Former Federal Trade Officials: Laws on Post-Employment Activities, Foreign Representation, and Lobbying
Released: 2010-06-23T00:00:00

Letter

Background

In 1962, the U.S. government enacted conflict of interest laws that were designed to protect against the improper use of influence and government information by former employees, as well as to limit the potential influence that a prospective employment arrangement may have on current federal officials when dealing with prospective private clients or future employers while still in government service. Congress broadened post-employment restrictions as part of the Ethics Reform Act of 1989, including, for example, a restriction against certain former government officials representing, aiding, or advising on foreign entities. The executive branch promotes compliance with post-employment restrictions through agency ethics-in-government programs, which are guided by OGE, an executive branch agency. OGE is responsible for providing overall direction to executive branch policies related to preventing conflicts of interests on the part of officers and employees of any executive agency. Individual agencies are responsible for the day-to-day administration of their own ethics programs.

In contrast to post-employment restrictions specific to former government personnel, there are federal disclosure statutes concerning foreign representation and lobbying activities that affect all individuals. Enacted in 1938, FARA is a disclosure law that requires all individuals in the United States working as agents of a foreign principal to publicly disclose these connections. LDA is a disclosure law that requires all individuals working a certain percentage of the time as lobbyists to publicly disclose these activities. Lobbying regulations began with the Federal Regulation of Lobbying Act of 1946, which required lobbyists to disclose the identities of their clients, report the receipts and expenses involved, and describe the nature of the legislative objectives that were pursued for each client. Lobbying was interpreted under the 1946 act as direct communication with a member of Congress in an attempt to influence the passage or defeat of any proposed or pending legislation. Congress replaced this law with the Lobbying Disclosure Act of 1995, which expanded the definition of lobbying to include communications with “covered” employees in both the legislative and executive branch regarding legislation, regulations, policies, or the nomination or confirmation of a person for a position subject to confirmation by the Senate.

Post-Employment Restrictions for Former Federal Officials and Disclosure Laws Related to Foreign Representation and Lobbying

Post-employment restrictions in the Revolving Door law prohibit federal employees from engaging in certain conduct with the intent to influence government officials for a specified period of time after leaving federal employment. In contrast to post-employment restrictions for former government officials, the disclosure laws in FARA and LDA are not specific to former government employees. FARA and LDA do not prohibit any activities; rather, they require individuals engaging in certain foreign representation and lobbying activities to make these activities public. Table 1 describes the key attributes of the three laws.

Revolving Door Law

Revolving Door Restrictions More Stringent for Former Senior and Very Senior Officials

The post-employment restrictions contained in the Revolving Door law prohibit categories of former federal employees from conducting certain activities, with the intent to influence government officials, for various periods of time once they have left federal government employment. Most executive branch employees are affected by only one restriction: a life- time ban on “switching sides,” that is, representing any person with the intent to influence, in a communication to or appearance before a government official, in connection with a matter (1) in which the United States is a party or has a direct and substantial interest, (2) in which the former executive branch employee had worked personally and substantially for the government, and (3) that involved specific parties at the time of the former employee’s participation. Additional restrictions, however, apply to senior or very senior employees: a 1-year “cooling off” period bars certain former senior employees from representing anyone with the intent to influence individuals at their former agency and a 2-year “cooling off” period bars former very senior employees’ representation and attempted influence concerning any matter. These former senior and very senior employees are also banned for 1 year from representing, aiding, or advising foreign entities with the intent to influence a decision of a government official, and former U.S. Trade Representatives and Deputy Trade Representatives are banned for life from such activity.

Level of pay and certain designated positions are used to categorize employees as “senior” or “very senior.” Senior employees include employees whose rate of pay is specified in or fixed according to the Executive Schedule, as well as certain other employees who hold specific appointed positions or who meet a specific financial threshold—86.5 percent of Executive Schedule Level II. Most employees in the Senior Executive Service are considered senior employees under the Revolving Door law because their pay exceeds this financial threshold. “Very senior employees” include employees whose rate of pay is equal to the rate of pay for Level I of the Executive Schedule, and employees in certain other named and appointed positions.

The number of senior and very senior officials separating from USTR, ITA, and USITC, and to whom certain Revolving Door restrictions apply, varies from year to year. From 2004 through 2009, a total of 19 senior or very senior officials separated from USTR, 47 separated from ITA, and 5 , 47 separated from ITA, and 5 separated from USITC (see fig. 1). separated from USITC (see fig. 1).

One section of the Revolving Door law is of specific relevance to former officials who participated in treaty negotiations. This section prohibits all former employees (regardless of level) who participated personally and substantially in ongoing treaty negotiations for 1 year from aiding or advising any other person in that treaty negotiation, on the basis of certain “covered” information to which the employee had access. This section of the law also used to apply to employees who negotiated certain trade agreements; however, the specific definition of “trade agreements” as used in the section of the law refers only to the “fast track” trade agreement authority that expired in 1993. According to OGE, when Congress restored similar fast track authority in 2002, it did so by creating new authority rather than by amending the prior fast track provisions that are referenced in the section of the Revolving Door law, and made no conforming changes to reference the new fast track provisions. Consequently, the prohibition no longer applies to former government employees who negotiated trade agreements. As a result, former employees may advise another party on “covered” information related to trade negotiations as long as doing so would not violate other provisions of the Revolving Door law. OGE did not take a position on whether this section of the law should be amended to again cover fast track trade agreement authority. However, an OGE official told us that the Revolving Door prohibition relating to trade negotiations had applied only in relatively narrow circumstances, for example when the employee used information that he or she knew was designated as exempt from disclosure under the Freedom of Information Act. See appendix II for a more detailed discussion of all post-employment restrictions in the Revolving Door law.

USTR, ITA, and USITC Ethics Officials Train Current Employees and Advise Former Employees on Revolving Door Restrictions

Ethics officials at USTR, ITA, and USITC described a variety of activities they use to inform senior employees of the post-employment restrictions, such as conducting training programs and providing counseling to former employees. Ethics officials at all three agencies told us that they provide special, one-on-one counseling to senior officials separating from the government regarding what post-employment activities are permitted. They said that they also advise former employees who contact them with questions on post-employment restrictions. The ethics officials at the three agencies described the ethics training they provide that is specific to post- employment restrictions: USTR. According to USTR’s designated ethics official, all new employees receive training from the Executive Office of the President’s Office of Administration as well as an additional briefing from a USTR ethics official on issues of particular concern to USTR. New senior employees receive one-on-one training. Current employees receive annual ethics training during which employees are encouraged to contact the ethics official with any questions or concerns regarding contact they receive from former employees. All separating employees receive one-on-one training that addresses the post-employment provisions applicable to them; they also receive an outline of the post-employment restrictions. This counseling is documented on the employees sign out form, which is retained by the agency. Senior employees complete financial disclosure reports that identify any agreements they have for future employment. Separating employees are informed that they may contact the USTR ethics official after leaving the agency to ask questions on post-employment restrictions. The USTR ethics official said that many former employees do contact the ethics office; specific advice provided is documented in either an e-mail or in notes of the conversation.

ITA. According to a Commerce ethics official, all new ITA employees located in the Washington, D.C., area receive an in-person briefing at the time of appointment; employees located outside of Washington, D.C., receive a written copy of the summary of ethics rules for new employees. All ITA officials appointed by the President receive individual ethics briefings from the Assistant General Counsel for Administration, upon appointment and each year thereafter, including a post-employment briefing. Current ITA employees who are required to file a private or public financial disclosure report (which includes all senior officials) receive a written copy of the summary of ethics rules and those in the Washington, D.C., area attend an in-person ethics briefing every year. The ethics office also routinely provides in-person briefings at regional conferences to ITA employees stationed at foreign posts. The office also provides individual briefings to separating ITA officials upon request. The office typically provides a 1-page summary of the post-employment restrictions and/or a 17-page detailed summary of the post-employment restrictions for employees requesting post-employment guidance. A Commerce ethics official reported that former ITA officials have contacted the ethics office for post-employment guidance on numerous occasions.

USITC. According to an USITC ethics official, all employees separating from the USITC have one-on-one meetings with an ethics official to receive counseling and documentation on post-employment restrictions. Senior officials receive specific information regarding the parts of the Revolving Door restrictions specific to them. All separating employees must sign a form to acknowledge receipt of a memorandum describing the post-employment restrictions. Attached to the memorandum is OGE guidance on post-employment restrictions, a copy of the Revolving Door law, and various other information regarding how ethics rules apply to former officials’ post-employment activities. The packet also contains information on a rule specific to the USITC: no former officer or employee of the USITC who personally and substantially participated in a matter that was pending in any manner or form before the USITC during his or her employment shall be eligible to appear before the USITC as attorney or agent in connection with such matter. No former officer or employee of the USITC shall be eligible to appear as attorney or agent before the USITC in connection with any matter that was pending in any manner or form before the USITC during his or her employment, unless he or she first obtains written consent from the USITC. The memorandum also explains that the USITC’s ethics counseling service is available to employees with any questions concerning post-employment activities.

Revolving Door Enforcement

Former government officials who violate the Revolving Door law may be subject to criminal and civil penalties. prohibited activity can be imprisoned for up to 1 year, or fined for each violation, or both. Any person who willfully engages in conduct violating the provisions of the law may be imprisoned for up to 5 years, or fined for each violation, or both. In addition to criminal punishment, the Attorney General is authorized to bring civil suits against anyone who violates the law. If found to have engaged in misconduct, the defendant can be subject to a civil penalty up to $50,000 for each violation, or the amount of compensation that he or she received or was offered for the prohibited conduct, whichever is greater. Finally, the Attorney General may also petition for injunctive relief in federal court to prevent the defendant from engaging in conduct that violates the law.

Our discussion on enforcement of the Revolving Door law refers only to enforcement of 18 U.S.C § 207, the sections of the law related to post-employment activities of former federal employees. violations in conjunction with Inspectors General. Justice officials reported that the record of Revolving Door prosecutions is limited and that there are no prosecutions on record for violations by former USTR, ITA, and USITC officials. Through its annual Conflict of Interest Prosecution Survey, OGE collects information from Justice on all indictments, pleas, convictions, etc., that deal with the conflict of interest laws. According to OGE’s prosecution surveys, there have been 26 reported cases for Revolving Door prosecutions from 1990 through 2008. These cases included, for example, prosecutions of former officials who had violated their cooling off periods or life-time representation ban. None of these cases involved prosecutions of the section of the law that prohibits former senior officials from representing, aiding, or advising a foreign interest.

Justice officials cited several reasons for the limited number of prosecutions. First, they said that they receive a limited number of referrals from the investigative agencies. In particular, the Civil Division reported that the division had received no referrals of Revolving Door violations by USTR, ITA, and USITC officials in at least 15 years. Second, it is difficult to bring cases to a criminal level because Justice must show that the former employee knowingly broke the law. One Justice official noted that it is difficult to prove that the former employee knew he or she was violating the law and that it is often hard to prove that the employee’s actions resulted in real harm. Moreover, it is possible that a former official misunderstood guidance received from his or her ethics official regarding post-employment restrictions, or that the former official did not receive accurate guidance. Justice officials said they viewed the Revolving Door law as being more useful as a preventative measure rather than a tool for prosecution; they believed that guidance from agency ethics officials deterred most violations. In many cases, according to a Justice official, the former employee can be counseled to stop doing what he or she is doing and that is all that needs to be done.

Foreign Agents Registration Act (FARA)

FARA is a disclosure law that requires all individuals acting as agents of foreign principals to register their activities with Justice, unless exempt by law. FARA registration requirements are not specific to former federal employees, but rather apply to all individuals and organizations performing certain activities on behalf of a foreign principal, unless specifically exempt. The purpose of the act is to ensure that the U.S. government and the American people are informed of the source of representational activity in the United States and the identity of persons attempting to influence U.S. public opinion, policy, and laws. Under FARA, a person is considered an agent of a foreign principal when the person acts in any capacity at the order or request or is under the control, supervision, or financing of the foreign principal, and engages in the following within the United States: political activities for or in the interest of the foreign principal; public relations, information-service employment, or political consulting for or in the interest of the foreign principal; fundraising, collecting, or disbursing of money or things of value for or in the interest of the foreign principal; or representing the interests of a foreign principal before any agency or official of the U.S. government.

Justice’s Registration Unit, in the National Security Division, is responsible for the administration of the law. FARA requires individuals engaged in the listed activities above to file a registration statement, which collects detailed information on the registrant and the activities he or she will perform on behalf of the foreign principal listed. Additionally, foreign agents are required to file a supplemental statement every 6 months for the duration of the foreign principal-agent relationship, providing updated information on the agent’s activities.

According to the Registration Unit, 5 of the 71 former senior officials who separated from USTR, ITA, and USITC from 2004 through 2009 registered as foreign agents at one point, but only one is currently registered. The other four individuals were FARA registrants for periods of time while working for private law firms either before their government service or in between 2 periods of government service. They are no longer registered. The individual who is currently registered was a former senior official at USTR and separated from the federal government in 2006. This individual first registered under FARA in 2008, more than 2 years after separating from the federal government, and, as of April 2010, remains actively registered. According to the individual’s initial FARA registration in 2008, the individual is employed by a law firm and facilitates interaction between the U.S. government and the government of Mexico’s agriculture department on meat inspection issues and Mexican meat imports.

Numerous FARA Exemptions

Individuals and organizations engaging in certain diplomatic, humanitarian, commercial, and legal activities on behalf of a foreign principal are exempt from registering with Justice. FARA regulations state that the burden of establishing the availability of the exemption is on the person for whose benefit the exemption is claimed; however, there is no requirement for such persons to provide any notification about their exempted activities and thus they are not formally tracked.

Diplomatic and consular officers of foreign governments, officials of foreign governments, and staff members of diplomatic and consular officers of foreign governments are exempt from registering under FARA. Diplomatic and consular officers must be accredited by the Department of State, and foreign officials and diplomatic and consular staff must file with the Department of State notifications of status with a foreign government. Other exempted categories of agents of foreign principals include individuals who (1) engaged only in private and nonpolitical activities in furtherance of trade or commerce for the foreign principal; (2) engaged in collecting funds or contributions within the United States for humanitarian purposes such as medical aid, food, and clothing; and (3) engaged only in activities in furtherance of bona fide religious, scholastic, academic, scientific, or artistic pursuits. Activities are considered “private” for the commercial trade exemption, so long as they do not directly promote the public or political interests of the foreign government. This applies even if the foreign principal is a corporation that is owned by the foreign government. The religious and scholastic pursuit exemption does not apply to any agent of a foreign principal who is engaged in political activity for the foreign principal.

Lawyers engaging in legal representation of foreign principals before an adjudicatory body in the United States are exempt from registering under FARA. The legal exemption does not include attempts to influence officials other than in the course of judicial or law enforcement investigations or proceedings. Examples of activities for which lawyers still must register include attempts to influence the formulation, adoption, or change of domestic or foreign U.S. policy, or to persuade agency personnel or officials with reference to the political or public interests of a foreign country or foreign political party.

Agents of foreign principals who have registered as lobbyists under LDA are exempt from registering under FARA, if the LDA registration is connected with the agent’s representation of the foreign principal. However, this exemption does not apply if the foreign principal is a foreign government or foreign political party.

Another exemption exists for agents whose foreign principal is a government of a foreign country, the defense of which the President deems vital to the defense of the United States. This exemption is only available for people who are conducting activities that do not conflict with any domestic or foreign policies of the United States, who only disseminate accurate information within the United States and disclose their true identity in the disseminated information, and whose government has furnished information to the United States about the identity and activities of the agent of the foreign principal. This exemption does not become available until the President has published in the Federal Register the country whose defense is deemed vital to the defense of the United States.

FARA Compliance and Enforcement

According to Justice officials, the cornerstone of the Registration Unit’s enforcement efforts is encouraging voluntary compliance. This includes providing registration forms, copies of the FARA law, and other information to registrants, as well as members of the public and press. The Registration Unit proactively outreaches to various professional communities (e.g., law, advertising, political, and public relations firms) from which the majority of foreign agents are drawn, as well as educates prosecutors and other federal agencies about FARA. The Registration Unit meets with potential registrants to discuss their possible obligation to register, and with current registrants regarding whether they should continue to register. Justice has a public Web site that provides an overview of FARA and key information. In addition, Justice officials said they answer inquiries from agency ethics officers on FARA requirements and provide information on FARA registration and reporting requirements for federal employees to ethics officers.

Justice officials said that the Registration Unit is proactive in identifying potential registrants. It reviews publications such as Congressional Quarterly; monitors the Lobbying Disclosure Web site; and acts on tips provided from various sources. These referrals may come from sources such as the Department of State and the Federal Bureau of Investigation, or from competing legal firms or members of the public. The Registration Unit officials send out letters of inquiry to individuals it has reason to believe may be acting as foreign agents. The letters of inquiry start a process in which the Registration Unit requests more information on these individuals’ activities to determine whether they need to register. In 2008, we reported that from January 2004 through May 2008, the Registration Unit had sent letters to approximately 130 individuals or firms it believed may have had an obligation to register as foreign agents under FARA, and received approximately 25 registrations as a result of these letters; the remaining entities were either determined not to have an obligation to register or were still being reviewed at the time of our 2008 report. We requested updated information from Justice regarding inquiries sent from June 2008 through March 2010; Registration Unit officials reported that it had sent 18 letters of inquiry, and that two individuals were found to have obligations to register and have since registered. The remaining 16 were either found to have no obligation to register or the Registration Unit is continuing to evaluate whether a registration obligation exists.

Civil and criminal penalties exist for willful violations of FARA requirements and for willful false statements or omissions on FARA registration statements and supplements. Individuals who willfully violate FARA, or willfully make a false statement or omission on their registration form, can be imprisoned for up to 5 years or be fined up to $10,000, or both. For certain violations, including the failure to properly label propaganda that is disseminated in the United States, the punishment is imprisonment for up to 6 months or a fine of up to $5,000, or both. The Registration Unit handles enforcement of FARA violations. According to the Registration Unit, it has prosecuted one violation of FARA since 1990.

Lobbying Disclosure Act

The Lobbying Disclosure Act of 1995, as amended, requires public disclosure by registrants of certain lobbying activities. The LDA was enacted to enhance public awareness of paid lobbyists’ efforts to influence the public decision-making process in the legislative and executive branches, and to increase public confidence in the integrity of government. Under LDA, a registrant can be an individual, a lobbying firm, or an organization that has employees lobbying on its own behalf, depending on the circumstances. Registrants are required to file a registration with the Secretary of the Senate and the Clerk of the House of Representatives for each client on whose behalf a lobbying contact is made if a minimum dollar threshold is passed. For reporting purposes, a lobbyist is defined as a person who has made two or more lobbying contacts and whose lobbying activities represent at least 20 percent of the time that he or she spends on behalf of the client during any quarter. Registrations and reports must also identify any covered official positions a lobbyist held in the previous 20 years.

Lobbyist registration requirements apply to all individuals conducting lobbying activities, not only to former federal officials. Within 45 days of first making a lobbying contact or being employed to make a lobbying contact with a covered official, whichever is earlier, the lobbyist or organization employing the lobbyist must register with the Secretary of the Senate and Clerk of the House of Representatives.

The Secretary and the Clerk are required by law to provide guidance and develop common standards and procedures for compliance with the LDA. They must also review, verify, and inquire to ensure the timeliness and accuracy of the reports, as well as develop a publicly available list of all registered lobbyists and their clients. The Secretary and the Clerk must retain registrations and reports for 6 years after they are filed, and make all filed documents searchable on the Internet for free. If lobbyists are not in compliance with the LDA, the Secretary and Clerk must notify them in writing, after which the registrant has 60 days to provide an appropriate response. If the registrant does not reply, the Secretary and Clerk must refer the noncompliance to the U.S. Attorney for the District of Columbia.

According to the Clerk of the House of Representatives, 15 of the 71 former senior or very senior officials who separated from USTR, ITA, and USITC registered as lobbyists. Nine were former USTR officials, four were former ITA officials, and two were former USITC officials.

During a calendar quarter, lobbyists who do not spend at least 20 percent of their time conducting lobbying activities, or whose lobbying activities do not meet the above mentioned financial thresholds for either a particular client or for total expenses, are not required to register. In addition, communications made on behalf of a government of a foreign country or a foreign political party and disclosed under FARA are Agents of foreign excluded from the definition of a “lobbying contact.” principals registered under FARA, whose only contacts are on behalf of foreign governments or political parties, therefore do not meet the definition of a lobbyist, because they would not have conducted any activities that meet the definition of “lobbying contact.” These individuals are therefore exempt from registering as lobbyists under the LDA for these activities.

LDA Compliance and Enforcement

The U.S. Attorney’s Office for the District of Columbia is responsible for the enforcement of the LDA. It fulfills its responsibilities, administratively, by researching and responding to referrals made from the Secretary of the Senate and the Clerk of the House of Representatives of non-complying lobbyists by sending additional noncompliance notices to the lobbyists, requesting that the lobbyists file reports or correct reported information. The U.S. Attorney’s Office has the authority to pursue a civil or criminal case for noncompliance. Civil penalties exist for instances in which lobbyists knowingly fail to remedy a defective filing within 60 days after notification from the Secretary or Clerk, and for any other knowing failure to comply with provisions of the LDA. If these violations occur, lobbyists can be subjected to fines up to $200,000, depending on the gravity of the violation. In addition, anyone who knowingly and corruptly fails to comply with the LDA requirements can be imprisoned for up to 5 years or fined, or both.

In past work, we have reported in detail on the U.S. Attorney’s Office’s enforcement efforts. To enforce LDA compliance, it has primarily focused on sending letters to lobbyists who have potentially violated the LDA by not filing disclosure reports as required. The letters request that the lobbyists comply with the law and promptly file the appropriate disclosure documents. In our 2008 lobbying disclosure report, we noted that the U.S. Attorney’s Office had settled with three lobbyists and collected civil penalties totaling about $47,000 in 2005. All of the settled cases involved a failure to file. Since then, no additional settlements or civil actions have been pursued, although the U.S. Attorney’s Office is following up on hundreds of referrals each year. In a response to a GAO recommendation, the U.S. Attorney’s Office developed a system to help monitor and track its enforcement efforts.

Agency Comments and Our Evaluation

We provided a draft of this report to USTR, ITA, USITC, Justice, and OGE and requested that they provide comments. We also provided a draft to staff at the Clerk of the House of Representatives and the Secretary of the Senate. We received comments from officials at all of these agencies, except ITA, to clarify our descriptions of the various laws, regulations, and agency practices. We considered their suggestions and made changes throughout the report in response, as appropriate.

We are sending copies of this report to the United States Trade Representative, the Secretary of Commerce, the Chairman of the U.S. International Trade Commission, the Director of the Office of Government Ethics, and the Attorney General, as well as appropriate congressional committees. In addition, the report will be available at no charge on the GAO Web site at http://www.gao.gov.

If you or your staffs have any questions about this report, please contact me at (202) 512-4347 or yagerl@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made contributions to this report are listed in appendix III.

Appendix I: Objectives, Scope, and Methodology

This report describes a summary and comparison of the relevant federal statutes governing post-employment, foreign representation, and lobbying activities. This information includes data on the number of senior officials who separated from the Office of the United States Trade Representative (USTR), the Department of Commerce’s International Trade Administration (ITA), and the United States International Trade Commission (USITC) from 2004 through 2009, as well as information on the number of these officials who registered under FARA or LDA.

To address this objective, we reviewed the post-employment restrictions of 18 U.S.C. § 207, referred to as the “Revolving Door” law in this report, the Foreign Agents Registration Act (FARA), and the Lobbying Disclosure Act (LDA), as amended. We interviewed officials from the Office of Government Ethics (OGE) regarding the interpretation and implementation of the Revolving Door law. We interviewed ethics officials from USTR, ITA, and USITC regarding these laws and the guidance these officials provide to current, separating, and former employees of their respective agencies. We included USTR and ITA in our scope because their respective missions concern trade policy formulation and trade promotion. We included the USITC because of its role in administering U.S. trade remedy laws and providing independent analysis on trade matters. We interviewed Department of Justice (Justice) officials regarding administration of FARA and enforcement actions for post- employment restrictions and FARA.

We focused our work specifically on the number of former senior and very senior officials separated from these agencies because post-employment restrictions are more stringent for former senior and very senior officials. We obtained data on the number of former senior officials who separated from USTR, ITA, and USITC from 2004 through 2009 from each of the respective agencies and cross-referenced these data with data we extracted from the Office of Personnel Management’s Central Personnel Data File. We defined “senior” as being any official who met the definition of “senior employee” in the post-employment restrictions on former federal employees: Employees whose rate of pay was specified in or fixed according to the Executive Schedule.

For employees whose rate of pay was not tied to the Executive Schedule, any employee whose rate of basic pay was at 86.5 percent or higher of the rate of basic pay for Level II of the Executive Schedule.

For the period between November 24, 2003, to November 24, 2005: employees who, as of November 23, 2003, were in a position for which the rate of basic pay was equal or greater than the rate of basic pay payable for Level 5 of the Senior Executive Service in 2003.

We collected data on all senior officials separated from these three agencies, regardless of job title or description. We did not include officials who had separated from one of the agencies but who had continued working for the federal government at another agency. For contextual purposes, we queried the Central Personnel Data File to ascertain the number of all staff who separated from USTR, ITA, and USITC from 2004 through 2009 and left government service. To assess the reliability of data on senior officials who separated from USTR, ITA, and USITC, we used data from the Central Personnel Data File to determine the reliability of the agency-supplied data. After reconciling discrepancies with the agencies and receiving revised data from them, we determined that the data provided to us from the agencies were sufficiently reliable.

Using the names of the 71 former senior officials we had identified as having separated from USTR, ITA, and USITC between 2004 and 2009, we requested Justice’s Registration Unit to determine which of these individuals had registered under FARA. As our work focused only on senior level employees, we did not ask the Registration Unit to search for FARA registrations for all former employees from these three agencies. We did not attempt to determine whether any of these 71 former senior officials who did not register should have registered under FARA.

Using this same list of 71 former senior officials, we requested the Clerk of the House of Representatives to conduct a search of the publicly-available LDA database maintained by the Clerk to ascertain the number of these individuals who had registered as lobbyists. As our work was focused only on senior employees, we did not search the LDA databases for all former employees from these three agencies. We did not attempt to determine whether any of these 71 former senior officials who did not register should have registered under LDA.

To assess the reliability of the FARA and LDA registration data, we reviewed documentation related to the data sources and interviewed knowledgeable agency officials about the data. Although both FARA and LDA are publicly-available databases, we requested that officials at Justice’s Registration Unit search the FARA database and that officials at the Clerk of the House of Representatives search the LDA database as those officials are knowledgeable about search terms for their databases. These officials described to us the structure of their databases and the methods used for searching. We determined that the data were sufficiently reliable for the purpose of our report.

We conducted our work from January 2010 to June 2010 in accordance with all sections of GAO’s Quality Assurance Framework that are relevant to our objective. The framework requires that we plan and perform the engagement to obtain sufficient and appropriate evidence to meet our stated objectives and to discuss any limitations in our work. We believe that the information and data obtained, and the analysis conducted, provide a reasonable basis for the findings in this product.

Appendix II: Overview of Revolving Door Law and Regulations

OGE has promulgated regulations that clarify many of the terms in the Revolving Door law and that provide examples of what constitutes prohibited behavior by a former federal employee, as discussed below: 18 U.S.C. § 207(a)(1) Permanent restrictions on representations in particular matters for all officers and employees of the executive branch. This section of the law prohibits any former employee of the executive branch from knowingly, with the intent to influence, making a communication to or appearance before a federal employee on behalf of another person in connection with a particular matter involving a specific party, in which he or she participated personally and substantially as an employee, and in which the United States is a party or has a direct and substantial interest.

For the life-time ban under this section of the law, federal regulations state that “communications” occur when information of any kind is transmitted by any means, as long as the employee intends the information to be attributed to himself or herself. “Appearances” occur when the former employee is physically present before an employee of the federal government in either a formal or informal setting. This section does not prohibit any behind-the-scenes assistance from former federal employees, so long as no communications or appearances occur. For example, if a former employee of an agency accompanies representatives of a grantee of that agency to an agency meeting, the former employee is considered to be making an appearance, even if he or she never speaks during the meeting.

Communications and appearances are only prohibited if they are made knowingly and with the intent to influence the United States government. Federal regulations clarify that this occurs when the former employee’s purpose is to: (1) seek a government ruling, benefit, approval, or other discretionary government action, or (2) affect government action in connection with an issue or aspect of a matter which involves actual or potential controversy. For example, a former employee who calls an agency official to complain about how that agency is auditing the employee’s current employer has made a communication with the intent to influence government action. Certain communications and appearances are not considered to be made with the intent to influence, including routine requests not involving controversy, factual statements or inquiries that are not in dispute or do not seek discretionary government action, and purely social contacts. For example, a former employee who calls his or her prior agency to ask for the date of a scheduled hearing for her current client is not intending to influence the government. However, if he or she calls his or her former agency to request that the hearing date be moved, that may be considered a communication made with the intent to influence.

The prohibition in this section of the law applies only to communications or appearances made in connection with particular matters involving specific parties. According to federal regulations, “particular matters involving specific parties” include those that involve specific proceedings that affect the legal rights of parties, or an isolatable transaction between identified parties, such as specific contracts, grants, licenses, product approval applications, enforcement actions, administrative adjudications, or court cases. “Particular matters involving specific parties” do not include matters of general applicability, such as rulemaking or the formulation of general policies. The regulations state that international agreements may sometimes be considered particular matters involving specific parties, depending in part on whether the agreement focuses on specific property or claims, or instead includes a large number of diverse issues. For example, the regulations state that a former employee of the Department of State who participated in a treaty negotiation concerning transfer of ownership of a piece of land may not later represent the foreign government in the final stages of that negotiation without violating this provision.

The prohibition in this section of the law only applies to employees who participate “personally and substantially” in the matter. Federal regulations state that this means the employee participated directly or through direct and active supervision, and that the employee’s involvement was of significance to the matter. Substantial participation requires more than official responsibility or involvement on an administrative or peripheral issue. 207(a)(2) Two-year restrictions on all former executive branch employees for particular matters under official responsibility. A 2- year prohibition, similar to the life-time prohibition that exists under section 207(a)(1) for all former federal employees, exists under section 207(a)(2). However, whereas section 207(a)(1) requires personal and substantial participation in a matter on the part of the former employee, section 207(a)(2) merely requires that the employee had “official responsibility” for the particular matter. According to OGE regulations, “official responsibility” means direct administrative or operating authority to approve, disapprove, or otherwise direct government action. 207(b)(1) One-year restrictions on aiding or advertising concerning treaty negotiations. All former federal employees who participated personally and substantially in an ongoing treaty negotiation are prohibited for 1 year from aiding or advising any other person in that treaty negotiation, if the employee had access to certain covered information. According to OGE regulations, “covered information” means agency records that the employee had access to and that were designated exempt from disclosure under the Freedom of Information Act. The same prohibition used to exist for employees who negotiated certain trade agreements; however, the specific definition of “trade agreement,” as used in section 207(b)(2)(A), refers only to the fast track trade agreement authority, which expired in 1993. According to OGE, when Congress restored similar fast track authority in 2002, it did so by creating new provisions rather than by amending the prior fast track law that is referenced in section 207(b) and made no conforming changes to section 207(b) to reference the new fast track provisions. Consequently, section 207(b) no longer covers any existing trade agreement authorities. 207(c) One-year restrictions on former senior officials concerning any matter. For 1 year following termination of service in a senior position, former senior employees may not knowingly, with the intent to influence, make communications to or appearances before their former agency, if it is made on behalf of another person in connection with a matter on which the former employee seeks official action by the agency. “Senior employees” include employees whose rate of pay is specified in or fixed according to Level II of the Executive Schedule, as well as certain other employees who meet a specific financial threshold or hold specific appointed positions. Federal regulations state that a senior employee seeks official action when he attempts to induce a current employee to make a decision by his communication or appearance. Additionally, “matter” is not limited to just “particular matters” for this section, but also includes the consideration of broad policy options, new matters that were not previously pending at the employee’s former agency, and matters pending before any other agency or the legislative or judicial branches of government. 207(d) Two-year restriction on former very senior employees’ representations concerning any matter. A similar prohibition that applies to former senior federal employees also applies to former very senior federal employees, except that the prohibition lasts for two years, and also applies to representational contacts with Executive Schedule officials in the federal government and the President and Vice President. “Very senior employees” include employees whose rate of pay is equal to the rate of pay for Level I of the Executive Schedule, and employees in certain other named and appointed positions. 207(e) Two-year restriction on former Senators and 1-year restriction on former members of the House of Representatives and congressional staff. For 2 years for Senators, and for 1 year for members of the House of Representatives and congressional staff, former members of Congress and employees are prohibited from contacting current members of Congress and congressional staff with the intent to influence any matter on which the former member or staffer seeks action. 207(f) One-year restriction on former senior and very senior employees’ representations on behalf of, or aid or advice to, a foreign entity. For 1 year after leaving a senior or very senior position, employees cannot knowingly represent a foreign government or foreign political party before the United States government, or aid or advise the foreign entity with the intent to influence decisions of U.S. government officials. A life-time ban on representing, aiding, or advising foreign entities in this capacity applies to the United States Trade Representative and the Deputy United States Trade Representatives.

Section 207(f) states that “foreign entity” means both “foreign government” and “foreign political party” as defined in FARA. Under FARA, foreign governments include any person or groups of persons exercising actual or legal political jurisdiction over any foreign country or portion thereof, including factions and insurgents that may exercise governmental authority but have not been recognized by the United States. Foreign political parties include organizations outside the United States that are engaged in activities devoted to establishing, controlling, or acquiring control of foreign governments, or that are furthering or influencing political or public interests, policies or relations of a foreign government.

However, it is sometimes difficult to discern whether certain foreign organizations meet the definition of “foreign entity” under 207(f). Justice’s Office of Legal Counsel issued a legal opinion in 2008 stating that a foreign corporation can be considered a foreign entity for purposes of 207(f) if it exercises sovereign authority in fact or by formal delegation. In this opinion, Justice clarified that ownership of a foreign corporation by the foreign government does not itself make the corporation a foreign entity, but that if the corporation “exercises political jurisdiction over part of a foreign country,” then it would be considered a foreign entity under 207(f) and the prohibition would apply.

Appendix III: GAO Contact and Staff Acknowledgments

GAO Contact

Loren Yager (202) 512-4347 or yagerl@gao.gov.

Staff Acknowledgments

In addition to the individual named above, Adam Cowles (Assistant Director), Kate Brentzel, Ashley Alley, Greg Wilmoth, and Karen Deans made key contributions to this report.