18 Federal Ethics Management and Public Trust Robert Roberts James Madison University, Harrisonburg, Virginia From the colonial period of American history through today, the problem of maintaining public trust in federal government agencies has confronted the nation (Locke, 1995: 14- 24). Despite some extremely bleak periods (Summers, 1993), the last forty years has seen federal agencies and departments make considerable progress in the development of ethics programs designed to protect public trust in government. The chapter argues that the exec- utive branch ethics program deserves much of the credit for the improved ethical climate in federal agencies and departments. The federal executive branch ethics management program has proven exceptionally effective in reducing the frequency of conflict-of-inter- est controversies involving federal employees and officials. Interestingly, public administration ethics scholars have not welcomed the evolution of public ethics codes and conflict-of-interest focused public ethics programs. They criti- cize public ethics codes for typically dealing with only a limited number of ethical issues; where a financial conflict-of-interest raises questions regarding the ability of a public offi- cial or employee to perform their public duties in an impartial manner. In contrast, many public ethics scholars argue that public ethics programs should focus their efforts on per- suading public managers to ' 'weigh the ethics of the programs and policies they set in motion" (Cohen and Eimicke, 1995: 107). The sharp difference of opinion over the usefulness of public ethics codes has com- plicated the process of reaching a consensus over the best strategy for protecting public confidence in public institutions. An objective analysis of public ethics codes and ethics programs that focus upon the ethical implications of public policy decisions provide strong evidence that both types of ethics programs help public employees and officials to resolve ethical problems directly related to the performance of official duties. I. THE EVOLUTION OF THE FEDERAL EXECUTIVE BRANCH PUBLIC INTEGRITY MANAGEMENT SYSTEM Annually, a relatively small number of federal employees and officials come under in- vestigation for possible violations of criminal public corruption statutes (Miller, 1992). Today, the Federal Bureau of Investigation, the Public Integrity Section of the United 367 368 Roberts States Department of Justice, United States Attorneys, and independent counsels exer- cise responsibility for investigating and prosecuting possible violations of these criminal public corruption prohibitions involving federal employees and officials (Roberts and Doss, 1997: 88-91). However, from the beginning of this republic, the vast majority of public ethics controversies have not involved allegations of criminal wrongdoing. Despite this fact, it took until the early 1960s for the White House and federal agencies and depart- ments to begin putting in place a formal executive branch ethics management program designed to reduce the number of public ethics controversies involving federal employees and officials. Long before a series of 1950s political ethics scandals persuaded the Kennedy White House to establish an executive branch ethics program, a small number of federal agencies experimented with administrative ethics codes as a method of protecting public trust in government. For instance, Postmaster General Amos Kendall, in 1829, created a model ethics code of conduct for postal employees. Kendall's code "included a long list of rules governing work habits, office conduct, the use of government property, and personal morals" (Roberts, 1988:8). Kendall believed that the post office's credibility depended, in part, upon his employees remaining above reproach in the performance of their official duties as well as in their private lives. The commitment of Kendall to high ethical standards in government proved to be much more the exception than the rule. From the early 1830s through the 1880s, public corruption scandals involving fed- eral departments multiplied like rabbits (Summers, 1987). By the end of the Civil War, critics focused on the "spoils system" as one of the primary causes for the collapse of ethical standards in federal agencies and departments (Roberts, 1988: 19-21). And re- former-minded individuals and groups came to regard civil service reform as the best hope of restoring integrity to management of federal departments (Roberts, 1982: 105- 125). Decades of struggle culminated in the passage of the Pendleton Act of 1883 which authorized the establishment of an executive branch merit system. Equally significant, the act provided for the establishment of the Civil Service Commission and delegated it responsibility for protecting the integrity of the process for selecting members of the new merit system. The Pendleton Act made it a crime punishable by "a fine up to $1000 or imprisonment up to a year or both'' for any commissioner or public employee to engage in any "collusion or corruption in the administration of the examinations" used to select individuals for merit system positions (Van Riper, 1979: 9). The passage of the Pendelton Act of 1883 represented the beginning of a long road back from a low point in federal public service ethics (Mosher, 1982: 65). Public corruption prevention and civil service reform went hand in hand. From 1900 to 1950, the nation experienced an unprecedented explosion in the size and power of the federal government. With the proliferation of federal agencies and pro- grams, came the necessity to delegate to a new generation of federal employees and offi- cials increased discretion to formulate and implement solutions for pressing national prob- lems (Rosenbloom, 1994: 3-36). By the end of the 1930s, a growing number of Americans began to raise legitimate questions regarding the accountability of federal officials and the agencies that employed them. As explained by Kenneth F. Warren, "the Brownlow Commission's 1937 recommendations for procedural reform, along with reports by the American Bar Association on the state of administrative law, and the 1941 report of the Attorney General's Committee on Administrative Procedure, inspired Congress after World War II to draft and unanimously pass the Administrative Procedure Act of 1946" Federal Ethics Management and Public Trust 369 (Warren, 1996: 183). The passage of the Administrative Procedure Act did little to stop growing public concern over the perceived ability of powerful special interests to influence federal decision-makers. During the early 1950s, a series of public ethics controversies involving close associ- ates of President Harry Truman and a number of high-profile federal agencies (Dunar, 1984) led many Americans to doubt the impartiality of federal employees and officials. During the fall of 1951, the Senate subcommittee on Labor and Public Welfare issued a report titled Proposals for Improvement of Ethical Standards in the Federal Government. The report urged federal agencies and departments to adopt new codes of ethics to prevent federal employees and officials from becoming involved in situations that tend ' 'to make public officials consciously or unconsciously partial in handling issues which come before them" (U.S. Senate, Committee on Labor and Public Welfare, 1951: 11). In addition, the report argued that conflict of interests often ' 'create a suspicion of bias even where it may not exist; they tempt public officials to put personal interests ahead or in conflict with the public interest; or they are damaging or unfair to members of the public" (U.S. Senate, Committee on Labor and Public Welfare, 1951: 11). Throughout the 1950s, a battle swirled around the future of federal ethics reform. Defenders of the administrative state argued that, without a major overhaul of the way federal agencies and departments resolve ethics controversies involving their employees and officials, public support for major federal programs would continue to erode. On the other hand, critics of existing federal ethics restrictions argued that confusion regarding the scope of public ethics prohibitions deterred some individuals from accepting government positions and made it extremely difficult for individuals with private sector backgrounds to move back and forth between government and the private sector. By the close of the 1950s, the search intensified for a new approach to federal ethics management that would reduce the number of ethics controversies without making it impossible for federal agen- cies and departments to recruit and retain essential personnel. A. Presidential Ethics Reform and the Standards of Ethical Conduct for Government Officers and Employees In 1960, the Association of the Bar of the City of New York issued a report titled Conflict of Interest in Federal Service. The report called for a major overhaul of the system for regulating conflict-of-interest situations involving federal employees and officials (Associ- ation of the Bar of the City of New York, 1960). The report did not find a crisis in federal service ethics. To the contrary, it found that the vast majority of federal employees and officials tried to do the right thing. However, a confusing web of outdated criminal conflict- of-interest statutes did little to protect public trust in government and had proven next to impossible to enforce. Equally important, the report expressed serious concern that the existing system made it difficult to recruit essential personnel for political and career positions. To deal with these problems, the Association of the Bar of the City of New York threw its full support behind the issuance of new administrative ethics rules to supplement revised criminal bribery and conflict-of-interest prohibitions (Association of the Bar of the City of New York, 1960: 8). In other words, the report argued that reliance upon criminal bribery and conflict-of-interest statutes hindered efforts to protect public confi- dence in the impartiality of executive branch decision-making. According to the report, a new administrative ethics program offered the best opportunity for protecting public 370 Roberts support for government policies and programs without making it even more difficult to recruit full-time career and political employees as well as part-time employees. From the spring of 1961 through the close of 1968, the Kennedy White House and then the Johnson White House directed efforts to put in place a new executive branch ethics program. No one in the Kennedy or Johnson White House viewed the new ethics program as a solution to the unethical problems faced by federal employees and officials. Both administrations saw the new ethics program as helping to reduce the number of instances where ethics controversies disrupted the formulation and implementation of pub- lic policies and programs. Both administrations saw the new ethics program as a way to reduce reliance upon criminal ethics restrictions as the primary tool for assuring the objec- tivity and impartiality of actions taken by federal employees and officials. Through the 1960s, the Kennedy and Johnson administrations issued a series of directives and executive orders establishing new non-criminal ethics guidelines for federal employees and officials (Gilman, 1995: 71). Interestingly, the Civil Service Commission Chairperson, John Macy, played a pivotal role in the development and implementation of the new ethics policies and proved instrumental in the development and the subsequent implementation of the new ethics guidelines (Macy, 1971: 249-256). This fact helps to explain why the new guidelines reflected a much more progressive approach for the resolu- tion of ethics controversies. In this 1971 book, titled Public Service: The Human Side of Government, Macy explained why the Kennedy and Johnson administrations pursued their ethics reform agenda. ' 'Although the federal standards are by no means ideal and must be reevaluated frequently to assure that they match the requirements of the times," stressed Macy, "they do constitute a valid starting point for other jurisdictions. Such standards can emphasize for the benefit of the public the strong intention of the public administrators that the affairs of government be conducted openly, honestly, and impartially" (Macy, 1971: 256). Not surprisingly, the first directives sought to clarify ethics rules governing the con- duct of high-level presidential nominees and appointees. Executive Order 10939 directed: All heads of departments and agencies, full-time members of boards and commissions appointed by the president, and members of the White House staff not to accept any fee, compensation, gift, payment of expenses, or anything of monetary value, or create the appearance of, or resulting in (1) use of public office for private gain, (2) an under- taking to give preferential treatment to any person, (3) any loss of complete indepen- dence and impartiality, (4) the making of a Government decision outside official chan- nels and (5) any adverse effect on the confidence of the public in the integrity of the Government (Roberts, 1988: 84). The Kennedy White House subsequently directed all federal agencies and depart- ments to require all federal employees and officials to comply with similar ethics guide- lines. On May 9, 1965, President Johnson issued Executive Order 11222, "Prescribing Standards of Ethical Conduct for Government Officers and Employees" (Newland, 1967: 158). Of great significance, Executive Order 11222 delegated to the United States Civil Service Commission day-to-day responsibility for overseeing the implementation of the new ethics code by federal agencies and departments (Gilman, 1995: 71). The new executive order differed in three significant respects from the earlier Ken- nedy standards of conduct order. In the first place, the order directed all federal employees and officials to avoid any action that "might result in, or create the appearance of (1) Federal Ethics Management and Public Trust 371 using public office for private gain; (2) giving preferential treatment to any organization or person; (3) impeding government efficiency or economy; (4) losing complete indepen- dence or impartiality of action; (5) making a government decision outside official channels; or (6) affecting adversely the confidence of the public in the integrity of the Government'' (Oilman, 1995: 71). Second, the order gave the Civil Service Commission the authority to require tens of thousands of federal employees to file confidential financial disclosure statements. Third, the order directed every federal agency and department to appoint an individual to oversee ethics programs within individual federal agencies and departments. Of equal importance to the future evolution of the executive branch ethics program was the requirement that every federal agency and department appoint a Designated Agency Ethics Official (DAEO) to implement the Executive Order 11222 at the agency and department level. Over time, agency and department DAEOs assumed primary respon- sibility for reviewing confidential financial disclosure statements for conflicts of interest problems, fashioning remedies for actual and potential conflicts of interest, and for issuing agency standards of conduct. As explained by John Macy, Executive Order 11222 "en- couraged individuals faced with problems involving sensitive judgments to seek counsel'' (Macy, 1971: 253). To facilitate effective ethics problem solving, President Johnson di- rected Chairman Macy "to work with each department and agency head to designate within his organization qualified persons who could provide guidance and interpretation in specific situations" (Macy, 1971: 253). Looking back more than three decades, little doubt remains that the actions taken by the Kennedy and Johnson administrations succeeded in reducing the dependence on criminal statutes as the primary method for guaranteeing the impartiality of decisions made or actions taken by federal agencies and officials. By the end of the 1960s, federal agencies and departments came to depend upon the new standard of conduct regulations as the primary tool for resolving conflict-of-interest problems involving federal employees and officials. B. The Public Integrity War and Public Ethics Reform Through the 1960s and early 1970s, the executive branch ethics program received little public or media attention, until the Watergate scandal. In the aftermath of the Watergate scandal, Congress and public interest groups placed the blame for the scandal on inade- quate ethics regulations rather on the character flaws of a group of individuals who proved unable to distinguish between right and wrong. A consensus quickly developed that Con- gress needed to enact new ethics measures designed to prevent the repeat of Watergate. Other critics of Washington ethics used the Watergate scandal to push a much broader reform agenda. Critics of federal regulatory agencies argued that powerful special interests exercised too much influence over federal regulatory policies. They placed part of the blame for this situation on former federal officials leaving key regulatory agencies to become lobbyists for regulated industries and enterprises (Roberts and Doss, 1997: 63- 85). To deal with the so-called ' 'revolving door'' problem, reformers urged Congress to enact new restrictions on former high-level federal officials lobbying their former agencies. The aggressive lobbying campaign culminated in the passage of the Ethics in Gov- ernment Act of 1978 (Roberts, 1988: 147-162). Today, the Ethics in Government Act of 1978 has come to symbolize a turning point in the management of federal public service ethics. In the first place, the act established procedures for the appointment of special prosecutors (now independent counsels) to investigate allegations of criminal wrongdoing 372 Roberts made against certain high-level executive branch and White House officials (Carroll and Roberts, 1988-1989: 437-438). Second, the act established within the Office of Personnel Management a new United States Office of Government Ethics (USOGE) headed by a presidential nominee. Congress delegated to OGE responsibility for coordinating ethics policy through agency-designated ethics officials (DAEOs) (Oilman, 1995: 72). Third, the act put into place a far reaching public financial disclosure system for high-level officials in all three branches of the federal government (Carroll and Roberts, 1988-1989: 439-440). Fourth, Congress enacted a number of new restrictions on former high-level federal officials lobbying their former agencies after leaving federal agencies and departments. Yet, the Ethics Act left unchanged the vast majority of public corruption statutes and executive branch ethics standards. Although the Ethics Act added only a few new ethics restrictions, Watergate ushered in an unprecedented period of scrutiny of the on- and off-duty conduct of federal employ- ees and officials. Investigative reporters looked behind every door in Washington for the next Watergate scandal. From 1981 through 1988, a significant number of Reagan nomin- ees and appointees found themselves caught up in public ethics controversies (Oilman, 1995: 73). Not unexpectedly, many Reagan administration officials blamed their predica- ment on political opponents who used ethics allegations as a way to destroy the reputations of honest public servants (Garment, 1991: 83-107). Many incorrectly thought that the Ethics in Government Act had significantly tightened federal ethics laws and rules. On the other hand, Reagan administration critics blamed the situation on the failure of these officials to follow well established ethical rules or guidelines (Kurtz, 1986: 11-13). Neither the Reagan administration officials who faced intense scrutiny for their con- duct nor the critics of Reagan administration ethics understood that Watergate had set back efforts to decriminalize federal ethics management for at least two decades. The enactment of an independent counsel law and the establishment of the Public Integrity Section of the Department of Justice pumped new resources into public corruption investi- gations (Roberts and Doss, 1987: 88-94). Badly damaged by its failure to uncover the Watergate conspiracy, the Federal Bureau of Investigation developed the capacity to con- duct elaborate public corruption stings. From the Watergate scandal through much of the 1980s, the executive branch ethics program found itself caught between groups arguing for more aggressive criminal investi- gations of federal officials and those complaining about the use of ethics allegations to discredit honest public servants. These factors, along with a lack of resources, made it extremely difficult for the Office of Government Ethics to make any significant progress in improving the effectiveness of the executive branch ethics program. C. The Professionalization of Federal Ethics Management Early in 1989, the executive branch ethics program received help from an unlikely source. Wishing to avoid a repeat of the ethics scandals that had damaged the reputation of Presi- dent Reagan, President Bush took immediate steps to evaluate the effectiveness of the executive branch ethics program. In late January 1989, President Bush established the President's Commission on Federal Ethics Law Reform (Roberts and Doss, 1997: 133). President Bush directed his ethics commission to take a close look at federal ethics regula- tion in all three branches of the federal government. To the dismay of some observers, President Bush appointed Washington insiders who had strong views regarding the direc- tion of the federal ethics program (Clinton, 1989: 10). Federal Ethics Management and Public Trust 373 The March 1989 report of the Bush ethics commission turned out to be remarkably similar to the 1960 report of the Association of the Bar of the City of New York. The commission found that the vast majority of federal officials and employees experienced few ethics problems. At the same time, the report found that certain federal criminal con- flict-of-interest statutes significantly complicated the process of recruiting individuals for career and political positions. Instead of significantly tightening executive branch ethics rules, the report argued that the same ethics rules should apply to members of Congress and executive branch employees and officials. In particular, the commission criticized Congress for requiring executive branch employees to comply with much stricter gift acceptance and financial conflict-of-interest laws than members of Congress (Roberts and Doss, 1997: 134). Finally, the report recommended the relaxation of a small number of ethics rules in order to ease the burden of ethics rules on federal employees and officials (President's Commission on Ethics Law Reform, 1989). Shortly after the president's ethics commission released its report, President Bush issued Executive Order 12674 which replaced President Johnson's 1965 Executive Order 11222. The new standards of conduct order increased the number of fundamental princi- ples of ethical conduct from six to fourteen and ' 'changed the standards-of-conduct frame- work from a model program, with agencies writing their own variations, to a single, com- prehensive set of standards applicable to the entire executive branch" (Oilman, 1995: 73). Equally significant, the order delegated to the Office of Government Ethics responsibility for assuring government-wide implementation of the uniform ethical guidelines. The issu- ance of Bush's standards of conduct executive order provided the OGE the authority to restructure the federal executive branch ethics program. Between 1990 and 1994, the Of- fice of Government Ethics issued hundreds of pages of ethics-related regulations (Ethics Resource Library, 1999). More important, over the next five years, Congress significantly increased the budget of the ethics office which permitted OGE to expand federal executive branch ethics programs. The Bush White House ethics reform program did not stop with the issuance of the new executive branch standards of conduct executive order. When Congress passed the Ethics in Government Reform Act of 1989, they included a number of ethics initiatives which the Bush White House demanded in return for supporting a congressional pay in- crease (Roberts and Doss, 1997: 139-141). With little fanfare, Congress agreed to expand the authority of federal agencies to accept travel reimbursements from nonfederal sources to defray the cost of travel by federal employees and officials. Congress also agreed to allow federal employees and officials to defer capital gains on financial holdings sold to comply with federal conflict-of-interest rules. Congress also agreed to place new restric- tions on the right of members of Congress to accept honoraria from nonfederal sources. Although the Ethics Reform Act did expand the scope of federal' 'revolving door'' restric- tions and prohibited all federal executive branch employees and officials from accepting honoraria, the Ethics Reform Act did not significantly tighten ethics restrictions on federal employees and officials. II. THE FEDERAL ETHICS MANAGEMENT PROGRAM TODAY As discussed previously, the federal executive branch ethics program has taken some 40 years to evolve. The main ethics management topics include: (1) gifts from outside sources, (2) gifts between employees, (3) conflicting financial interests, (4) impartiality 374 Roberts in performing public duties, (5) seeking outside employment, (6) restrictions on former employees, (7) misuse of position and (8) outside activities (USOGE, 1993b). The ethics program relies upon criminal and administrative conflict-of-interest sanctions to protect public confidence in the impartiality and objectivity of actions taken by federal officials and employees. Since the passage of the Ethics in Government Act of 1978, the Office of Govern- ment Ethics has issued hundreds of pages of regulations denning the scope of administra- tive and criminal ethics prohibitions. During early 1993, USOGE (1993a) took the major step of issuing uniform standard of conduct regulations for the eight program topic areas. The Office of Government Ethics issued the uniform standard of conduct regulations in an effort to establish minimum standards of conduct for all federal employees and officials. Written in an easily understandable question and answer format, the regulations went a long way toward reducing confusion with respect to major areas of federal ethics regula- tion. In issuing the standards of conduct rules, the USOGE took great care to draft the regulations to reduce the impact of federal ethics rales on the day-to-day operations of federal agencies and departments. Yet, the complexity of the new regulations required a significant increase in agency and department resources devoted to ethics education, train- ing, and enforcement. A. Gifts from Outside Sources and Travel Reimbursements Setting clear and workable policies governing the acceptance of private hospitality by federal employees and officials has constituted the most difficult undertaking for the execu- tive branch ethics management program (Roberts and Doss, 1992: 260). Federal gift accep- tance prohibitions take two different approaches for distinguishing between permissible and impermissible gifts. One rule prohibits federal employees and officials from accepting gifts from certain sources. A second rale prohibits federal employees and officials from accepting gifts from nonfederal sources motivated by official acts performed by the federal employee or official. The executive branch, administrative, prohibited-source rule states that federal em- ployees and officials may not accept anything of value from persons or organizations that (1) seek a particular action from their agency, (2) does business or seeks business with their agency, (3) are regulated by the employee's agency, or (4) "have interests that may be substantially affected by" the performance or nonperformance of the employee's offi- cial duties (USOGE, 1993b: 5). The prohibited-source rule requires federal employees to inquire into the relationship between any source of a potential gift and the federal employ- ee's official activities. To reduce the impact of the prohibited-source rale on the routine activities of federal employees and officials, USOGE regulations established a category of permissible gifts or gift "exclusions" (USOGE, 1993b: 6). Gift acceptance exclusions permit federal em- ployees to accept "soft drinks, coffee, donuts, and other modest items of food and refresh- ment when not offered as part of a meal," and "items of inherent value such as plaques and certificates and items which federal employees pay full market value for" (USOGE, 1993b: 6). In addition to items treated as "gift exclusions," federal gift acceptance rales allow federal employees to accept ' 'certain unsolicited gifts with a value of $20 or less per occasion (but not cash gifts and not gifts that add up to over $50 in value in any year from any single source" (USOGE, 1993b: 6). Federal Ethics Management and Public Trust 375 Prior to the passage of the Ethics in Government Reform Act of 1989, federal law prohibited the vast majority of federal agencies and departments from accepting travel reimbursements from private sources to cover the travel expenses of federal employees. To remedy this situation, the Ethics Reform Act granted the General Services Administra- tion the authority to issue regulations permitting all federal agencies and departments to accept travel reimbursements from nonfederal sources (USOGE, 1997a: 1). For instance, a corporation would like to host a conference to examine ways to reduce air pollution by commuters. The new law permits the corporation to pay the travel and lodging costs of Environmental Protection Administration officials invited to the conference. To guard against possible conflict-of-interest problems, the law requires all federal agencies and departments to certify, prior to the acceptance of any payments, that the acceptance of a travel reimbursement would not lead a reasonable person to "question the integrity of agency programs or operations'' (USOGE, 1997a: 1 -2). The establishment of government-wide agency gift acceptance authority constituted a major relaxation of executive branch ethics rules. Besides being subject to the prohibited-source gift acceptance rule, federal employ- ees and officials must comply with the federal illegal-gratuity statute (Roberts et al., 1996: 1). The illegal-gratuity statute prohibits federal employees from accepting anything of value from a nonfederal source for the performance of official acts or duties. Despite the fact that the provision became law in 1962, considerable controversy still continues over the scope of the illegal-gratuity statute. It would take the Supreme Court to resolve the dispute. On the one hand, some experts argued that the statute prohibited federal employees and officials from accepting all "non quid pro quo" gifts motivated by the position held by the federal employee or official. In other words, the illegal-gratuity statute prohibited private sources from providing federal employees and officials a wide variety of private hospitality (Greenhouse, 1998: A18). On the other hand, other ethics experts argued that illegal-gratuity statute only prohibited federal employees and officials from accepting pri- vate hospitality from private sources if the federal employee knew that a particular action taken by the employee motivated the gift (Greenhouse, 1998: A18). Prior to the criminal prosecution of former Secretary of Agriculture, Mike Espy, for accepting illegal-gratuity from companies regulated by the Department of Agriculture, few Americans ever heard of the illegal-gratuity statute (Greenhouse, 1998: A18). In late 1998, a federal jury rejected this broad interpretation of the statute put forward by indepen- dent counsel Donald Smaltz. After the verdict, members of the federal jury publicly criti- cized independent counsel Donald Smaltz for bringing the charges without being able to prove that Espy had done something in return for the gifts (Miller, 1998: Al). On April 27, 1999, in United States v. Sun-Diamond Growers of California, the Supreme Court rejected the broad interpretation of the illegal-gratuity statute supported by the Department of lustice and independent council Donald Smaltz. The Court held that "in order to establish a violation of 18 U.S.C. & 201(c)(l)(A), the Government must prove a link between a thing of value conferred upon a public official and a specific 'official act' for or because of which it was given" (U.S. v. Sun-Diamond, 1999, 526 U.S. 398). In rejecting the argument that the illegal-gratuity statute prohibited all private hospitality of federal officials, Justice Scalia pointed to gift acceptance regulations issued by the Office of Government Ethics which permitted executive branch employees and officials to accept certain types of private hospitality. As Justice Scalia explained, "we 376 Roberts are frankly not sure that even our more narrow interpretation of 18 U.S.C. & 201(c)(l)(B) will cause OGE's assurance of nonviolation if the regulation is complied with to be entirely accurate; but the misdirection, if any, will be infinitely less" (U.S. v. Sun-Diamond, 1999). The criminal ban on nonfederal sources supplementing the salaries of executive branch employees and officials constitutes the final type of gift acceptance ban. Originally enacted in 1917, the salary supplementation prohibits nonfederal sources from supple- menting the salaries of executive branch employees. For instance, a major corporation may not pay the difference between what an executive earned and his or her salary as a cabinet secretary. However, the Supreme Court ruled in the 1990 case of Crandon v. United States that the ban did not apply to payments made prior to the date individuals legally become an executive branch employee or official (Crandon v. United States, 1990). Prior to the decision, the Department of Justice had ruled that the salary supplementation ban also applied to payments made to individuals prior to the date they became a federal employee or official. B. Gifts Between Employees A separate ethics policy regulates gifts between federal employees. As a general rule, federal employees may not provide superiors gifts or accept gifts from superiors. In addi- tion, federal employees may not accept gifts "from non-subordinates who receive less pay'' than another federal employee (USOGE, 1993b: 8). Much like the exemption provis- ions of the prohibited-source gift acceptance policy, federal ethics regulations permit cer- tain types of gifts between subordinates and superiors, and between superiors and subordi- nates. The first exception permits gifts "given on an occasional basis" to express appreciation for private hospitality. The second exception permits federal employees to give or accept certain small gifts "recognizing special, infrequent events such as a mar- riage, illness, the birth or adoption of a child, and a retirement, resignation or transfer'' (USOGE, 1993b: 9). Like the outside gift acceptance rules, the gift-between-employees rules demonstrate sincere effort by USOGE to adopt flexible ethics rules which do not unreasonably interfere with social activities that occur routinely in all types of organizations. C. Conflicting Financial Interests Without question, the regulation of conflicting financial interests has proven the most difficult federal executive branch ethics rule to enforce. As part of the 1962 revision of federal criminal conflict-of-interest laws, Congress enacted a new criminal conflicting- financial-interests statute (Roberts, 1988: 101-102). At the urging of the Kennedy White House and federal agencies and departments, Congress exempted from coverage so called "special government employees" from coverage under the statute; individuals employed for less than 135 days in any 365-day period by a federal agency or department (Roberts, 1988: 97). The action reduced the problem of paid or unpaid experts or consultants being unable to work on certain projects because of the fact that they held certain financial interests. On the other hand, the statute established a sweeping financial conflict-of-interest rule for the vast majority of executive branch employees and officials. Section 208 of title 18 of the United States Code prohibits executive branch employees or officials "from participating personally and substantially in certain matters'' in which federal employees [...]... infrequent use of waiver authority to resolve the financial conflictof-interest problems of federal employees and officials At the urging of the Bush White House, Congress included liberalized waiver authority among the provisions of the Ethics Reform Act of 1989 (USOGE, 1999: 12) Between the enactment of the 1962 federal conflict -of- interest law and the passage of the Ethics Reform Act of 1989, federal... After decades of struggling with the issue of how to enforce financial conflict-ofinterest rules without working an undue hardship on executive branch employees and officials, it appears that agency ethics officials now have sufficient flexibility to effectively resolve the financial conflict -of- interest problems of federal employees and officials D Impartiality in the Performance of Official Duties... States v Sun-Diamond Growers of California (1999) 526 U.S 398 United States Office of Government Ethics (1995) Do it Right: An Ethics Handbook for Executive Branch Employees United States Office of Government Ethics, Washington, D.C United States Office of Government Ethics (1999) Ethics Program Topics URL: http:// www.usoge.gov/usoge003.htm, February 16 United States Office of Government Ethics (1998)... Certificates of Divestiture, 5 CFR Part 2635 United States Office of Government Ethics (1998) Interpretation, Exemption and Waiver Guidance Concerning 18 U.S.C 208 (Acts Affecting a Personal Financial Interest) 5 CFR 2640 United States Office of Government Ethics (1997a) Gifts of Travel and Other Benefits United States Office of Government Ethics, Washington, D.C United States Office of Government... States Office of Government Ethics (1993a) Standards of Ethical Conduct for Employees of the Executive Branch 5 C.F.R Part 2636 United States Office of Government Ethics (1993b) Take the High Road: An Ethics Booklet for Executive Branch Employees United States Office of Government Ethics, Washington, D.C Van Riper, P (1979) Americanizing a foreign invention: The pendleton act of 1883 In Classics of Public... empowered the Director of the Office of Government Ethics with the authority to issue certificates of divestiture permitting executive branch employees and officials to roll over capital gains resulting from the forced sale of financial interests (Roberts and Doss, 1996: 49-60) Between 1990 and today, the director of the USOGE has issued hundreds of certificates 375 Roberts of divestiture to both political... government ethics as if people mattered: Some thoughts on the ethics reform act of 1989 The George Washington University Law Review, 58:502-525 Newland, C (1967) Federal employee conduct and financial disclosure Record of the Association of the Bar of the City of New York, 22:158-180 Plant, J.F (1994) Codes of ethics In Handbook of Administrative Ethics (T Cooper, ed.) New York, Marcel Dekker, p 221-241 President's... Westport, CT Roberts, R., Doss, M.T., and Hammond, J (1996) Lobbyists beware: The rise of the illegal-gratuity statute The Journal of Social, Political and Economic Studies, 21:383-420 Rosenbloom, D.H (1994) The evolution of the administrative state and transformation of administrative law In Handbook of Regulation and Administrative Law (D.H Rosenbloom and R.D Schwartz, ed) Marcel Dekker, New York, pp... rights of federal employees and officials below the grade of GS-16 (U.S v National Treasury Employees Union, 1995) Significantly, the decision left in place the authority of Congress to regulate outside appearances, speeches, and written articles of high-level federal officials Fourth, federal law places a cap on the outside earned income received by certain types of executive branch employees and officials... federal employees and officials for violating the appearance -of- impropriety rule (Brownstein, 1985: 640) During this period, the Merit Systems Protection Board had upheld the authority of federal agencies and departments to enforce the rule (Dickenson, 1985: A17) Between 1981 and the end of 1988, the ethics problems of a number of Reagan administration officials led to the development of intense interest . Record of the Association of the Bar of the City of New York, 22 :158-180. Plant, J.F. (1994). Codes of ethics. In Handbook of Administrative. conflict- of- interest problems. As part of the Ethics Reform Act of 1989, Congress empowered the Director of the Office of Government Ethics