM.

    (a) In accordance with section 9(a) of E.O. 10450, each agency 
conducting an investigation under E.O. 10450 is required to notify OPM 
when the investigation is initiated.
    (b) In accordance with section 14(c) of E.O. 10450, agencies shall 
report to OPM the action taken with respect to individuals investigated 
pursuant to E.O. 10450 as soon as possible and in no event later than 
90 days after receipt of the final report of investigation.
    3. Part 736 is revised to read as follows:
    
[[Page 401]]


PART 736--PERSONNEL INVESTIGATIONS

Subpart A--General Provisions

Sec.
736.101  Purpose.
736.102  Scope.
736.103  Responsibilities of OPM and other Federal agencies.
736.104  Timing of investigations.

Subpart B--Collection of Information

736.201  Protecting the identity of a source.
736.202  Notice to investigative sources.
736.208  Use of the polygraph.

Subpart C--Maintenance of Information

736.301  Maintenance of investigative files.
736.302  Handling of OPM investigative files.

    Authority: Pub. L. 93-579; (5 U.S.C. 552a).

Subpart A--General Provisions


Sec. 736.101  Purpose.

    The purpose of this part is to specify certain requirements for 
personnel investigations conducted by OPM, for investigations conducted 
under delegated authority from OPM, and for use of OPM investigative 
records.


Sec. 736.102  Scope.

    (a) The requirements of this part apply to suitability and national 
security investigations conducted under parts 731 and 732 of this 
chapter and to national security investigations of individuals seeking 
or holding employment with Federal Contractors.
    (b) For purposes of this part, Agency means any authority of the 
Government of the United States, whether or not it is within or subject 
to review by another agency, and includes any executive department, 
military department, Government corporation, Government-controlled 
corporation, or other establishment in the executive branch of the 
Government, or any independent regulatory agency.


Sec. 736.103  Responsibilities of OPM and other Federal agencies.

    (a) Unless provided otherwise by law, the investigation of persons 
entering or employed in the competitive service, or by career 
appointment in the Senior Executive Service, is the responsibility of 
OPM.
    (b) Requests for delegated investigating authority. Agencies may 
request delegated authority from OPM to conduct or contract out 
investigations of persons entering or employed in the competitive 
service or by career appointment in the Senior Executive Service. Such 
requests shall be made in writing by agency heads, or designees, and 
must specify the reason(s) and justification for the request and must 
include a complete cost analysis of all factors spelled out in OPM 
guidance. Background investigations for these positions may not be 
conducted or contracted out unless expressly authorized by OPM special 
agreement.
    (c) OPM Security Program Appraisals. Under E.O. 10450 (3 CFR, 1949-
1953 Comp., p. 936), OPM is required to conduct a continuing study of 
each agency's personnel security program. The purpose of the appraisal 
is to identify any deficiencies in security programs established under 
E.O. 10450 which are inconsistent with the interests of, or directly or 
indirectly weaken, the national security, and to identify tendencies in 
such programs to deny to individual employees fair, impartial, and 
equitable treatment or rights under the Constitution and laws of the 
United States.
    (d) OPM Suitability Program Appraisals. Under its statutory 
authority to delegate personnel management functions to agencies (5 
U.S.C. 1104), OPM conducts a continuing appraisal of agency compliance 
with personnel suitability program requirements under 5 CFR part 731. 
In addition, OPM conducts a continuing appraisal of the Computer/ADP 
requirements set forth in OMB Circular A-130.


Sec. 736.104  Timing of investigations.

    Investigations required for all positions subject to investigation 
must be initiated within 14 days of placement in the position except 
for positions designated Special-Sensitive under part 732 of this 
chapter, for which the preappointment investigative requirement may not 
be waived.

Subpart B--Collection of Information


Sec. 736.201  Protecting the identity of a source.

    (a) The interviewing agent may grant a pledge to keep confidential 
the identity of an information source only in the most compelling 
circumstances and only upon specific request by the source. Although 
the interviewing agent may not ordinarily suggest that the source 
request confidentiality, the agent may offer a pledge of 
confidentiality where the agent believes that the source would not 
otherwise be willing to provide needed information.
    (b) A pledge of confidentiality may not be assumed by the source.
    (c) A pledge of confidentiality, if granted, extends only to the 
identity of the source and to any information furnished by the source 
that would reveal the identity of the source.
    (d) When a source is granted a promise that the source's identity 
will be kept confidential, the investigating agency and all other 
agencies that receive information obtained under the promise are 
required to take all reasonable precautions to protect the source's 
identity. Each agency will prepare implementing instructions consistent 
with this part.


Sec. 736.202  Notice to investigative sources.

    (a) The investigating agent must notify sources:
    (1) Of the purpose of the request for information,
    (2) Of the uses that may be made of the information, and
    (3) That all information provided, including the record source's 
identity, may be disclosed to the subject of the investigation upon the 
subject's request.
    (b) Where information is requested by written inquiry, the form, 
instructions, or correspondence used by an agency must include, in 
addition to the requirements listed in paragraph (a) of this section:
    (1) Space for the source to request a pledge that the source's 
identity will not be disclosed to the subject of the investigation, and
    (2) An offer to make special arrangements to obtain significant 
information which the source feels unable to furnish without a promise 
that the source's identity will be kept confidential.


Sec. 736.203  Use of the polygraph.

    (a) An executive branch agency which has a highly sensitive 
intelligence or counterintelligence mission directly affecting the 
national security (e.g., a mission approaching the sensitivity of that 
of the Central Intelligence Agency) may use the polygraph for 
employment screening and personnel investigations of applicants and 
appointees only after complying with the requirements in paragraphs (c) 
and (d) of this section.
    (b) All other executive branch departments and agencies are 
prohibited from initiating a polygraph examination for employment 
screening purposes for applicants or appointees to the competitive 
service.
    (c) If an agency desires to determine whether the agency mission 
meets the criteria to be allowed to use the polygraph, the agency must 
submit to the Director, OPM a statement of the nature of its mission 
and a copy of its current or proposed regulations and directives 
governing use of the polygraph (or a citation to them if there has been 
no change since they were previously submitted and approved). The 
Director shall then determine whether the agency has an intelligence or 
counter-intelligence mission directly 

[[Page 402]]
affecting the national security and whether the regulations and 
directives meet current approval requirements.
    (d) The agency shall prepare regulations and directives governing 
use of the polygraph in employment screening and personnel 
investigations which must be reviewed and approved by the Director, 
OPM. These shall contain at a minimum:
    (1) Specific purposes for which the polygraph may be used, and 
details concerning the types of positions or organizational entities in 
which it will be used, and the officials authorized to approve these 
examinations;
    (2) A provision that a person to be examined must be informed as 
far in advance as possible of the intent to use the polygraph, and of
    (i) Other devices or aids to the examination which may be used 
simultaneously with the polygraph, such as voice recordings,
    (ii) The effect of the polygraph examination, or his/her refusal to 
take this examination, on eligibility for employment, and that refusal 
to consent to a polygraph examination will not be made a part of the 
personnel file, and
    (iii) The characteristics and nature of the polygraph machine and 
examination, including an explanation of the physical operation of the 
machine, the procedures to be followed during the examination, and the 
disposition of information developed;
    (3) A provision that no polygraph examination will be given unless 
the person to be examined has voluntarily consented in writing to be 
examined after having been informed of the provisions in paragraph 
(d)(2) of this section;
    (4) A provision that questions to be asked during a polygraph 
examination must have relevance to the subject of the particular 
inquiry;
    (5) Adequate standards for the selection and training of examiners, 
keeping in mind the Government's objective of insuring protection for 
the subject of an examination and the accuracy of polygraph results;
    (6) A provision for adequate monitoring of polygraph operations to 
prevent abuses or unwarranted invasions of privacy; and
    (7) A provision for adequate safeguarding of files, charts, and 
other relevant data developed through polygraph examinations to avoid 
unwarranted invasions of privacy.
    (e) Approval to use the polygraph for employment selection 
screening for positions in the competitive service will be granted only 
for a 12-month period, and is conditioned upon prior approval of the 
agency's regulations and directives as provided in paragraph (d) of 
this section. An agency given approval to use the polygraph for 
competitive service positions will be required to recertify annually to 
the Director, OPM, that the conditions which led to the original 
certification still exist in the agency. Nothing contained in this 
section shall be applicable to polygraph examinations for purposes 
other than employment selection screening.
    (f) The basic requirements of National Security Decision Directive 
Number 84 (NSDD-84), subject to and as affected by any restrictions in 
force, approved by former President Ronald W. Reagan on March 11, 1983, 
include the use of the polygraph in certain instances. Agencies that 
originate or handle classified national security information should 
review the current requirements of NSDD-84.

Subpart C--Maintenance of Information


Sec. 736.301  Maintenance of Investigative Files.

    (a) Investigative files are records subject to the Privacy Act and 
the Freedom of Information Act and are maintained in accordance with 
the provisions of those Acts.
    (b) Investigative information, including investigative reports and 
other materials, is highly personal and is properly restricted to 
agency officials who have an official need for it in performance of 
their duties. All investigative information shall be maintained in 
confidence. Notices of systems of records published to fulfill Privacy 
Act requirements must show full consideration for the highly personal 
nature of this information.
    (c) When not in use, personnel investigations must be stored in a 
combination-locked cabinet or safe, or in an equally secure area. 
Access to case files should be limited only to the Security Officer and 
approved staff, who shall not have access to their own files.


Sec. 736.302  Handling of OPM Investigative Files.

    (a) The agency security office must maintain a record of each 
disclosure of OPM investigative material within the agency, including 
at a minimum:
    (1) The name and title of the person to whom disclosure was made;
    (2) The type of background investigation conducted on the person to 
whom the material was disclosed;
    (3) The date(s) of disclosure; and
    (4) The reason(s) for the disclosure.
    (b) An agency may disseminate OPM investigative files, in whole or 
in part, outside the agency only when the agency obtains prior OPM 
approval. Agency security officers are responsible for controlling 
files within their agencies.
    (c) Privacy Act and Freedom of Information Act requests for OPM 
investigative records are to be submitted to the Office of Personnel 
Management, Federal Investigations Processing Center, FOI/P, P.O. Box 
618, Boyers, Pennsylvania 16018-0618.

[FR Doc. 96-116 Filed 1-4-96; 8:45 am]
BILLING CODE 6325-01-M