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Effects of Nixon's Resignation In the aftermath of the Watergate scandal, in which President Richard Nixon resigned rather than face impeachment for crimes committed by his administration, numerous reforms were instituted to protect the public interest from official malfeasance. These included campaign finance regulations, conflict-of-interest guidelines, safeguards on the freedom of information, and improved privacy laws. Candidates for public office came under increased scrutiny for both their public and private lives, and public interest groups such as Common Cause greatly increased their membership rolls. While Watergate was neither the first nor the last presidential scandal of shocking proportions, it did mark a milestone in the growth of public cynicism about elected officials. |
The Ethics in Government Act of 1978 (P.L. 95-521, 92 Stat. 1824) addressed the constitutional crisis surrounding the Watergate break-in and the resignation of President Richard M. Nixon. These events prompted calls for ethics and openness in government. In response, the act established certain rules of conduct for former federal employees. These rules were designed to reduce corruption and prevent the improper use of knowledge gained while in the government's employ. The two most significant provisions of the law (1) require public officials and higher-ranking civil servants to make public financial disclosures and (2) prohibit certain activities by federal employees after their government employment ends. In addition, the act imposed limits on gifts and honoraria (payments at a set price for speeches or other services) and created new administrative procedures for enforcing ethics provisions.
Financial Disclosure
At the time of enactment, several states already had public financial disclosure laws, and the act drew in part on these laws. In the name of ethics and openness, it also sought to correct the existing disclosure system for federal officials, which relied only on internal reporting within each agency. In 1974 the General Accounting Office, an investigative arm of Congress, had cast doubt on the effectiveness of that disclosure system, and Congress was responding to these criticisms.
Who Must Report? Within the executive branch, the act requires reporting by the president and vice president, all employees whose positions are classified at GS-16 (a classification for a federal civil service pay rate) or above, higher-ranking military officers, and administrative law judges. The reporting requirement also applies to members of Congress, federal judges, certain employees of the judiciary, and certain officers and employees of Congress.
What Must They Report? People covered by the act must report income derived from various sources, gifts, assets and liabilities, including some transactions, and certain positions held in businesses and in nonprofit organizations. Gifts of food, lodging, transportation, and entertainment are to be reported if gifts from any individual in a calendar year total $250 or more. Other gifts must be reported if gifts from any individual in a calendar year total $100 or more.
Income derived from dividends, interest, rent, and capital gains exceeding $100 must be reported but only in nine broad categories of value, from not more that $1,000 to greater than $5 million. As to other forms of income, the employee must report the source, type, amount, and value of income exceeding $200.
Assets and liabilities are reported within broad categories of value and include both real and personal property. The act does not require the reporting of the value of a personal residence not used for the production of income, provides a $1,000 exception, and excludes savings accounts and certificates of deposit totaling $5,000 or less. The employee must report all transactions, including a description, date, and value involving the purchase, sale, or exchange of real property, stocks, bonds, or commodity futures. Excluded is any transaction between the employee and the employee's spouse or children as well as the transfer, purchase, or sale of a personal residence.
An employee covered by the act must report the names of anyone who paid the employee compensation in excess of $5,000 in any of the two calendar years before a report is first filed. The employee must also include a brief description of the services performed. An employee must also disclose all positions held as an officer, trustee, director, partner, employee, representative, proprietor, or consultant of any corporation, firm, or business, including nonprofit organizations.
Protection of Privacy. The act seeks to ensure that reporting requirements will not compromise personal privacy or create opportunities for abuse of the financial information. Although the interests of spouses must be reported, the act creates several exemptions that reduce the effect of the reporting requirements on spouses. In addition, an agency must evaluate an employee's report before disclosure and indicate if no conflicts of interest were found. The custodian of the reports must destroy them after six years, and penalties are imposed for use of the reports for unlawful purposes or for commercial purposes, such as solicitation.
Postemployment Restrictions
Before passage of the act, the federal criminal code placed limitations on the postemployment activities of federal employees. One such restriction barred appearances by former employees of an agency in certain proceedings conducted by that agency. The act added prohibitions on communications by former employees with their agencies.
Communications. Today, these restrictions create a lifetime bar against communications, including submission of memoranda, letters, and telephone calls, to an employee of the United States "in connection with a particular matter involving a specific party or parties, in which [the former employee] participated personally and substantially as an employee." The matter must be one in which the United States is "a party or has a direct and substantial interest." This prohibition seeks to prevent a former employee from "switching sides" by representing a party in a matter in which the former employee had previously worked as a government employee. For example, an employee representing the U.S. government in a particular matter should not be allowed to leave government service and soon after begin to represent in the same matter a private party whose interests may be antagonistic to those of the government. The appearance of impropriety is simply too great. It applies to appearances before the agency and communications with it but not to "behind the scenes" assistance given to others representing a party in the same matter. An employee might also be able to avoid this prohibition by disqualifying herself from the particular matter while still a government employee. A disqualification would have to remove the employee from all involvement in the matter.
A two-year prohibition applies in similar circumstances to communications by former employees regarding matters that they know or should know were actually pending under their official responsibility within a one-year period prior to leaving government employment. This prohibition addresses the improper use after leaving a job of knowledge that was gained while on the job. Employees have official responsibility for many matters in which they do not participate personally or substantially. Because the prohibition covers more matters with which employees have a more limited connection, it is of shorter duration. Because the prohibition applies to every particular matter that an employee oversees or reviews as part of their official responsibilities, an employee can not disqualify themselves without significantly impairing their performance as a government employee. Therefore disqualification will not remove the matter from those official responsibilities and will not affect the application of the prohibition. Like the other restrictions on communication, this prohibition seeks to prevent a former employee from "switching sides" by representing a party in a matter for which the former employee had official responsibility as a government employee, and does not apply to "behind the scenes" assistance given to others representing a party in the matter.
Modifications. The act originally prohibited a broader range of communications, including the prohibition of some "behind the scenes" communications, but concerns about the breadth of the prohibitions led to modifications. As a result, these restrictions now apply only to actions in which former employees communicate with an agency on behalf of a third party. The prohibition seeks to prevent an appearance that government decisions have been unduly influenced by former employees.
Senior Personnel. A prohibition on the postemployment activities of senior and very senior government personnel extends to other activities involving representing a third party. Senior employees, paid at the highest executive levels, may not, on behalf of any person, attempt to influence, through communication to or appearance before, the employee's former agency. This prohibition does not require that the matter on which official action is sought is one in which the former senior employee participated personally or substantially or was within the former employee's official responsibilities. It prohibits any representation of another person regarding any matter, including rule making or policy matters pending before the former senior employee's agency. The matter need not have been pending before the agency while the senior employee worked for the federal government. The Office of Government Ethics may waive these restrictions in certain limited circumstances, and some exceptions apply.
A similar prohibition regarding cabinet-level officials and a few employees paid at the level of deputy secretaries of cabinet departments extends beyond the agency for which the former employee worked and includes representation before the highest-ranking government officials in other agencies. The Office of Government Ethics may not waive this prohibition, although some limited exceptions apply.
Honoraria. Under the act, federal employees may not receive honoraria for speeches and writings directly related to official duties or paid because of the status of the recipient as a government employee. The act also restricts certain types of outside employment by government employees.
Enforcement
The Office of Government Ethics, established by the act, has responsibility for interpreting the act's provisions. The Office is treated as a separate agency within the executive branch. It has issued both regulations and advisory opinions that further define the prohibitions contained in the statute, and it has played an important role in clarifying them. The director of the Office of Government Ethics may seek to discipline an employee, and individual government agencies may take administrative action in some situations. The act permits civil as well as criminal enforcement of its prohibitions. The attorney general may seek civil penalties and injunctions against violation of these restrictions.
As part of a system of regulations including presidential executive orders, the Ethics in Government Act remains an important part of the legal regulation of public service ethics in the federal government. In Congress and the courts as well, it is a component of other ethical provisions imposed by rule and by statute.
Bibliography
Roberts, Robert. "Regulatory Bias and Conflict of Interest Regulation." In Handbook ofRegulation and Administrative Law. Ed. David H. Rosenbloom and Richard D. Schwartz. New York: Marcel Dekker, 1994.
Vaughn, Robert G. Conflict of Interest Regulation in the Federal Executive Branch. Lexington, MA: Lexington Books, 1979.
