Court Opinion

ID: 4119490
Source: CourtListenerOpinion
Date Created: 2017-01-27 22:40:25.495273+00
Date Added: 2024-06-11T14:46:47.532043
License: Public Domain

Application of Conflict of Interest Rules to Appointees
                              Who Have Not Begun Service
         Conflict of interest rules first apply when an appointee begins the duties of his office.

                                                                                                     May 8, 2002

                              MEMORANDUM OPINION FOR THE GENERAL COUNSEL
                                     OFFICE OF GOVERNMENT ETHICS

            You have asked for our opinion whether the principal conflict of interest rules
         of the Executive Branch apply to a person who has been appointed to an office by
         the President with the advice and consent of the Senate but has not yet begun the
         duties of that office. 1 We determine that the conflict of interest rules do not apply
         by virtue of the appointment alone but instead apply only after the appointee has
         begun the duties of his office.

                                                              I.

             The principal conflict of interest restrictions that govern the Executive Branch
         are found in the criminal conflict of interest laws, 18 U.S.C. §§ 202-209 (2000);
         the directives in Executive Order No. 12674, Principles of Ethical Conduct for
         Government Officers and Employees, 3 C.F.R. 215 (1989); and the Standards of
         Ethical Conduct for Employees of the Executive Branch, 5 C.F.R. pt. 2635 (2002)
         (“Standards of Ethical Conduct”). In each case, the reach of the restrictions
         depends on the meaning of the terms “officer” and “employee.”
             By their terms, the potentially relevant criminal statutes cover “officers” and
         “employees.” For example, 18 U.S.C. § 203(a)(1)(B) forbids, among other things,
         a person’s receipt of compensation for certain representational services rendered
         “at a time when such person is an officer or employee . . . in the executive . . .
         branch of the government.” Under 18 U.S.C. § 205(a), “[w]hoever, being an
         officer or employee of the United States in the executive . . . branch of the
         Government” acts as an agent or attorney for anyone before an agency or court is
         guilty of a crime. And 18 U.S.C. § 209(a) bars receipt of a salary or supplement to
         a salary “as compensation for . . . services as an officer or employee of the
         executive branch of the United States Government.”
             Because title 18 sets out no definition of “officer” or “employee,” we have
         looked to the definitions in title 5 as “‘the most obvious source of a definition’ for
         title 18 purposes.” Applicability of Executive Order No. 12674 to Personnel of

             1
               Letter for M. Edward Whelan III, Principal Deputy Assistant Attorney General, Office of Legal
         Counsel, from Marilyn L. Glynn, General Counsel, Office of Government Ethics (Jan. 8, 2002) (“OGE
         Letter”). We earlier gave informal advice reaching the same conclusion as in the present opinion.

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             Regional Fishery Management Councils, 17 Op. O.L.C. 150, 154 (1993) (“Fishery
             Management Councils”) (quoting Conflict of Interest—Status of an Informal
             Presidential Advisor as a “Special Government Employee,” 1 Op. O.L.C. 20
             (1977) (“Informal Presidential Advisor”)). Under 5 U.S.C. § 2104 (2000), an
             “officer” is defined to mean someone who is (1) “required by law to be appointed
             in the civil service by [the President, a court of the United States, the head of an
             Executive agency, or the Secretary of a military department] acting in an official
             capacity,” (2) “engaged in the performance of a Federal function under authority
             of law or an Executive act,” and (3) “subject to the supervision” of the President
             or the head of an Executive agency or military department. Section 2105 defines
             “employee” to include not only an “officer,” but also anyone in a larger class of
             persons who, like “officers,” are engaged in federal functions, but are appointed
             and supervised by specified federal officials other than those able to appoint and
             supervise “officers.”
                The Executive Order similarly imposes certain restrictions on “employees,”
             defined to mean “any officer[s] or employee[s] of an agency.” Exec. Order No.
             12674, § 503(b). Although the Executive Order does not define “officer” or
             “employee,” we previously have concluded that the terms “are identical in scope
             and meaning with the terms ‘officer’ and ‘employee’ as used in 5 U.S.C. §§ 2104
             and 2105.” Fishery Management Councils, 17 Op. O.L.C. at 153. We rested this
             conclusion on three grounds. First, we noted that we had turned to the title 5
             definitions for guidance in interpreting the criminal conflict of interest laws, and
             “[b]ecause the objectives of the Order and its implementing regulations are closely
             related to those of the conflicts statutes, we [thought] it reasonable to look to title
             5’s definition of ‘employee’ when elucidating the Order.” Id. at 154 (citation
             omitted). Second, the Executive Order adopts the definition of “agency” from title
             5, with certain exceptions, Exec. Order No. 12674, § 503(c); and “[w]e [thought] it
             unlikely that the Order was intended to cover personnel who were employed by
             ‘agencies’ within the meaning of title 5 but who were not themselves ‘employees’
             within the same title.” 17 Op. O.L.C. at 154. Third, while the Executive Order
             states generally that it is based on the authority vested in the President “by the
             Constitution and laws of the United States,” Exec. Order No. 12674, pmbl., but
             does not specify the authorizing statutes, “the most obvious statutory source of
             authority” is the President’s power under title 5 to “prescribe regulations for the
             conduct of employees in the executive branch,” 5 U.S.C. § 7301 (2000), and this
             authority brings into play the definition of “employee” in title 5. 17 Op. O.L.C. at
             154.
                The Standards of Ethical Conduct carry out the Executive Order, and we there-
             fore applied our conclusion in Fishery Management Councils about the applicable
             definitions both to the Executive Order and to these implementing regulations. 17
             Op. O.L.C. at 150 n.2, 158. In addition, we note that some of the particular rules in
             the Standards of Ethical Conduct rest on specific statutory provisions in title 5 that

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         use the term “employee” and so invoke the title 5 definition. The rules about gifts
         to superiors, for example, derive in part from 5 U.S.C. § 7351 (2000), which bars
         “[a]n employee” from receiving or making certain gifts. 2 The reach of the
         Standards of Ethical Conduct thus depends, too, on the meaning of the terms
         “officer” and “employee” in title 5.

                                                          II.

                                                          A.

             The OGE Letter argues that the three parts of the title 5 definitions—
         appointment by a federal official, engagement in a federal function, and federal
         government supervision—need not “be applied invariably or formalistically in
         every case where the application of federal ethics requirements is at issue.” OGE
         Letter, supra note 1, at 2. In particular, the OGE Letter cites two opinions of our
         Office—one in which we quoted a previous opinion for the proposition that the
         title 5 definition of employee “is not necessarily conclusive for conflicts purpos-
         es,” Fishery Management Councils, 17 Op. O.L.C. at 154 n.12, and one in which
         we concluded that “an identifiable act of appointment may not be absolutely
         essential for an individual to be regarded as an officer or employee in a particular
         case where the parties omitted it for the purpose of avoiding the application of the
         conflict-of-interest laws or perhaps where there was a firm mutual understanding
         that a relatively formal relationship existed,” Informal Presidential Advisor, 1 Op.
         O.L.C. at 21. Therefore, the OGE Letter argues, satisfaction of only the first part
         of the title 5 definitions—appointment by a federal official—ought to suffice to
         render an individual subject to the federal conflict of interest laws.
             We do not agree. First, as stated above, we have previously opined that the
         terms “officer[s]” and “employee[s]” in the Executive Order and the Standards of
         Ethical Conduct “are identical in scope and meaning with the terms ‘officer’ and
         ‘employee’ as used in 5 U.S.C. §§ 2104 and 2105.” Fishery Management Coun-
         cils, 17 Op. O.L.C. at 153. We have, in short, concluded that the three parts of the
         title 5 definitions must be applied invariably in these contexts. Second, with
         respect to the criminal conflict of interest laws, we do not read our opinions as
         suggesting any general flexibility to depart from the three-part test, much less to
         simply disregard two of the three parts. Indeed, particularly in view of the rule of
         lenity, see Jones v. United States, 529 U.S. 848, 858 (2000) (quoting Rewis v.
         United States, 401 U.S. 808, 812 (1971), and United States v. Universal C.I.T.
         Credit Corp., 344 U.S. 218, 221-222 (1952)), we would be loath to dilute the

             2
               The statutory provision that underlies the rules on gifts from outsiders, 5 U.S.C. § 7353 (2000),
         has its own definition of “officer or employee”—“an individual holding an appointive or elective
         position in the executive, legislative, or judicial branch of Government, other than a Member of
         Congress.” Id. § 7353(d)(2). This definition, however, is congruent with the analysis we set out below.

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             three-part test. In this regard, our statement that the title 5 definition of employee
             “is not necessarily conclusive for conflicts purposes” might more sensibly be read
             to mean that, in some circumstances, even satisfaction of the three-part test might
             not conclusively establish that a person is an officer or employee for purposes of
             the criminal prohibitions. We further note that our conclusion that “an identifiable
             act of appointment may not be absolutely essential for an individual to be regarded
             as an officer or employee,” Informal Presidential Advisor, 1 Op. O.L.C. at 21
             (emphasis added), does not mean that we concluded that the requirement of
             appointment by a federal official was not necessary. On the contrary, it presuppos-
             es the requirement and merely leaves open the possibility that an individual could
             be shown to have satisfied the requirement—i.e., to have been appointed—even in
             the absence of an identifiable act of appointment, if a “formal relationship” had
             been established between the individual and the government. Id.
                 We therefore look to the statutory definitions of “officer” and “employee” in
             title 5 in deciding whether the conflict of interest restrictions apply to a person
             who has been appointed to office by the President with the Senate’s advice and
             consent but has not yet begun the duties of office. We conclude that a person in
             these circumstances would not meet at least two of the three statutory tests—
             engagement in a federal function and federal government supervision—and that
             the conflict of interest restrictions therefore would not apply to him.
                 Chief Justice Marshall explained in Marbury v. Madison, 5 U.S. (1 Cranch)
             137, 162 (1803), that “when a commission has been signed by the president, the
             appointment is made.” In the circumstances here, an appointment in the constitu-
             tional sense would thus be complete. Whether the signing of a commission would
             constitute an “appointment” for purposes of 5 U.S.C. §§ 2104 and 2105 may be
             less clear. The United States Court of Appeals for the Federal Circuit has held, for
             example, that appointment under the statute requires “action by the appointee
             denoting acceptance” and that “[a]cceptance is important, as membership in the
             civil service imports burdens as well as benefits.” Watts v. OPM, 814 F.2d 1576,
             1580 (Fed. Cir. 1987). We need not resolve this issue here, however; we instead
             assume arguendo that the first part of the test would be met when the President
             signed the commission.
                 Nevertheless, status as an employee under 5 U.S.C. § 2105 (2000) or an officer
             under 5 U.S.C. § 2104 requires more than an appointment: “One may be an
             appointee and never achieve the status of employee. There are three elements to
             the statute and all must be complied with to achieve the status of an employee.”
             McCarley v. MSPB, 757 F.2d 278, 280 (Fed. Cir. 1985). 3 In McCarley, the

                 3
                  On the question whether the Merit Systems Protection Board or the agency taking the underlying
             action should be the respondent, which is not at issue here, McCarley was overruled by Hagmeyer v.
             Dep’t of Treasury, 852 F.2d 531 (Fed. Cir. 1988). Congress then amended the statute to clarify this
             question. See Amin v. MSPB, 951 F.2d 1247, 1251-54 (Fed. Cir. 1991).

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         petitioner had been appointed, but had not entered upon the duties of the position.
         The Merit Systems Protection Board dismissed his claim for lack of jurisdiction,
         because jurisdiction depended upon his being an employee. The Federal Circuit
         affirmed, explaining that relief is unavailable “to an appointee who has not
         qualified as an employee by performing a federal function subject to the supervi-
         sion of a federal employee.” Id.; see also Miller v. MSPB, 794 F.2d 660 (Fed. Cir.
         1986).
            Your question concerns appointees, like the petitioner in McCarley, who have
         not entered upon the duties of their offices and have therefore not yet performed a
         federal function, under the supervision of a federal official. Under 5 U.S.C.
         §§ 2104 and 2105, they are not yet officers or employees and thus are not yet
         subject to conflict of interest restrictions.
            The reasoning by which we conclude that the conflict of interest restrictions do
         not become applicable upon appointment, without more, is not novel. In Marbury,
         Chief Justice Marshall carefully distinguished between the President’s act of
         appointment and the appointed officer’s subsequent acceptance of that appoint-
         ment: “The appointment is the sole act of the president; the acceptance is the sole
         act of the officer, and is, in plain common sense, posterior to the appointment. As
         he may resign, so may he refuse to accept.” 5 U.S. at 161; see id. at 162 (“the
         person appointed . . . has the absolute, unconditional power of accepting or
         rejecting [the appointment]”). Thus, it is plain under Marbury that the act of
         appointment does not ipso facto make the appointed person an officer or employ-
         ee. See also Acceptance of a Promotion, 12 Op. Att’y Gen. 229, 229 (1867) (“a
         person cannot be made an incumbent without his consent, and, of course, this he
         must manifest by some adequate token of his intention”; “a formal acceptance is
         the evidence which, in the public service generally, it has been customary to
         require”).
            Assistant Attorney General William H. Rehnquist used parallel reasoning when
         he concluded that a United States Attorney would not become subject to a
         particular rule grounded in conflict of interest principles, where that person had
         been appointed as a federal judge but had not yet taken the oath of judicial office
         or begun his judicial duties. See Memorandum for Harlington Wood, Jr., Associate
         Deputy Attorney General, from William H. Rehnquist, Assistant Attorney
         General, Office of Legal Counsel, Re: Delay in Induction of Judge into Office
         Following His Confirmation by the Senate (Nov. 27, 1970) (“Rehnquist Opinion”).
         According to the Rehnquist Opinion, “the offices of judge and of prosecutor in the
         same court are incompatible”: it would be “improper as a matter of public policy if
         the same person carried out their functions,” with the “impropriety deriv[ing] from
         such considerations as conflicts of interest or the rule that no person shall be a
         judge in his own cause.” Id. at 5. The appointee in question wished to complete a
         criminal prosecution before becoming a judge, but the President had already
         signed his commission and sent it to him. Because “the assumption by an officer

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             of a new office which is incompatible with the one he is holding has the effect of
             vacating the first office,” id. (citation omitted), the issue was “whether a federal
             official vacates his office at the time when the President executes and forwards a
             commission appointing him to an office incompatible with the one which the
             officer is holding, or whether the vacation of the office takes place at a later date,
             e.g., when the officer accepts it, or enters upon duty.” Id. The Rehnquist Opinion
             concluded that although the appointment is made with the signing of the commis-
             sion, that signing “is not the last step in the investiture of an officer,” id. at 6, and
             “an appointment must be accepted in order to have [the] effect” of vacating an
             office already held, id. at 7. As the Rehnquist Opinion explained, “[t]he rule that
             an incumbent vacates his office only upon acceptance and exercise of an incom-
             patible office, rather than upon appointment to it, is obviously designed to prevent
             the appointing power from removing an inconvenient officeholder or even a
             member of the legislature by appointing him to an incompatible office.” Id. at 8.

                                                         B.

                The OGE Letter also argues that “the underlying purposes of the ethical re-
             quirements are better served by the view that officer or employee status commenc-
             es with a personnel appointment.” OGE Letter at 2. For example, an appointee
             might defer his first day of work in order to represent a client before the agency to
             which he had already been appointed. Id. We do not dispute that the rule that
             conflict of interest restrictions do not apply immediately upon appointment may
             indeed open the possibility of some abuses. We note, however, that such a rule
             also enables an appointee to wind up his private affairs in an orderly manner
             (presumably in consultation with the Administration) and therefore may be critical
             to recruiting qualified appointees in the first place. Moreover, in the event of any
             real abuse, the President could remove the appointee from the office to which he
             had been appointed, even before he began work.
                The position advocated in the OGE Letter invites its own set of abuses. If a
             person were to be subject to conflict of interest restrictions merely upon appoint-
             ment, the appointing authority “might prejudice the appointee,” Rehnquist Opinion
             at 7, and even subject him to the threat of criminal liability, by appointing him to
             an office he did not want and would not undertake. Even in the case of voluntary
             office-seekers, while it would be highly unusual for an appointee, having under-
             taken the rigors of the appointment process, to refuse his office, such a decision is
             far from implausible. Our files reveal, for example, that in 1971 a presidential
             appointee decided not to serve after the President signed his commission, because
             he recently had been elected to Congress. See Memorandum for the Honorable
             Daniel Kingsley, Special Assistant to the President, from Thomas E. Kauper,
             Deputy Assistant Attorney General, Office of Legal Counsel, Re: Effect of
             Appointment as a Member of the Air Quality Advisory Board (June 3, 1971).

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         A similar decision might be made by someone appointed at the time of a presiden-
         tial election lost by the incumbent’s party.
             On balance, were we to decide which rule better promoted the underlying
         purposes of the conflict of interest rules, we doubt very much that we would adopt
         the rule advocated by the OGE Letter. But, for the reasons stated above, the choice
         is not ours to make.

                                                          C.

            The OGE Letter further states that “[o]ver the years [OGE has] advised numer-
         ous agencies, White House officials, and nominees for Senate-confirmed (PAS)
         positions that an individual becomes subject to the various ethical requirements
         upon appointment.” OGE Letter at 1. We note that it appears that OGE has not
         always had this view. In 1984, we issued an opinion concluding that a statutory
         bar against outside employment by commissioners of the International Trade
         Commission applied as of the commencement of duties, rather than as of appoint-
         ment. Memorandum for Fred F. Fielding, Counsel to the President, from Ralph W.
         Tarr, Deputy Assistant Attorney General, Office of Legal Counsel, Re: Appoint-
         ment of New Members to the International Trade Commission (Mar. 22, 1984)
         (“ITC Opinion”). In the course of this opinion, we noted that “OGE has indicated
         that as a general matter, it does not apply similar ethical and conflict of interest
         standards to employees until the time when they actually begin their employment
         and receive federal pay.” Id. at 10. Although our opinion may require a departure
         from OGE’s more recent practice, we are persuaded that OGE’s earlier view of the
         matter was the better one.

                                                          D.

            Finally, the OGE Letter expresses concerns about practical application of our
         conclusion. For example, the letter asks whether an officer starts work when he
         takes the oath of office or performs some official action. 4 We believe that a
         Senate-confirmed official becomes an “officer” in the relevant sense when, upon
         or after accepting his appointment, he actually begins his duties. At that point, the
         appointee is performing a federal function, under the supervision of the President
         or the agency head. To meet this test, it is not necessary that he take any particular
         “official action” in his position. It suffices that he has begun the work of that
         office. 5

             4
               In an analogous situation involving a judicial office, the Rehnquist Opinion found it unnecessary
         to choose between “the time when [the appointee] takes the . . . oath, or when he actually begins to
         exercise his . . . office.” Rehnquist Opinion at 8.
             5
               If the official is a “special government employee” under 18 U.S.C. § 202(a) because he is
         expected to work no more than 130 days in the next year, the first day that, under usual principles,

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                The question when an official begins the duties of his office is a familiar one
             that must, irrespective of the conflict of interest prohibitions, be addressed and
             answered for each official. Specifically, an official is entitled to the salary of his
             office at the time he enters upon the duties of office, see ITC Opinion at 9-10;
             Interstate Commerce Commission, 19 Op. Att’y Gen. 47, 48 (1887), not at the
             time of appointment or at the time of the oath of office, see United States v.
             Flanders, 112 U.S. 88, 91 (1884); Leave for Transferred Employee, 39 Op. Att’y
             Gen. 304, 305-06 (1939) (Jackson, Acting A.G.). A determination of the time
             when the conflict of interest rules begin to apply is identical to, and should
             therefore be no more difficult to make than, the routine determination of the time
             when the official begins to accrue his salary.

                                                                  M. EDWARD WHELAN III
                                                           Principal Deputy Assistant Attorney General
                                                                     Office of Legal Counsel

             counts toward the 130-day limit should be considered the day on which he enters upon his duties. See
             Office of Government Ethics, Summary of Ethical Requirements Applicable to Special Government
             Employees, Informal Advisory Op. 00x1, at 5-6 (Feb. 15, 2000), available at http://www.oge.gov/
             OGE-Advisories/Legal-Advisories/Legal-Advisories/ (last visited July 12, 2012). The OGE Letter asks
             whether a special government employee who is reappointed would be subject to conflict of interest
             restrictions during the period after reappointment but before the next day on which he actually works.
             This question seems to concern special government employees who are not appointed by the President
             with the advice and consent of the Senate but are reappointed annually, either by the President or by
             another officer. OGE Letter at 3. We believe that the reappointments of such employees do not place
             them in the same position as the Senate-confirmed appointees we address in this opinion. In many
             instances, as a matter of practice, special government employees are employed continuously, and the
             successive one-year appointments are primarily a means of enabling the appointing officer to assess
             whether the work anticipated in the next year will exceed 130 days and require an end to the
             designation as a special, rather than ordinary, government employee. See Office of Government Ethics,
             Special Government Employees and 18 U.S.C. §§ 202, 203, and 205, Informal Advisory Op. 81x24,
             at 2-3 (July 23, 1981), available at http://www.oge.gov/OGE-Advisories/Legal-Advisories/Legal-
             Advisories/ (last visited July 12, 2012). We believe that the conflict of interest restrictions would apply
             continuously to a special government employee, until he resigns or the agency notifies him that he has
             not been reappointed.

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