b'Financial Interests of Nonprofit Organizations\nfor Purposes of 18 U.S.C. \xc2\xa7 208\nUnder 18 U.S.C. \xc2\xa7 208, a nonprofit organization does not have a \xe2\x80\x9cfinancial interest\xe2\x80\x9d in a particular\nmatter solely by virtue of the fact that the organization spends money to advocate a position on the\npolicy at issue in the matter.\n\nJanuary 11, 2006\n\nMEMORANDUM OPINION FOR THE GENERAL COUNSEL\nOFFICE OF GOVERNMENT ETHICS\nThe primary criminal statute dealing with financial conflicts of interest, 18\nU.S.C. \xc2\xa7 208 (2000), prohibits a federal employee from participating in certain\ngovernmental matters if he or she is an officer or director of an organization that\nhas a \xe2\x80\x9cfinancial interest\xe2\x80\x9d in the \xe2\x80\x9cparticular matter.\xe2\x80\x9d You have asked whether a\nnonprofit organization has a financial interest in a particular matter solely by\nvirtue of the fact that the organization spends money to advocate a position on the\npolicy at issue in the matter. 1 We conclude that a nonprofit organization does not\nhave such a \xe2\x80\x9cfinancial interest\xe2\x80\x9d merely because it spends money on advocacy.\nI.\nSection 208(a) forbids an officer or employee in his official capacity from\nparticipating \xe2\x80\x9cpersonally and substantially\xe2\x80\x9d in (among other things) any \xe2\x80\x9cparticular\nmatter in which, to his knowledge, . . . [an] organization in which he is serving as\nofficer [or] director . . . has a financial interest.\xe2\x80\x9d If the organization has a \xe2\x80\x9cfinancial interest,\xe2\x80\x9d a federal employee serving on the board of the organization must\nrecuse himself from any involvement in that particular matter, unless he can take\nadvantage of a waiver or exemption issued under 18 U.S.C. \xc2\xa7 208(b). Your\nquestion concerns employees who serve on the boards of nonprofit organizations\nthat engage in advocacy with respect to particular matters pending before the\nemployees\xe2\x80\x99 agencies. The question recently has arisen in two contexts.\nIn the first context, an official is considering service on the board of the Senior\nExecutives Association (\xe2\x80\x9cSEA\xe2\x80\x9d). SEA describes itself as \xe2\x80\x9ca nonprofit professional\nassociation that promotes ethical and dynamic public service by fostering an\noutstanding career executive corps, advocates the interests of career federal\nexecutives (both active and retired), and provides information and services to SEA\nmembers.\xe2\x80\x9d See Senior Executives Association, About SEA, http://seniorexecs.org\n1\nLetter for Daniel Levin, Acting Assistant Attorney General, Office of Legal Counsel, from\nMarilyn L. Glynn, Acting Director, Office of Government Ethics (Sept. 20, 2004) (\xe2\x80\x9cOGE Letter\xe2\x80\x9d).\n\n64\n\n\x0cFinancial Interests of Nonprofit Organizations for Purposes of 18 U.S.C. \xc2\xa7 208\n\n(last visited June 2, 2005). In \xe2\x80\x9cadvocat[ing] the interests of career federal executives,\xe2\x80\x9d id., \xe2\x80\x9cSEA has taken and continues to take and advance positions\xe2\x80\x9d on certain\nissues involving the pay of federal employees in the senior executive service,\nLetter for Marilyn L. Glynn, Acting Director, Office of Government Ethics\n(\xe2\x80\x9cOGE\xe2\x80\x9d), from William L. Bransford, General Counsel, SEA, Re: Membership on\na Professional Association\xe2\x80\x99s Board by an Executive Branch Official at 1 (Aug. 9,\n2004) (\xe2\x80\x9cSEA Letter\xe2\x80\x9d). The official contemplating service on the SEA board\nalready serves on \xe2\x80\x9chis Department\xe2\x80\x99s Executive Resources Board, which has,\namong other functions, responsibility for formulating or contributing to the\nformulation of the Department\xe2\x80\x99s recommendation\xe2\x80\x9d to the Office of Personnel\nManagement (\xe2\x80\x9cOPM\xe2\x80\x9d) regarding the senior executive service pay system. SEA\nLetter at 1. If, therefore, the official joins the SEA board, and if SEA has a\n\xe2\x80\x9cfinancial interest\xe2\x80\x9d in a matter involving senior executive pay (e.g., the establishment of a new system of pay), the official (absent a waiver) would have a criminal\nconflict of interest if he participated in the Executive Resources Board\xe2\x80\x99s consideration of the issue.\nIn the second context, employees of the National Oceanic and Atmospheric\nAdministration (\xe2\x80\x9cNOAA\xe2\x80\x9d) are serving in their private capacities as Councilors of\nthe American Meteorological Society (\xe2\x80\x9cAMS\xe2\x80\x9d). Letter for Marilyn L. Glynn,\nActing Director, Office of Government Ethics, from Barbara S. Fredericks,\nAssistant General Counsel for Administration, Department of Commerce, Re:\nRequest for Guidance on the Application of 18 U.S.C. \xc2\xa7 208 (Sept. 10, 2004)\n(\xe2\x80\x9cCommerce Letter\xe2\x80\x9d). \xe2\x80\x9cAMS is a . . . nonprofit organization that promotes the\ndevelopment and dissemination of information and education on atmospheric and\nrelated oceanic sciences.\xe2\x80\x9d Id. at 1. A Councilor of AMS \xe2\x80\x9cserv[es] on the governing\nbody of the organization, which is the equivalent to service as a member of a\nboard of directors,\xe2\x80\x9d and, therefore, we assume (without deciding) that a Councilor\nwould be a \xe2\x80\x9cdirector\xe2\x80\x9d or \xe2\x80\x9cofficer\xe2\x80\x9d within the meaning of section 208(a). AMS\nissues \xe2\x80\x9cpolicy statements . . . on issues in which NOAA has an interest, such as\nmeteorological drought, atmospheric ozone, and hurricane research and forecasting.\xe2\x80\x9d Id. The NOAA employees serving as Councilors of AMS \xe2\x80\x9clikely will\nparticipate in [the] consideration of these issues on a policy level in the course of\nperforming their official duties at NOAA.\xe2\x80\x9d Id. at 1\xe2\x80\x932. Once again, absent a waiver,\nthey would be disqualified under the criminal conflict of interest statute from such\nparticipation if AMS has a financial interest in these matters. 2\n2\nIn analyzing these issues, we have obtained the views of the Department of the Interior, the\nDepartment of Agriculture, the Department of Health and Human Services, the Environmental\nProtection Agency, the National Science Foundation, and the National Aeronautics and Space\nAdministration, in addition to the views of OGE and the Department of Commerce. See Letter for\nSteven G. Bradbury, Acting Assistant Attorney General, Office of Legal Counsel, from Sue Ellen\nWooldridge, Solicitor, Department of the Interior, Re: Financial Interests Under 18 U.S.C. \xc2\xa7 208 (Mar.\n\n65\n\n\x0cOpinions in the Office of Legal Counsel in Volume 30\n\nII.\nWe conclude that nonprofit organizations such as SEA and AMS do not have a\nfinancial interest in a particular matter solely by virtue of spending money to\nadvocate a position on the policy under consideration in that matter. 3\nA.\nSection 208(a), in essentially its present form, was enacted in 1962 as part of a\ngeneral revision of criminal laws on conflicts of interest. Pub. L. No. 87-849, 76\nStat. 1119, 1124 (1962). The earlier version of the law provided criminal penalties\nfor any federal official who was \xe2\x80\x9cdirectly or indirectly interested in the pecuniary\nprofits or contracts of any corporation, joint-stock company, or association, or of\nany firm or partnership or other business entity,\xe2\x80\x9d and who was \xe2\x80\x9cemployed or\nact[ed] as an officer or agent of the United States for the transaction of business\nwith such business entity.\xe2\x80\x9d 18 U.S.C. \xc2\xa7 434 (1958). The revision of 1962 extended\nthe reach of the statute in several respects. Nevertheless, the current text of section\n208(a), under the most natural interpretation, indicates that the prohibition does\nnot apply to the policy interest that a nonprofit organization has in a government\ndecision. Section 208(a) provides that, absent a waiver under section 208(b),\nwhoever, being an officer or employee of the executive branch of the\nUnited States Government, . . . participates personally and substantially as a Government officer or employee, through decision, approval, disapproval, recommendation, the rendering of advice, investigation, or otherwise, in a judicial or other proceeding, application,\n\n10, 2005); Letter for Steven G. Bradbury, Acting Assistant Attorney General, Office of Legal Counsel,\nfrom Nancy S. Bryson, General Counsel, Department of Agriculture, Re: Advocacy of Non-Profit\nOrganizations and 18 U.S.C. 208(a) (Mar. 16, 2005); Letter for Steven G. Bradbury, Acting Assistant\nAttorney General, Office of Legal Counsel, from Ann R. Klee, General Counsel, Environmental\nProtection Agency (Mar. 16, 2005); Letter for Steven G. Bradbury, Acting Assistant Attorney General,\nOffice of Legal Counsel, from Lawrence Rudolph, General Counsel, and Charles S. Brown, Assistant\nGeneral Counsel and Designated Agency Ethics Official, National Science Foundation (Mar. 16, 2005);\nLetter for Steven G. Bradbury, Acting Assistant Attorney General, Office of Legal Counsel, from R.\nAndrew Falcon, Acting Associate General Counsel for General Law, With the approval of Michael C.\nWholley, General Counsel, National Aeronautics and Space Administration (Mar. 22, 2005); Letter for\nSteven G. Bradbury, Acting Assistant Attorney General, Office of Legal Counsel, from Edgar M.\nSwindell, Associate General Counsel for Ethics and Designated Agency Ethics Official, Department of\nHealth and Human Services (May 19, 2005).\n3\nWe do not address here the interest that a for-profit entity, owing a duty to promote the financial\ninterests of its owners, might have in a matter on which it engages in advocacy on behalf of itself or its\nclients or that might arise if an entity (whether for-profit or nonprofit) receives, or expects to receive,\npayment specifically for its advocacy. Thus, the possible interest of a lobbying firm or law firm is\nbeyond the scope of this opinion.\n\n66\n\n\x0cFinancial Interests of Nonprofit Organizations for Purposes of 18 U.S.C. \xc2\xa7 208\n\nrequest for a ruling or other determination, contract, claim, controversy, charge, accusation, arrest, or other particular matter in which,\nto his knowledge, he, . . . [or] [an] organization in which he is serving as officer, director, trustee, general partner or employee, . . . has\na financial interest[,]\nhas committed a crime punishable by fine and imprisonment. 18 U.S.C. \xc2\xa7 208(a).\nA disqualifying interest under the statute, therefore, is a \xe2\x80\x9cfinancial interest\xe2\x80\x9d \xe2\x80\x9cin\xe2\x80\x9d a\n\xe2\x80\x9cparticular matter.\xe2\x80\x9d See Ethics Issues Raised by the Retention and Use of Flight\nPrivileges by FAA Employees, 28 Op. O.L.C. 237, 239 (2004) (\xe2\x80\x9cFAA Opinion\xe2\x80\x9d).\nAs ordinarily understood, the interests that AMS and SEA as organizations\nhave in the matters you describe are policy interests in the questions being\naddressed by the government, not financial interests in the resolution of those\nquestions. An \xe2\x80\x9cinterest\xe2\x80\x9d in the sense of a \xe2\x80\x9cconflict of interest\xe2\x80\x9d is an \xe2\x80\x9cadvantage or\nprofit of a financial nature.\xe2\x80\x9d Black\xe2\x80\x99s Law Dictionary 828 (8th ed. 2004). For\nexample, an individual has an interest \xe2\x80\x9c[i]n a suit or action\xe2\x80\x9d when he has \xe2\x80\x9c[a]\nrelation to the matter in controversy, or to the issue of the suit, in the nature of a\nprospective gain or loss, which actually does, or presumably might, create a bias\nor prejudice in the mind inclining the person to favor one side or the other.\xe2\x80\x9d 33\nC.J. Interest 262 (1924) (footnotes omitted). And an interest is a financial one\nwhen it is pecuniary\xe2\x80\x94when it \xe2\x80\x9cpertain[s] to monetary receipts and expenditures.\xe2\x80\x9d\nRandom House Dictionary of the English Language 719 (2d ed. 1987) (emphasis\nadded). However, AMS and SEA care about these matters, and spend money to\nadvocate in favor of their preferred outcome, because they support or oppose\ncertain policies, not because the policies at issue will have a financial or pecuniary\nimpact on AMS and SEA as organizations. An organization that has no financial\nreason to prefer one outcome over another would not commonly be referred to as\nhaving a \xe2\x80\x9cfinancial interest\xe2\x80\x9d in the particular matter.\nOGE\xe2\x80\x99s regulatory interpretation of section 208 reinforces this view. OGE\xe2\x80\x99s\nregulations interpret the words \xe2\x80\x9cfinancial interest\xe2\x80\x9d \xe2\x80\x9cin\xe2\x80\x9d \xe2\x80\x9ca particular matter\xe2\x80\x9d to\nrequire a link between a governmental matter and a pecuniary gain or loss to the\nemployee or specified entity. A disqualifying financial interest is \xe2\x80\x9cthe potential for\ngain or loss to the employee, or other person specified in section 208, as a result of\ngovernmental action on the particular matter.\xe2\x80\x9d 5 C.F.R. \xc2\xa7 2640.103(b) (2005). 4 See\nFAA Opinion, 28 Op. O.L.C. at 239\xe2\x80\x9340; OGE, Letter to Designated Agency Ethics\nOfficial, Informal Advisory Ltr. 85x10, 1985 WL 57309, at *2 (July 15). Thus, for\nexample, section 208 does not require an employee of the Department of Interior\nwho owns transportation bonds issued by the State of Minnesota to recuse himself\n4\nOur Office concurred in OGE\xe2\x80\x99s regulatory definition. See 61 Fed. Reg. 66,830, 66,830 (Dec. 18,\n1996); 28 C.F.R. \xc2\xa7 0.25(i) (2004).\n\n67\n\n\x0cOpinions in the Office of Legal Counsel in Volume 30\n\nfrom all matters involving the State of Minnesota, only matters that hold the\npotential for pecuniary gain or loss to the employee. See 5 C.F.R. \xc2\xa7 2640.103(b)\n(example 1).\nThis Office\xe2\x80\x99s opinions have drawn a distinction between a \xe2\x80\x9cfinancial interest\xe2\x80\x9d\nand interests that do not involve a pecuniary gain or loss from the resolution of a\nquestion. For example, a 1970 opinion by then-Assistant Attorney General\nRehnquist distinguished between the policy interest that an association representing coal producers had in various Federal Power Commission natural gas proceedings\xe2\x80\x94\xe2\x80\x9can interest of a non-financial kind in the outcome of . . . [the] proceedings\xe2\x80\x9d\nthat implicated the coal association\xe2\x80\x99s \xe2\x80\x9cmajor purpose\xe2\x80\x9d\xe2\x80\x94and a financial interest in\nthose proceedings, which the coal association did not have. Memorandum for John\nW. Dean, III, Counsel to the President, from William H. Rehnquist, Assistant\nAttorney General, Office of Legal Counsel, Re: Commissioner Carl E. Bagge\xe2\x80\x99s\nContinued Service as Commissioner of the Federal Power Commission Until\nFebruary 1, 1971 at 4 (Dec. 10, 1970) (\xe2\x80\x9cRehnquist Opinion\xe2\x80\x9d).\nAgainst this interpretive backdrop, we cannot conclude that SEA or AMS has a\nfinancial interest in the particular matters that are the focus of advocacy by the\norganizations, as opposed to a mere policy interest in the questions being addressed by the government. The organizations\xe2\x80\x99 advocacy expenditures do not\nconstitute a gain or a loss. They do not arise from the pursuit of any financial or\neconomic interests, but only from the pursuit of certain policy goals. 5\nNor is there any other apparent basis on which to conclude that either organization has a financial interest. In particular, while SEA\xe2\x80\x99s members may reap a gain or\nsuffer a loss as a result of a new pay system, the potential for a gain or loss to SEA\nmembers as individuals does not disqualify SEA as an organization. Furthermore,\nwhether or not a federal employee\xe2\x80\x99s interest in his own federal compensation\ngenerally constitutes a disqualifying financial interest under section 208, OGE has\nissued an exemption, in most circumstances, for the \xe2\x80\x9cfinancial interest aris[ing] from\nFederal Government . . . salary or benefits.\xe2\x80\x9d See 5 C.F.R. \xc2\xa7 2640.203(d) (2005).6\n5\nThis conclusion is bolstered by the several examples in OGE\xe2\x80\x99s regulations of situations where a\n\xe2\x80\x9cfinancial interest\xe2\x80\x9d might arise, none of which resembles expenses for mere advocacy. The regulation\nstates that a \xe2\x80\x9cdisqualifying financial interest might arise from ownership of certain financial instruments or\ninvestments such as stock, bonds, mutual funds, or real estate,\xe2\x80\x9d or \xe2\x80\x9cmight derive from a salary, indebtedness, job offer, or any similar interest.\xe2\x80\x9d 5 C.F.R. \xc2\xa7 2640.103(b) (2005). OGE\xe2\x80\x99s regulations also provide\nillustrations that give other examples of \xe2\x80\x9cfinancial interests,\xe2\x80\x9d such as land ownership, the \xe2\x80\x9cvolume and\nprofitability of [a] doctor\xe2\x80\x99s private practice,\xe2\x80\x9d and a grant of funds, id. \xc2\xa7\xc2\xa7 2635.402(b)(2) (example 1),\n2640.103(b) (examples 2, 3), and none of these interests, too, resembles a mere expenditure on advocacy.\nSee also Roswell B. Perkins, The New Federal Conflict-of-Interest Law, 76 Harv. L. Rev. 1113, 1133\n(1963) (a research grant to a nonprofit organization is a \xe2\x80\x9cfinancial interest\xe2\x80\x9d).\n6\nIn issuing this exemption, OGE noted the \xe2\x80\x9csomewhat differing interpretations\xe2\x80\x9d of section 208 that\nhave been advanced regarding a federal employee\xe2\x80\x99s interest in his own compensation. See 60 Fed. Reg.\n44,706, 44,707 (Aug. 28, 1995).\n\n68\n\n\x0cFinancial Interests of Nonprofit Organizations for Purposes of 18 U.S.C. \xc2\xa7 208\n\nBecause an SEA member may participate in matters involving the pay system for\nsenior executives (so long as he does not make determinations that individually or\nspecially affect his own salary and benefits, or determinations that individually or\nspecially affect the salary and benefits of another person specified in section 208, see\n5 C.F.R. \xc2\xa7 2640.203(d)), we cannot say that SEA has a financial interest by virtue of\nits members\xe2\x80\x99 interests.\nAny other financial consequences for SEA or AMS that may flow from these\nmatters are speculative. If OPM reached a decision regarding pay for senior\nexecutives that accorded with SEA\xe2\x80\x99s proposals and arguments, the possibility that\nSEA had influenced that outcome might attract potential members to join SEA,\nthus possibly increasing its resources, but OPM\xe2\x80\x99s rejection of the proposals and\narguments might have the same effect, since potential members who agree with\nSEA\xe2\x80\x99s position might then believe that they should do more to support an\norganization advancing that position. In either case, SEA might gain members.\nConversely, while the failure of SEA\xe2\x80\x99s position might lead some members to drop\ntheir membership, success might also lead some members to believe that the main\npurpose of their membership had been achieved and that they could leave the\norganization. In either case, SEA might lose members. Or perhaps the success or\nfailure of SEA\xe2\x80\x99s positions would have no effect at all on membership. The same\nreasoning could be applied to AMS\xe2\x80\x99s advocacy of scientific or research-related\npolicies that government agencies might adopt or reject. 7\n7\nWe previously considered somewhat similar issues in the Rehnquist Opinion. There, a commissioner of the Federal Power Commission (\xe2\x80\x9cFPC\xe2\x80\x9d) had accepted future employment with the National\nCoal Association (\xe2\x80\x9cNCA\xe2\x80\x9d), a trade association of coal producers. NCA \xe2\x80\x9cengage[d] in typical trade\nassociation activity\xe2\x80\x94lobbying, research, gathering of statistical data.\xe2\x80\x9d Id. at 1. The Rehnquist Opinion\nstated that the Commissioner\n\nhas not accepted a position with a coal producer, but with NCA, which neither markets nor produces coal. It is the financial interest of NCA which determines disqualification under section 208. Certainly NCA has an interest of a non-financial kind in the\noutcome of various FPC natural gas proceedings: the outcome of these proceedings\nmay have an impact on coal production, and the stimulation of such production is\nNCA\xe2\x80\x99s major purpose. We do not believe, however, that NCA\xe2\x80\x99s interest in any given\nrate or certification proceeding can fairly be characterized as a \xe2\x80\x9cfinancial interest,\xe2\x80\x9d\nwithin the meaning of section 208.\nId. at 4. The Rehnquist Opinion went on to consider the argument that NCA would have a \xe2\x80\x9cfinancial\ninterest\xe2\x80\x9d in gas proceedings because \xe2\x80\x9cNCA\xe2\x80\x99s assessments against members are based upon their coal\nproduction, and NCA\xe2\x80\x99s total income will therefore vary as coal production varies.\xe2\x80\x9d Id. at 5. It\nconcluded, however, \xe2\x80\x9cthat this relationship is too tenuous and speculative to be regarded as a \xe2\x80\x98financial\ninterest\xe2\x80\x99 of the type prohibited by section 208.\xe2\x80\x9d Id. Even if the Commissioner were going to work for a\ncoal producer, \xe2\x80\x9cthe impact of any particular natural gas proceedings on the coal producer would vary\nfrom case to case, and would depend on the competitive relationships between the producers involved,\xe2\x80\x9d\nand \xe2\x80\x9c[t]he interest of NCA in such proceedings is even more remote.\xe2\x80\x9d Lower gas rates might mean\nlower coal prices rather than greater coal production, and in any event there would be no \xe2\x80\x9cnecessary\ncorrelation between natural gas rates in a particular area and the total membership production upon\nwhich NCA\xe2\x80\x99s income rests.\xe2\x80\x9d Id. (emphasis in original). There, as here, any effect on the financial\n\n69\n\n\x0cOpinions in the Office of Legal Counsel in Volume 30\n\nThe Executive Branch has long taken the position, however, that an employee\nor other person covered by section 208 has a financial interest in a particular\nmatter only when government action in the particular matter will have a \xe2\x80\x9cdirect\nand predictable effect\xe2\x80\x9d on the employee\xe2\x80\x99s financial interest. See, e.g., 5 C.F.R.\n\xc2\xa7 2640.103(a) (2005); Advisory Committees\xe2\x80\x94Food and Drug Administration\xe2\x80\x94\nConflicts of Interest (18 U.S.C. \xc2\xa7 208), 2 Op. O.L.C. 151, 155 (1978). A 1963\nmemorandum from the President to the heads of the executive departments and\nagencies, issued just a few months after section 208 took effect, stated that a\nspecial government employee \xe2\x80\x9cshould in general be disqualified from participating\nas such in a matter of any type the outcome of which will have a direct and\npredictable effect upon the financial interests covered by the section.\xe2\x80\x9d Memorandum to the Heads of Executive Departments and Agencies from the President, 28\nFed. Reg. 4539, 4543 (May 7, 1963) (emphasis added). This same interpretation\nwas incorporated in the Federal Personnel Manual shortly thereafter. See id. ch.\n735, app. C, at 4 (1988 ed.; added 1965).\nThe direct-and-predictable effect test also finds support in the traditional legal\nunderstanding of what it means to have an \xe2\x80\x9cinterest\xe2\x80\x9d in a proceeding. For example,\na financial interest in a proceeding for purposes of judicial disqualification\ntraditionally has required a proximate link between the proceeding and the\nfinancial interest. \xe2\x80\x9c[A] judge is disqualified,\xe2\x80\x9d one court explained, \xe2\x80\x9cin any\nlitigation where he has any certain, definable, pecuniary, or proprietary interest\nwhich will be directly affected by the judgment that may be rendered.\xe2\x80\x9d In re\nHonolulu Consol. Oil Co., 243 F. 348, 352 (9th Cir. 1917) (emphasis added). \xe2\x80\x9cThe\nterm \xe2\x80\x98interested in the case\xe2\x80\x99 means a direct interest in the case or matter to be\nadjudicated so that the result must, necessarily, affect his personal or pecuniary\nloss or gain.\xe2\x80\x9d Ex parte Largent, 162 S.W.2d 419, 426 (Tex. Crim. App. 1942)\n(emphasis added); see also Goodspeed v. Great W. Power Co. of Cal., 65 P.2d\n1342, 1345 (Cal. Dist. Ct. App. 1937) (\xe2\x80\x9cIt means an interest direct, proximate,\ninherent in the instant event.\xe2\x80\x9d) (emphasis added). 8 Thus, while it has been\nsuggested that the direct-and-predictable effect test is a gloss on the statutory text,\nthe test reflects a fair construction of the statute\xe2\x80\x99s terms in light of their established\nmeaning at the time Congress enacted section 208. 9\ninterests of an organization\xe2\x80\x99s members would not necessarily affect the finances of the organization\nitself.\n8\nIn Part II.B.1, we further discuss both the traditional understanding of \xe2\x80\x9cinterest,\xe2\x80\x9d as it bears on\njudicial disqualification and other matters relating to litigation, and the application in those contexts of\na test similar to the \xe2\x80\x9cdirect and predictable\xe2\x80\x9d effect test.\n9\nOGE relies \xe2\x80\x9con what appears to be a plain reading of 18 U.S.C. \xc2\xa7 208.\xe2\x80\x9d \xe2\x80\x9cIn cases where an outside\norganization stipulates that it is spending money to advocate its interests before the Government,\xe2\x80\x9d OGE\nexplains, \xe2\x80\x9cit is difficult to conclude that the organization does not have a financial interest that would\nbe affected directly and predictably by the Government matter.\xe2\x80\x9d OGE Letter at 3. Furthermore, in\nOGE\xe2\x80\x99s \xe2\x80\x9c\xe2\x80\x98long-standing view,\xe2\x80\x99\xe2\x80\x9d \xe2\x80\x9cthe outcome of a \xe2\x80\x98particular matter,\xe2\x80\x99 such as a rulemaking proceeding\n\n70\n\n\x0cFinancial Interests of Nonprofit Organizations for Purposes of 18 U.S.C. \xc2\xa7 208\n\nOGE\xe2\x80\x99s regulations define a \xe2\x80\x9cdirect effect\xe2\x80\x9d as \xe2\x80\x9ca close causal link between any\ndecision or action to be taken in the matter and any expected effect of the matter\non the financial interest.\xe2\x80\x9d 5 C.F.R. \xc2\xa7 2635.402(b)(1)(i) (2005). While \xe2\x80\x9c[a]n effect\nmay be direct even though it does not occur immediately,\xe2\x80\x9d it is not direct \xe2\x80\x9cif the\nchain of causation is attenuated or is contingent upon the occurrence of events that\nare speculative or that are independent of, and unrelated to, the matter.\xe2\x80\x9d Id. A\nmatter will have a \xe2\x80\x9cpredictable effect,\xe2\x80\x9d according to OGE\xe2\x80\x99s regulations, if \xe2\x80\x9cthere is\na real, as opposed to a speculative possibility that the matter will affect the\nfinancial interest,\xe2\x80\x9d id. \xc2\xa7 2635.402(b)(1)(ii), though the regulations do not require\nthat \xe2\x80\x9cthe magnitude of the gain or loss\xe2\x80\x9d be known or that the dollar amount be\nsubstantial, id. Here, we do not believe that a nonprofit organization\xe2\x80\x99s expenditure\nof money to advocate a policy position establishes that the government\xe2\x80\x99s action\nwill have a \xe2\x80\x9cdirect effect\xe2\x80\x9d on a financial interest of the organization.\nB.\nTwo other considerations support the conclusion that organizations do not have\na financial interest in a matter simply because they expend money on advocacy.\nFirst, no pecuniary gain or loss to the organization will flow from a particular\naction or outcome in the matters, rather than from the process by which the\ngovernment considers the matters. Second, neither organization at issue here falls\nwithin the class of persons upon which these matters are focused, even though\nsuch a connection is typical where an organization has a financial interest. These\ntwo considerations, while not essential to an analysis under section 208 or\ndispositive of the issues under that provision, offer additional support for our\nconclusion.\n1.\nThe significance of whether financial consequences will flow from a particular\naction or outcome in the matter is reflected in the 1963 presidential memorandum\nthat gave rise to the direct-and-predictable effect test. The presidential memorandum references matters \xe2\x80\x9cthe outcome of which will have a direct and predictable\neffect upon the financial interests covered by the section.\xe2\x80\x9d 28 Fed. Reg. at 4543\n(emphasis added); see also Federal Personnel Manual ch. 735, app. C, at 4.\n\naffecting the members of an industry, \xe2\x80\x98can have a direct and predictable effect on the financial interests\nof an industry trade association\xe2\x80\x99 because it prompts the association \xe2\x80\x98to expend resources to undertake a\nlobbying effort.\xe2\x80\x99\xe2\x80\x9d Id. (quoting OGE, Letter to an Alternate Designated Agency Ethics Official, Informal\nAdvisory Ltr. 98x2, 1987 WL 1007766, at *2 (Mar. 5). For the reasons set out above, we cannot agree\nthat these expenditures alone constitute a \xe2\x80\x9cfinancial interest\xe2\x80\x9d of the organization or association.\n\n71\n\n\x0cOpinions in the Office of Legal Counsel in Volume 30\n\nSeveral of our opinions have described the test in terms of the outcome. For\nexample, the Rehnquist Opinion concluded that a trade association representing coal\nproducers had \xe2\x80\x9can interest of a non-financial kind in the outcome of various [Federal\nPower Commission] natural gas proceedings\xe2\x80\x9d because \xe2\x80\x9cthe outcome of these\nproceedings may have an impact on coal production, and the stimulation of such\nproduction is [the National Coal Association\xe2\x80\x99s] major purpose,\xe2\x80\x9d but that the interest\nin these proceedings did not qualify as a financial interest. Id. at 4 (emphases added).\nA 1976 opinion issued by this Office explained that \xe2\x80\x9cwe have taken the position in\nthe past that a Federal employee does not have a \xe2\x80\x98financial interest\xe2\x80\x99 in a particular\nmatter coming before him unless there is a reasonable possibility that the resolution\nof the particular matter would have a \xe2\x80\x98direct and predictable effect\xe2\x80\x99 on an organization in which he owns an interest or holds or is seeking a position.\xe2\x80\x9d Memorandum\nfor Kenneth A. Lazarus from Leon Ulman, Deputy Assistant Attorney General,\nOffice of Legal Counsel, Re: Proposed Appointment of Chairman of the President\xe2\x80\x99s\nCommittee on Science and Technology at 3 (July 12, 1976) (emphasis added). A\n1977 opinion determined whether an employee had a financial interest in a matter\ninvolving real property by asking whether the employee had \xe2\x80\x9ca financial interest in\nthe outcome of the quiet title action.\xe2\x80\x9d Conflict of Interest\xe2\x80\x94Litigation Involving a\nCorporation Owned by Government Attorney, 1 Op. O.L.C. 7, 7 (1977) (emphasis\nadded). And an opinion issued two years later concluded that an Assistant Secretary\nof Agriculture was unlikely to have a financial interest in matters involving the union\nthat employed her husband, but explained that, \xe2\x80\x9cif a situation did arise in which the\noutcome of a matter might have a direct and predictable effect on his income from\nthe union or on any other personal financial interest, then [the Assistant Secretary]\nwould have to refrain from participating in it.\xe2\x80\x9d Conflict of Interest\xe2\x80\x94Financial\nInterest (18 U.S.C. \xc2\xa7 208)\xe2\x80\x94Husband and Wife, 3 Op. O.L.C. 236, 238 (1979)\n(emphasis added).\nSimilarly, OGE\xe2\x80\x99s regulations define \xe2\x80\x9cfinancial interest\xe2\x80\x9d as \xe2\x80\x9cthe potential for\ngain or loss to the employee, or other person specified in section 208, as a result of\ngovernmental action on the particular matter,\xe2\x80\x9d 5 C.F.R. \xc2\xa7 2640.103(b) (emphasis\nadded), and describe the necessary \xe2\x80\x9cdirect effect\xe2\x80\x9d as \xe2\x80\x9ca close causal link between\nany decision or action to be taken in the matter and any expected effect of the\nmatter on the financial interest,\xe2\x80\x9d id. \xc2\xa7 2640.103(a)(3)(i) (emphasis added). See\nFAA Opinion at 240; OGE, Informal Advisory Letter 85x10, 1985 WL 57309,\nat *2. In each of the examples of a disqualifying financial interest described in the\nregulations, the employee stood to gain or lose depending on the outcome of the\nmatter or some particular action to be taken. For instance, an employee\xe2\x80\x99s ownership of transportation bonds issued by the State of Minnesota does not create a\ndisqualifying interest in Minnesota\xe2\x80\x99s application for wildlife funds because\n\xe2\x80\x9capproval or disapproval of the grant\xe2\x80\x9d\xe2\x80\x94i.e., the outcome of the particular\nmatter\xe2\x80\x94\xe2\x80\x9cwill not in any way affect the current value of the bonds or have a direct\nand predictable effect on the State\xe2\x80\x99s ability or willingness to honor its obligation to\n\n72\n\n\x0cFinancial Interests of Nonprofit Organizations for Purposes of 18 U.S.C. \xc2\xa7 208\n\npay the bonds when they mature.\xe2\x80\x9d 5 C.F.R. \xc2\xa7 2640.103(b) (example 1) (emphasis\nadded).\nA focus on particular actions or outcomes, moreover, reflects the traditional\nlegal understanding of the terms \xe2\x80\x9cinterest in a matter,\xe2\x80\x9d \xe2\x80\x9cinterest in a proceeding,\xe2\x80\x9d\nand similar terms (e.g., \xe2\x80\x9cinterest in a case\xe2\x80\x9d or \xe2\x80\x9cinterest in an action\xe2\x80\x9d), which\nprovided the background against which Congress legislated when it enacted\nsection 208 in 1962. See Morissette v. United States, 342 U.S. 246, 263 (1952). In\nparticular, the law governing the analogous issue of mandatory judicial recusal\nhistorically focused on whether the judge or similar officer had an interest in the\ncase or proceeding, which was understood to mean \xe2\x80\x9ca financial . . . interest that\ncould be affected by the outcome of the case.\xe2\x80\x9d Jeffrey M. Shaman et al., Judicial\nConduct and Ethics \xc2\xa7 4.20, at 148\xe2\x80\x9349 (3d ed. 2000) (emphasis added). It required\n\xe2\x80\x9ca definite, material, financial stake in the direct outcome of the particular case.\xe2\x80\x9d\nGoodspeed, 65 P.2d at 1345; see also Worth v. Benton Cnty. Cir. Ct., 89 S.W.3d\n891, 896 (Ark. 2002) (\xe2\x80\x9c[T]o be a disqualifying interest, the prospective liability,\ngain, or relief to the judge must turn on the outcome of the suit.\xe2\x80\x9d); Williams v.\nViswanathan, 65 S.W.3d 685, 689\xe2\x80\x9390 (Tex. App. 2001) (citing cases dating back\nmore than a century to support this rule). 10\nThe same meaning attached in other contexts, as well. For example, an \xe2\x80\x9cinterest\nin the matter\xe2\x80\x9d for purposes of a statutory right to intervene was traditionally\nunderstood to mean an interest \xe2\x80\x9cin the matter in litigation and of such a direct and\n10\nCongress enacted the first judicial disqualification statute in 1792. That statute, which remained\nin effect in substantially the same form until 1974, required that \xe2\x80\x9cin all suits and actions in any district\ncourt of the United States, in which it shall appear that the judge of such court is, any ways, concerned\nin interest, or has been of counsel for either party, it shall be the duty of such judge\xe2\x80\x9d to disqualify\nhimself. Act of May 8, 1792, ch. 36, \xc2\xa7 11, 1 Stat. 275, 278\xe2\x80\x9379; see also Act of Mar. 3, 1911, ch. 231,\n\xc2\xa7 21, 36 Stat. 1087, 1090 (amending the statute to include as additional grounds for disqualification\nbias or prejudice, which, unlike pecuniary interest, was not a recognized ground for disqualification at\ncommon law); Act of June 25, 1948, ch. 646, \xc2\xa7 455, 62 Stat. 907, 908 (extending the statute to justices\nand appellate court judges; rephrasing as \xe2\x80\x9cany case in which he has a substantial interest\xe2\x80\x9d). These\nwords were interpreted by reference to English common law, see Spencer v. Lapsley, 61 U.S. (20\nHow.) 264 (1857), and were understood to refer to a direct pecuniary interest in the outcome of the\nmatter. See, e.g., In re Honolulu Consol. Oil Co., 243 F. 348, 353 (9th Cir. 1917) (a judge is disqualified under section 455 where he is \xe2\x80\x9cconcerned in interest in the result of th[e] suit\xe2\x80\x9d); In re Grand Jury\nInvestigation, 486 F.2d 1013, 1016 (3d Cir. 1973) (judge not substantially interested in a case because,\namong other reasons, he did not have \xe2\x80\x9ca special interest in the outcome of th[e] case\xe2\x80\x9d). The judicial\ndisqualification statute was rewritten in 1974 to reflect the new Canon 3C of the Model Code of\nJudicial Conduct adopted in 1972. Under the new statute (still codified at 28 U.S.C. \xc2\xa7 455 (2000)), a\njudge must disqualify himself if, among other reasons, \xe2\x80\x9c[h]e knows that he, individually or as a\nfiduciary, or his spouse or minor child residing in his household, has a financial interest in the subject\nmatter in controversy [for example, in an in rem proceeding] or in a party to the proceeding, or any\nother interest that could be substantially affected by the outcome of the proceeding.\xe2\x80\x9d Id. \xc2\xa7 455(b)(4)\n(emphasis added). \xe2\x80\x9cFinancial interest\xe2\x80\x9d as used in section 455 is a term of art that means, with certain\nexceptions, \xe2\x80\x9cownership of a legal or equitable interest, however small, or a relationship as director,\nadviser, or other active participant in the affairs of a party.\xe2\x80\x9d Id. \xc2\xa7 455(d)(4).\n\n73\n\n\x0cOpinions in the Office of Legal Counsel in Volume 30\n\nimmediate character that the intervenor will either gain or lose by the direct legal\noperation and effect of the judgment.\xe2\x80\x9d Bernheimer v. Bernheimer, 196 P.2d 813,\n814 (Cal. Dist. Ct. App. 1948). A potential appellant was \xe2\x80\x9cinterested in a suit\xe2\x80\x9d if it\nhad \xe2\x80\x9ca direct and substantial interest in the outcome.\xe2\x80\x9d People ex rel. Poage v.\nWalsh, 174 N.E. 881, 882 (Ill. 1931). And a disqualifying interest for purposes of\ndetermining a witness\xe2\x80\x99s interest in an adjudication of a will was \xe2\x80\x9ca legal or\npecuniary interest in the outcome of the suit.\xe2\x80\x9d Fortner v. McCorkle, 50 S.E.2d 250,\n252 (Ga. Ct. App. 1948). \xe2\x80\x9c[T]he test\xe2\x80\x9d was \xe2\x80\x9cwhether the witness will gain or lose\nby the direct legal operation and effect of the judgment.\xe2\x80\x9d State v. Robbins, 213\nP.2d 310, 315 (Wash. 1950). 11\nThe Supreme Court\xe2\x80\x99s opinion in Tumey v. Ohio illustrates well the historical\ndistinction between the financial consequences flowing from a proceeding and the\nfinancial consequences flowing from the outcome of a proceeding. In Tumey, the\nCourt held that it violated due process for a mayor to preside over a case in\nmayor\xe2\x80\x99s court where the mayor would receive payment for his services only if he\nconvicted the defendant\xe2\x80\x94i.e., where the mayor had a \xe2\x80\x9cdirect pecuniary interest in\nthe outcome\xe2\x80\x9d of the case. 273 U.S. 510, 535 (1927). In determining what constituted \xe2\x80\x9cdue process of law,\xe2\x80\x9d the Court examined the common law of judicial\ndisqualification, and found \xe2\x80\x9cno cases at common law\xe2\x80\x9d whereby \xe2\x80\x9cinferior judicial\nofficers were dependant upon the conviction of the defendant for receiving their\ncompensation.\xe2\x80\x9d Id. at 524. However, there were cases at common law where a\njudge would have a pecuniary stake in the case that did not depend on the outcome\nof the case, for example where a judge received daily wages collected from the\nparties regardless of the outcome. Id. at 524\xe2\x80\x9325. A direct pecuniary interest in the\noutcome of the case, by contrast, was disqualifying at common law, and thus could\nnot be regarded as due process of law. Id. at 526, 531. See also In re Murchison,\n349 U.S. 133, 136 (1955) (\xe2\x80\x9cno man can be a judge in his own case and no man is\npermitted to try cases where he has an interest in the outcome\xe2\x80\x9d) (emphasis added).\nSection 208 was enacted against the background of this traditional understanding of what it means to have an interest in a matter. Even if an expenditure on\nadvocacy could constitute a \xe2\x80\x9cfinancial interest\xe2\x80\x9d in a particular proceeding, it would\nbe, at most, a financial interest in the process by which the matter is considered\n11\n\nSee also, e.g., Spencer v. Wilsey, 71 N.E.2d 804, 809 (Ill. App. Ct. 1947) (\xe2\x80\x9cThe interest which\nwill render a witness incompetent [under a \xe2\x80\x98dead man\xe2\x80\x99s statute\xe2\x80\x99] must be such an interest in the\njudgment or decree that a pecuniary gain or loss will come to him directly as the immediate result of\nthe judgment or decree.\xe2\x80\x9d); Weber v. City of Cheyenne, 97 P.2d 667, 669 (Wyo. 1940) (\xe2\x80\x9c\xe2\x80\x98Interest,\xe2\x80\x99\nwithin the meaning of this rule [for determining real party in interest], means material interest, an\ninterest in issue and to be affected by the decree, as distinguished from mere interest in the question\ninvolved, or mere incidental interest.\xe2\x80\x9d); cf. Alleghany Corp. v. Breswick & Co., 353 U.S. 151, 173\n(1957) (\xe2\x80\x9cinterested party\xe2\x80\x9d for purposes of statutory right to be heard in an agency proceeding was \xe2\x80\x9ca\nlegal right or interest that will be injuriously affected by the order,\xe2\x80\x9d i.e., the action to be taken in or\noutcome of the proceeding).\n\n74\n\n\x0cFinancial Interests of Nonprofit Organizations for Purposes of 18 U.S.C. \xc2\xa7 208\n\nrather than in the outcome of the proceeding. The absence of any pecuniary\ninterest by SEA or AMS in a particular decision, action, or outcome in the matters\nat issue reinforces the conclusion that section 208 does not apply to their expenditures on advocacy.\nOne might argue that placing weight on the decision or outcome at issue is\ninconsistent with the examples of particular matters specifically enumerated in\nsection 208(a). The statute refers to \xe2\x80\x9ca judicial or other proceeding, application,\nrequest for a ruling or other determination, contract, claim, controversy, charge,\naccusation, arrest, or other particular matter.\xe2\x80\x9d Although it is true that some of the\nmatters specified can be intermediate steps in a larger proceeding, that does not\ncontradict our conclusion that it is the potential outcome that typically will\ndetermine whether section 208 can be invoked. The statute covers even \xe2\x80\x9cparticular\nmatters\xe2\x80\x9d that may be terminated before all the possible steps in a process have\noccurred, but all of the steps, if they occur, typically make up a single \xe2\x80\x9cparticular\nmatter.\xe2\x80\x9d See United States v. Jewell, 827 F.2d 586, 587\xe2\x80\x9388 (9th Cir. 1987).\nThe view that intermediate steps would be separate \xe2\x80\x9cparticular matters\xe2\x80\x9d would\nundercut our understanding of the term \xe2\x80\x9cparticular matter\xe2\x80\x9d for purposes of related\nstatutes. For example, 18 U.S.C. \xc2\xa7 207 (2000 & Supp. II 2002) imposes a permanent post-employment ban on representing a party in a \xe2\x80\x9cparticular matter\xe2\x80\x9d in\nwhich an individual participated as a government employee. Were a charge and a\ncriminal trial different particular matters, an employee who prepared the charge\nagainst a company could, after leaving the government, defend the company at the\ntrial of that charge without violating section 207, on the theory that the charge and\nthe trial were not the same particular matter. The term \xe2\x80\x9cparticular matter\xe2\x80\x9d has not\nbeen construed to compel such a surprising and unwarranted result. See 5 C.F.R.\n\xc2\xa7 2637.201(c)(4) (2005) (\xe2\x80\x9cThe same particular matter may continue in another\nform or in part.\xe2\x80\x9d); id. (example 2) (an application for a wiretap and the prosecution\nof a person overheard during the wiretap are part of the same particular matter).\nOur reading of these words, moreover, makes good sense: Section 208 specifically\nenumerates charges, accusations, and arrests in order to give examples of matters\nthat are \xe2\x80\x9cparticular\xe2\x80\x9d in the sense of being focused on specific individuals or\nentities or a discrete and identifiable class of individuals and entities, not to\nsuggest that various intermediate steps in an overall proceeding constitute discrete\nparticular matters. 12\n\n12\nIt is possible to have a financial interest in an intermediate step in a matter without having an\ninterest in the final outcome. For example, a person who has a contractual right to a fee if the\ngovernment initiates a rulemaking would have a financial interest in that intermediate step, without\nregard to the outcome. Because the intermediate step would be part of a larger matter, however, such a\nperson would have an interest in that entire, larger matter.\n\n75\n\n\x0cOpinions in the Office of Legal Counsel in Volume 30\n\n2.\nTypically, moreover, a person or entity that has a financial interest in a matter\nwill be within the category of persons or entities on which the \xe2\x80\x9cparticular matter\xe2\x80\x9d\nis focused. Although we do not conclude that this fact must be present if section\n208 is to apply, its absence with respect to SEA and AMS is further confirmation\nof our conclusion that section 208 does not apply here.\nA \xe2\x80\x9cparticular matter\xe2\x80\x9d includes \xe2\x80\x9conly matters that involve deliberation, decision,\nor action that is focused upon the interests of specific persons, or a discrete and\nidentifiable class of persons.\xe2\x80\x9d 5 C.F.R. \xc2\xa7 2640.103(a)(1); see also Memorandum\nfor C. Boyden Gray, Counsel to the President, from J. Michael Luttig, Acting\nAssistant Attorney General, Office of Legal Counsel, Re: Applicability of 18\nU.S.C. \xc2\xa7 208 to General Policy Deliberations, Decisions, and Actions Relating to\nIraq\xe2\x80\x99s Recent Invasion of Kuwait at 3 (Aug. 8, 1990) (same). The term encompasses matters that involve specific parties, such as a government enforcement\naction against a specific organization, as well as matters of general applicability\nthat are narrowly focused on the interests of a discrete industry, such as the meat\npacking industry or the trucking industry. See 5 C.F.R. \xc2\xa7 2640.103(a)(1) (example\n3); id. \xc2\xa7 2635.402(b)(3) (example 2).\nThe definition of \xe2\x80\x9cparticular matter\xe2\x80\x9d provides a useful tool in analyzing the\ndifficult question of what qualifies as a direct and predictable effect of a decision\nor outcome in a matter. OGE\xe2\x80\x99s regulations explain that,\n[i]f a particular matter involves a specific party or parties, generally\nthe matter will at most only have a direct and predictable effect . . .\non a financial interest of the employee in or with a party, such as the\nemployee\xe2\x80\x99s interest by virtue of owning stock. There may, however,\nbe some situations in which, under the above standards, a particular\nmatter will have a direct and predictable effect on an employee\xe2\x80\x99s financial interests in or with a nonparty. For example, if a party is a\ncorporation, a particular matter may also have a direct and predictable effect on an employee\xe2\x80\x99s financial interests through ownership of\nstock in an affiliate, parent, or subsidiary of that party. Similarly, the\ndisposition of a protest against the award of a contract to a particular\ncompany may also have a direct and predictable effect on an employee\xe2\x80\x99s financial interest in another company listed as a subcontractor in the proposal of one of the competing offerors.\nId. \xc2\xa7 2635.402(b)(1) note (emphasis added). Logic dictates that the same principle\noperates even when a particular matter is not limited to specific parties, but\nextends to a discrete and identifiable class of persons. In most circumstances, the\noutcome of a particular matter will not have a direct and predictable effect on a\n\n76\n\n\x0cFinancial Interests of Nonprofit Organizations for Purposes of 18 U.S.C. \xc2\xa7 208\n\nnonprofit organization outside of the discrete and identifiable class of persons or\nentities upon which the proceeding is focused.\nIn view of this guidance, it stretches section 208 beyond its limit to conclude\nthat SEA and AMS have financial interests in particular matters that are simply the\nfocus of their advocacy. If an organization were to spend money to issue a press\nrelease containing its views on a lawsuit to which it was not a party, we could not\nsay, consistent with this guidance, that it would have a financial interest in the\ncase. The parties to the case might have a financial interest; others whose financial\ninterests would be affected by a particular decision or outcome in the case might\nhave a financial interest; but the rest of the public at large, including non-profit\norganizations that have policy interests in the case, would not have a financial\ninterest simply by virtue of expressing a view about the case, even if such an\norganization expends resources to express that view. The same reasoning applies\nhere. The executive pay matter in which SEA has an advocacy interest is not\ndirected at nonprofit organizations like SEA; it is focused on federal employees in\nthe Senior Executive Service. Nor are the science policies described in Commerce\xe2\x80\x99s letter focused on regulation of nonprofit organizations like AMS.\nIII.\nA.\nNor does this Office\xe2\x80\x99s FAA Opinion compel us to conclude that section 208\napplies here. The FAA Opinion, to be sure, describes a \xe2\x80\x9cfinancial interest\xe2\x80\x9d as \xe2\x80\x9can\ninterest \xe2\x80\x98pertaining to monetary receipts and expenditures,\xe2\x80\x99\xe2\x80\x9d 28 Op. O.L.C. at 239\n(citation omitted), and the nonprofit organizations here are making monetary\nexpenditures for advocacy. That opinion also states that \xe2\x80\x9cone has a financial\ninterest in a governmental matter only when the particular matter can affect one\xe2\x80\x99s\nfinances\xe2\x80\x94i.e., one\xe2\x80\x99s monetary receipts and expenditures.\xe2\x80\x9d Id. at 240. The FAA\nOpinion correctly stated that a required expenditure can give rise to a financial\ninterest. But, in that opinion, it was the outcome of a particular matter that we\nsuggested could give rise to a financial interest in the matter, under circumstances\nthat would surely qualify as a \xe2\x80\x9closs\xe2\x80\x9d to the employee (being forced to pay for air\ntravel previously provided free of charge). Specifically, we suggested that an FAA\nemployee who had flight privileges with an airline would have a financial interest\nin a matter that could result in an airline\xe2\x80\x99s losing its ability to fly.\nIndeed, one might argue that the FAA Opinion construed the words \xe2\x80\x9cfinancial\ninterest\xe2\x80\x9d too broadly. Under one possible definition of \xe2\x80\x9cfinancial interest,\xe2\x80\x9d a\nmonetary expenditure alone would never qualify because a financial interest is a\n\xe2\x80\x9cproperty interest,\xe2\x80\x9d such as an equity stake in something. See Black\xe2\x80\x99s Law\nDictionary 828 (8th ed. 2004) (second definition of \xe2\x80\x9cinterest,\xe2\x80\x9d defining the word\nto mean \xe2\x80\x9c[a] legal share in something; all or part of a legal or equitable claim to or\n\n77\n\n\x0cOpinions in the Office of Legal Counsel in Volume 30\n\nright in property <right, title, and interest>\xe2\x80\x9d); The American Heritage Dictionary\nof the English Language 912 (4th ed. 2000) (an \xe2\x80\x9cinterest\xe2\x80\x9d is, among other things,\n\xe2\x80\x9c[a] right, claim, or legal share: an interest in the new company\xe2\x80\x9d). We do not\nbelieve, however, that the statute uses \xe2\x80\x9cinterest\xe2\x80\x9d exclusively in this sense of the\nword. Section 208(a) requires a \xe2\x80\x9cfinancial interest\xe2\x80\x9d \xe2\x80\x9cin\xe2\x80\x9d a \xe2\x80\x9cmatter,\xe2\x80\x9d as opposed to\na \xe2\x80\x9cfinancial interest\xe2\x80\x9d in property or a party, and one does not typically refer to a\n\xe2\x80\x9clegal share\xe2\x80\x9d in a matter. Compare 18 U.S.C. \xc2\xa7 208(a) (requiring a determination\nwhether an employee has a financial interest in a matter) with 18 U.S.C. \xc2\xa7 434\n(1958) (section 208(a)\xe2\x80\x99s predecessor, requiring a determination whether an\nemployee has an \xe2\x80\x9cinterest[] in the pecuniary profits or contracts of any corporation . . . or other business entity\xe2\x80\x9d). Nor would the narrower definition cover some\nseemingly obvious examples of a financial interest, such as the interest of a\ndefendant in a potential judgment against him in a tort action.\nWe believe, instead, that section 208(a) incorporates a broader understanding of\n\xe2\x80\x9cinterest\xe2\x80\x9d\xe2\x80\x94a concern based upon the potential for pecuniary gain or loss. 5 C.F.R.\n\xc2\xa7 2640.103(b). An interest in a matter, then, is \xe2\x80\x9c[a] relation to the matter in\ncontroversy . . . in the nature of a prospective gain or loss, which actually does, or\npresumably might, create a bias or prejudice in the mind inclining the person to\nfavor one side or the other.\xe2\x80\x9d 33 C.J. Interest 262 (1924) (footnotes omitted).\nWhatever the precise formulation (which we need not resolve here), an expenditure, just like a stock or a bond, can give rise to an interest in a matter, but, as\nnoted, only if a particular action or outcome in the matter holds the potential for a\nfinancial gain or a loss to the organization. Only then will the organization have a\nsufficient financial reason for wanting a particular result in the matter. 13\n\n13\nFor the difference between the two definitions of \xe2\x80\x9cinterest,\xe2\x80\x9d one involving a share in property and\nthe other a relation giving rise to prospective gain or loss, see Restatement (First) of Property \xc2\xa7 5\n(1936) (in effect when section 208 was enacted) (\xe2\x80\x9cNote on the Use of the Word Interest in the\nRestatement: Throughout all the Restatements the word \xe2\x80\x98interest\xe2\x80\x99 is used to denote one of three things:\na legal relation, a human desire, and return for the use of money. When the word is used in the last\nsense the context clearly indicates the meaning. With this exception throughout all the Restatements,\nexcept the restatement of Torts, \xe2\x80\x98interest\xe2\x80\x99 is used as defined in this Section; that is, as a word denoting a\nlegal relation or relations. In restating the law of Torts it has been found necessary to use the word\n\xe2\x80\x98interest\xe2\x80\x99 to denote any human desire. (See Restatement of Torts \xc2\xa7 1). The two different meanings of\nthe word correspond to existing differences in common and legal usage. When it is said that \xe2\x80\x98A has sold\nhis interest in Blackacre,\xe2\x80\x99 the word is used as it is used in this and other Restatements except the\nRestatement of Torts; when it is said that \xe2\x80\x98A has an interest in being free from bodily harm\xe2\x80\x99 the word is\nused as it is used throughout the Restatement of the Law of Torts.\xe2\x80\x9d); 33 C.J. Interest 261\xe2\x80\x9362 (1924)\n(\xe2\x80\x9cAs applied to property. The chief use of the term \xe2\x80\x98interest\xe2\x80\x99 seems to be to designate some right\nattached to property which either cannot, or need not, be defined with precision. It means such a right\nin or to a thing capable of being possessed or enjoyed as property which can be enforced by judicial\nproceedings . . . . In a suit or action. A relation to the matter in controversy, or to the issue of the suit, in\nthe nature of a prospective gain or loss, which actually does, or presumably might, create a bias or\nprejudice in the mind inclining the person to favor one side or the other; such relation to the matter in\nissue as creates a liability to pecuniary loss or gain from the event of a suit; the benefit which a person\n\n78\n\n\x0cFinancial Interests of Nonprofit Organizations for Purposes of 18 U.S.C. \xc2\xa7 208\n\nNeither is our conclusion inconsistent with the general understanding that an\norganization has a financial interest in a matter when it formally intervenes to\nassert the financial interests of its members. The Rehnquist Opinion stated that\n\xe2\x80\x9c[i]f a pending proceeding [before the FPC] involved intervention by NCA as in\n[Natural Gas Pipeline Co. of Am., 33 F.P.C. 545 (1965)], or [Great Lakes Gas\nTransmission Co., 37 F.P.C. 1070 (1967)], participation by [the Commissioner] in\nthe Commission\xe2\x80\x99s consideration and decision would obviously be ruled out.\xe2\x80\x9d\nRehnquist Opinion at 4 n.3. Earlier, the Rehnquist Opinion described the financial\ninterest of coal producers in natural gas rates and then cited the two FPC proceedings as support for the proposition that \xe2\x80\x9c[t]he interest of coal producers in natural\ngas rate and certification proceedings has in past years (though not recently) been\nmanifested by their direct intervention, through NCA, in such proceedings.\xe2\x80\x9d Id.\nat 4. The Rehnquist Opinion thus treated such formal intervention as a means by\nwhich the members of the outside organization asserted their financial interests,\nwith the outside organization standing in the shoes of the members. In these\ncircumstances, the outside organization, as the surrogate for its members, could\nwell be found to have a \xe2\x80\x9cfinancial interest\xe2\x80\x9d in the proceeding, and a government\nemployee to whom section 208(a) imputes the financial interest of the outside\norganization would therefore have to recuse himself.\nThis understanding of formal intervention, however, has no application in the\npresent context. According to Commerce\xe2\x80\x99s letter, AMS does not intervene in\ngovernmental proceedings involving science policy; it merely issues policy\nstatements. Even if AMS were to intervene in some sufficiently formal manner,\nAMS\xe2\x80\x99s members are not financially interested. They have only a policy interest in\nthe questions being addressed by the government, not a financial or pecuniary\ninterest in the resolution of those questions. AMS, therefore, would not be\nrepresenting the financial interests of its members. SEA, by contrast, submitted\ncomments in the informal rulemaking involving the establishment of a new pay\nsystem for senior executives, and SEA resembles a typical trade association in that\nit advocates on behalf of the financial interests of its members. However, we need\nnot decide whether SEA\xe2\x80\x99s submitting comments in an informal rulemaking\nconstitutes a sufficiently formal intervention to impute the financial interests of its\nmembers to SEA, because, as we explained above, SEA\xe2\x80\x99s members themselves do\nnot have a disqualifying financial interest in matters regarding the pay system for\nsenior executives. A federal employee\xe2\x80\x99s interest in his own federal compensation\nhas in the matter about to be decided and which is in issue between the parties.\xe2\x80\x9d) (footnotes omitted);\nPersky v. Greever, 202 S.W.2d 303, 306 (Tex. Civ. App. 1947) (\xe2\x80\x9cThe word \xe2\x80\x98interest\xe2\x80\x99 has more than\none meaning, depending upon the manner of its use and the context of the sentence, phrase of grouped\nwords, or subject matter under consideration. An interest may well be said to exist in an action which\ncreates or determines a liability or pecuniary loss or gain, depending upon the result of a trial in\ncourt.\xe2\x80\x9d).\n\n79\n\n\x0cOpinions in the Office of Legal Counsel in Volume 30\n\ngenerally does not constitute a disqualifying financial interest under section 208,\nbecause OGE has issued an exemption, over a wide range of circumstances, for the\n\xe2\x80\x9cfinancial interest aris[ing] from Federal Government . . . salary or benefits\xe2\x80\x9d\xe2\x80\x94the\nsort of financial interest that SEA might assert on behalf of its members. 5 C.F.R.\n\xc2\xa7 2640.203(d). Given that an SEA member may participate in matters involving\nthe pay system for senior executives (so long as he does not make determinations\nthat individually or specially affect his own salary and benefits, or determinations\nthat individually or specially affect the salary and benefits of another person\nspecified in section 208, 5 C.F.R. \xc2\xa7 2640.203(d)), we cannot say that SEA itself\nwould have a disqualifying financial interest merely by virtue of representing its\nmembers\xe2\x80\x99 interests.\nB.\nConcluding that section 208 encompasses a nonprofit organization\xe2\x80\x99s expenditures on advocacy would have untoward consequences. If expenditures on\nadvocacy alone gave rise to a financial interest that implicates section 208(a), the\nstatute would disqualify an employee whenever an organization in which the\nemployee is a director makes any expenditure, even a minimal one, with respect to\nan issue that might come before him in his official capacity. 14 If, for example, an\norganization had a meeting to consider whether to take a position on the issue and\nspent some small amount of money\xe2\x80\x94indeed, perhaps if two salaried employees of\nthe organization, during the time for which the organization pays them, briefly\ndiscussed the possibility of taking a position, or if the organization did nothing\nmore than issue a press release\xe2\x80\x94a federal employee who serves on the organization\xe2\x80\x99s board would be disqualified from his agency\xe2\x80\x99s work on that issue (at least\nabsent a waiver). By logic, the same principle, moreover, would apply to spending\non advocacy by individual federal employees, as well as organizational spending.\nWere an employee to purchase a bumper sticker or yard sign expressing an\nopinion on a policy at issue in a governmental matter, that employee might have a\nfinancial interest in the matter under such reasoning.\nIt seems unlikely that Congress intended for this criminal conflict-of-interest\nstatute to reach so far. What led to the regulation of financial interests was the\neconomic temptation to put a finger on the scale that exists when an employee has\na financial reason to prefer a particular outcome. But when a government actor has\nno financial temptation, however slight, to prefer one outcome over another, the\nfinancial justification for requiring recusal disappears. And, while there are many\npotential non-financial reasons for requiring a government actor to recuse\n14\nThe statute would apply, however, only if the employee had knowledge of the organization\xe2\x80\x99s\nfinancial interest. 18 U.S.C. \xc2\xa7 208(a) (covering particular matters \xe2\x80\x9cin which, to [the employee\xe2\x80\x99s]\nknowledge . . . [an] organization in which he is serving as . . . director . . . has a financial interest\xe2\x80\x9d).\n\n80\n\n\x0cFinancial Interests of Nonprofit Organizations for Purposes of 18 U.S.C. \xc2\xa7 208\n\nhimself\xe2\x80\x94bias, prejudice, social relationship with the parties, etc.\xe2\x80\x94section 208\nsingles out only financial interests. \xe2\x80\x9cThe simplest reason,\xe2\x80\x9d explained the influential Bar Association Report that led to the enactment of section 208, \xe2\x80\x9cis that it is\nbetter to control whatever fraction of improper behavior is attributable to economic motives than to control none. The second reason is that regulatory schemes have\nto be administered. Restrictions on outside economic affiliations can be written\nwith reasonable particularity and enforced with moderate predictability.\xe2\x80\x9d Association of the Bar of the City of New York, Conflict of Interest and Federal Service\n17 (1960). Both reasons suggest that section 208 does not reach the advocacy\nexpenditures at issue here.\nAt any rate, even if section 208 were ambiguous with respect to the question\npresented, because section 208 is a penal statute, the law requires that it receive a\nstrict construction. United States v. Chem. Found., Inc., 272 U.S. 1, 18 (1926)\n(interpreting section 208\xe2\x80\x99s predecessor). This rule is \xe2\x80\x9cnot merely a convenient\nmaxim of statutory construction,\xe2\x80\x9d but \xe2\x80\x9cis rooted in fundamental principles of due\nprocess which mandate that no individual be forced to speculate, at peril of\nindictment, whether his conduct is prohibited,\xe2\x80\x9d Dunn v. United States, 442 U.S.\n100, 112 (1979), and in the separation of powers principle that \xe2\x80\x9c\xe2\x80\x98legislatures and\nnot courts should define criminal activity,\xe2\x80\x99\xe2\x80\x9d Ratzlaf v. United States, 510 U.S. 135,\n148\xe2\x80\x9349 (1994) (quoting United States v. Bass, 404 U.S. 336, 348 (1971)). And the\nrule surely applies here, where construing the words \xe2\x80\x9cfinancial interest in a\nparticular matter\xe2\x80\x9d to include mere policy-motivated expenditures on advocacy\nwould expand the criminal conflict of interest law beyond its traditional application.\nAccordingly, we conclude that SEA and AMS do not have financial interests in\nthe matters you have described.\nIV.\nAlthough section 208(a) may not apply in these circumstances, government\nemployees are under a separate duty to \xe2\x80\x9cavoid any actions creating the appearance\nthat they are violating the law or . . . ethical standards.\xe2\x80\x9d 5 C.F.R. \xc2\xa7 2635.101(b)(14)\n(2005) (emphasis added); see Exec. Order No. 12674, \xc2\xa7 101(n) (Apr. 12, 1989),\n3 C.F.R. 215 (1989 Comp.), as amended by Exec. Order No. 12731 (Oct. 17, 1990),\n3 C.F.R. 306 (1990 Comp.); see also 5 C.F.R. \xc2\xa7 2635.502 (2005). Among the\nrelevant ethical standards is an obligation to \xe2\x80\x9cact impartially and not give preferential\ntreatment to any private organization or individual,\xe2\x80\x9d 5 C.F.R. \xc2\xa7 2635.101(b)(8), and\na prohibition against an employee\xe2\x80\x99s use of \xe2\x80\x9chis public office . . . for the private gain\nof . . . persons with whom the employee is affiliated in a nongovernmental capacity,\nincluding nonprofit organizations of which the employee is an officer or member,\xe2\x80\x9d\nid. \xc2\xa7 2635.702. Citing the predecessor version of these provisions, Exec. Order No.\n11222, \xc2\xa7 201(c) (May 8, 1965), 3 C.F.R. 130, 131 (1965 Supp.), the Rehnquist\n\n81\n\n\x0cOpinions in the Office of Legal Counsel in Volume 30\n\nOpinion observed that \xe2\x80\x9c[w]hile [the Commissioner] in our judgment cannot be\nviewed as having the type of financial interest covered by 18 U.S.C. 208, the fact\nremains that NCA does have a direct non-financial interest in any matters affecting\ncoal in its competitive fight with natural gas\xe2\x80\x9d and that \xe2\x80\x9ceven assuming all good faith\non [the Commissioner\xe2\x80\x99s] part, his participation in the direct regulation of the chief\ncompetitor of NCA\xe2\x80\x99s members is likely to suggest an inference of preferential\ntreatment or loss of independence which could be difficult to dispel.\xe2\x80\x9d Id. at 6\xe2\x80\x937.\nHere, too, when an outside organization on whose board a government employee\nserves is actively advocating a position, particularly where it devotes a large portion\nof its budget to such advocacy, the employee\xe2\x80\x99s official participation in his agency\xe2\x80\x99s\nwork on the same issue may \xe2\x80\x9csuggest an inference of preferential treatment or loss of\nindependence\xe2\x80\x9d giving rise to an appearance of partiality for purposes of the ethical\nrules.\nAs we wrote in the FAA Opinion, OGE takes the view that it \xe2\x80\x9c\xe2\x80\x98is not in a position to decide for an agency whether a reasonable person would question the\nimpartiality of [an] employee\xe2\x80\x99s participation in a particular matter,\xe2\x80\x99\xe2\x80\x9d FAA\nOpinion, 28 Op. O.L.C. at 244\xe2\x80\x9345 (quoting OGE, Letter to an Agency Ethics\nAdvisor, Informal Advisory Ltr. 00x4, 2000 WL 33407281, at *3 (Apr. 11)), and\n\xe2\x80\x9c[t]he same generally holds for this Office; the question of an appearance problem\nis best left to the employee and the agency based on the facts of a particular case,\xe2\x80\x9d\nid. at 245. Nevertheless, we note that, on the facts presented to us, there is a\nsubstantial question whether it would create the appearance of a conflict for an\nagency employee who is a director of SEA to participate in an official capacity in\ndeciding on recommendations for the agency\xe2\x80\x99s senior executive pay system. SEA\napparently is engaged in a broad and active campaign involving communications\ndirectly to the agencies of the federal government, in which SEA advances\npositions about the system for senior executive pay. For example, when OPM\nissued a notice of proposed rulemaking to prescribe the standards for senior\nexecutive pay, 69 Fed. Reg. 45,536 (July 29, 2004), SEA filed a set of comments\nin response. See Comments of the Senior Executives Association on the Proposed\nRule Regarding \xe2\x80\x9cSenior Executive Service Pay and Performance Awards and\nAggregate Limitation on Pay\xe2\x80\x9d (undated). SEA lists its \xe2\x80\x9cCurrent Objectives\xe2\x80\x9d on its\nwebsite, and advocacy about the new senior executive pay system used to be the\nfirst objective on the list, see Senior Executives Association, http://seniorexecs.org\n(last visited June 2, 2005), and remains one of the objectives, see id. (last visited\nJan. 11, 2006). 15 At the same time, the Executive Resources Board on which the\n15\n\nTo the extent that SEA represents its members\xe2\x80\x99 interests in the pay system, a director\xe2\x80\x99s official\nrole in the matter might not raise an appearance problem, because the regulatory exemption for an\nemployee\xe2\x80\x99s actions affecting his own pay or benefits \xe2\x80\x9cconstitute[s] a determination that the interest of\nthe Government in the employee\xe2\x80\x99s participation outweighs the concern that a reasonable person may\nquestion the integrity of agency programs or operations.\xe2\x80\x9d 5 C.F.R. \xc2\xa7 2635.501 note (2005). But, apart\n\n82\n\n\x0cFinancial Interests of Nonprofit Organizations for Purposes of 18 U.S.C. \xc2\xa7 208\n\nemployee has served in his official capacity makes recommendations regarding the\nsenior executive pay system. SEA Letter at 1. If an outside organization in which\nan employee is a director has been advocating its views directly to the federal\ngovernment on a matter that the organization has identified as especially significant, there is a significantly heightened risk that the employee, by taking a\npersonal and substantial role in the same matter, will at least appear less than\nindependent in his judgments for purposes of 5 C.F.R. \xc2\xa7 2635.101(b), and that\nrisk, along with other factors such as the importance of the particular employee\xe2\x80\x99s\nrole in the government\xe2\x80\x99s deliberations, calls for serious consideration by the\nemployee\xe2\x80\x99s agency. 16\nSTEVEN G. BRADBURY\nActing Assistant Attorney General\nOffice of Legal Counsel\n\nfrom this representation of its members\xe2\x80\x99 financial interests, SEA as an organization has a substantial\npolicy interest in the SES pay system that raises a separate concern about the appearance of an SEA\ndirector\xe2\x80\x99s taking part in such agency deliberations.\n16\nIn contrast, AMS appears in some instances only to have issued public statements about matters\nidentified in the Commerce Letter, rather than directly communicating with federal agencies. See\nCommerce Letter at 2 n.2.\n\n83\n\n\x0c'