Application of 18 U.S.C. § 208 to Service by Executive Branch Employees on Boards of Standard-Setting Organizations ( 1998 )

Application of 18 U.S.C. § 208 to Service by Executive Branch
Employees on Boards of Standard-Setting Organizations
U n d er 18 U S.C . § 208, a federal em ployee may serve as a m em ber o f the board o f a private voluntary
standards organization to the extent necessary to perm it participation in his or her official capacity
in the o rg an izatio n ’s standard-setting activities.
August 24, 1998
M em orand um O p in io n fo r th e G en era l C o u n sel
O f f ic e of G o v e r n m e n t E t h ic s
This responds to your request o f August 10, 1998 for our opinion whether,
absent a waiver, 18 U.S.C. §208 (1994) would forbid employees of the executive
branch from serving, in their official capacities, as members of the boards of pri­
vate voluntary standards organizations. We believe that, to the extent necessary
to permit the federal employees to take part in the standard-setting activities, § 208
does not bar such service.
Section 208 prohibits an officer or employee from taking part as a government
official in any “ particular matter” in which he or she has a financial interest.
The statute imputes to the employee the financial interests of certain other persons
and entities, including an “ organization in which he is serving as officer, director,
trustee, general partner or employee.” 18 U.S.C. § 208(a). In an earlier opinion,
we observed that when an employee is acting in his or her official capacity as
a director or officer of an outside entity, the work for that entity necessarily entails
official action affecting the entity’s financial interests. We therefore concluded
that, under 18 U.S.C. §208, the “ broad prohibition against conflicts o f interest
within the federal government would prevent a government employee from serving
on the board o f directors of an outside organization in his or her official capacity,
in the absence of: (1) statutory authority or a release of fiduciary obligations by
the organization that might eliminate the conflict of interest, or (2) a waiver of
the requirements of § 208(a), pursuant to 18 U.S.C. § 208(b).” Service on the
Board o f Directors o f Non-Federal Entities by Federal Bureau o f Investigation
Personnel in Their Official Capacities, 20 Op. O.L.C. 379, 379 (1996) (“ FBI
Opinion” ). In particular, if “ Congress has authorized the service by statute, the
official ‘serves . . . in an ex officio rather than personal capacity,’ owes a duty
only to the United States, and does not violate section 208.” Service by Federal
Officials on the Board o f Directors o f the Bank fo r International Settlements, 21
Op. O.L.C. 87 (1997) (citation omitted) (“ FRB Opinion” ).
Since the FBI Opinion, we have had a number of occasions to consider whether
particular statutes confer authority for service on outside boards. We have found
such authority in a range of circumstances. Sometimes the statutes expressly con­
templated official service on an outside board. See Memorandum for Files, from
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A pplication o f 18 U.S.C. § 2 0 8 to Service by Executive B ranch E m ployees on B oards o f Standard-
Setting Organizations
Daniel Koffsky, Special Counsel, Office of Legal Counsel, Re: Foundations and
Commissions Under Fulbright Program (Oct. 24, 1997); Memorandum for Files,
from Daniel Koffsky, Special Counsel, Office of Legal Counsel, Re: Service on
Outside Board (Feb. 27, 1998) (United States-India Fund for Cultural, Edu­
cational, and Scientific Cooperation). In another instance, the statute was less
explicit, but we found the authority because service on the outside entity was
a means by which the United States negotiated with foreign governments and
“ the breadth of the President’s power [in that area] counsels a broad reading of
congressional authorization for particular means by which the power may be exer­
cised.” FRB Opinion, 21 Op. O.L.C. at 89 (citation omitted). In one other
instance, where the agency largely conducts its operations in secret and had to
create the outside entity to preserve the secrecy of its work, we concluded that
the outside organization was, for relevant purposes, a part of the federal govern­
ment, and thus no conflict existed.
As this experience in applying the principles of the FBI Opinion has made clear,
Congress has enacted a variety of arrangements contemplating, directly or
indirectly, that federal employees will participate in outside organizations,
including by serving on their boards, and it would frustrate these arrangements
if such service were considered a disqualifying “ director[ship]” under 18 U.S.C.
§208. See Applicability o f 18 U.S.C. §208 to Proposed Appointment o f Govern­
ment Official to the Board o f Connie Lee, 18 Op. O.L.C. 136, 138 (1994) (cat­
egories of service considered outside statute). We believe that there are cir­
cumstances in which statutory authority for service on an outside board can be
found even though Congress has not expressly addressed that service. When Con­
gress has specifically provided for participation in outside organizations and such
participation, to carry out the statutory purposes, entails service on a board, statu­
tory authorization may be inferred.
Here, Congress has provided that, in general, federal agencies and departments
“ shall use technical standards that are developed or adopted by voluntary con­
sensus standards bodies” and, in carrying out this requirement, “ shall consult
with voluntary, private sector, consensus standards bodies and shall, when such
participation is in the public interest and is compatible with agency and depart­
mental missions, authorities, priorities, and budget resources, participate with such
bodies in the development o f technical standards." National Technology Transfer
and Advancement Act of 1995, Pub. L. No. 104—113, § 12(d)(1) & (2), 110 Stat.
775, 783 (1996), 15 U.S.C. §272 note (1994) (emphasis added). As the legislative
history explains, Congress desired and anticipated that federal agencies would
“ work closely” with voluntary standard-setting organizations, that these organiza­
tions would “ include active government participation,” and that agencies would
“ work with these voluntary consensus standards bodies, whenever and wherever
appropriate.” H.R. Rep. No. 104—390, at 15, 25 (1995). When the board o f an
outside organization plays an integral role in the process of setting standards, it
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Opinions of the Office o f Legal Counsel in Volume 22
would therefore frustrate the statute to forbid federal employees from being on
the board. They could not then take the “ active” role that Congress mandated.
To carry out the statute, therefore, employees may serve on these outside boards
without running afoul of 18 U.S.C. §208, if the boards are engaged in the
standard-setting activities in which Congress directed federal agencies to partici­
pate.
To be sure, §208 allows for waivers when the employee’s “ interest is not so
substantial as to be deemed likely to affect the integrity of the services which
the Government may expect,” 18 U.S.C. § 208(b)(1), and thus a conclusion that
§ 208 generally would bar employees from serving on standard-setting bodies in
their official capacities would not necessarily have prevented the service in every
instance. Nevertheless, reliance on the waiver procedure would not be consonant
with the statutory scheme here. Congress itself has resolved the possible conflict
between duties to the organization and duties to the United States, at least to
the extent that the criminal prohibition may be at issue.
W e would not reach the same conclusion, however, if the board of an organiza­
tion had only administrative responsibilities and was not directly involved in
standard-setting. In that event, the congressional direction to “ participate . . . in
the development of technical standards” would not apply. Consequently, in
accordance with the FBI Opinion, § 208 would bar the service on the board, absent
a waiver or an effective release from fiduciary duty.
Finally, you also ask us to confirm your view that an employee’s service in
an official capacity as the chair o f a working committee or subcommittee of a
standard-setting organization, to the extent the position imposes no fiduciary duty
and creates no employer-employee relationship, would not implicate 18 U.S.C.
§ 208. W e agree that service in such a position would not itself trigger the statute.
Indeed, we are far from certain that a position other than one specified in § 208—
“ officer, director, trustee, general partner or employee” —could be the basis for
imputing an organization’s financial interest to the employee, even if that other
position created a fiduciary duty to the organization. In any event, the positions
you describe would not give rise to an imputed disqualification.
BETH NOLAN
Deputy Assistant Attorney General
Office o f Legal Counsel
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