EXECUTIVE SUMMARY This report discusses whether or not the standard of conduct requiring employees to avoid certain actions which may create the "appearance of impropriety", or the "appearance" of a conflict of interest or the use of one's office for personal gain, may be used and is used as a basis for disciplining federal employees, including removal of federal employees from office. The standard of conduct in question derives substantially from Executive Order No. 11222, and is embodied, as required, in the regulations of the Office of Personnel Management and all agencies of the executive branch of government. It appears from practice and instructions that this standard of conduct is used as a basis for disciplining federal employees for "cause", including removal and suspension for "such cause as will promote the efficiency of the service". 5 U.S.C. 7315(a). See Federal Personnel Manual, Office of Personnel Management, Ch. 752, Part 3-2, Paragraph (c). Decisions from the Merit System Protection Board, reviewing the disciplining of federal employees, have upheld the removal or other discipline of employees based upon findings that the employee's conduct created the "appearance" of certain improprieties. Moffer v. Department of Interior, MSPB 134 (1981); Burnett v. U.S. Soldiers' and Airmen's Home, 11 MSPB 559, 561-562 (1982); Miller v. United States Postal Service, 7 MSPB 413, 414 (1980). In the Moffer decision, the Board specifically found error in the presiding officer's earlier decision because of the failure of the officer "to consider or rule on whether the appellant ... created the appearance of using his office for private gain". Moffer, supra at 135. Federal court decisions have also upheld the removal and discipline of federal employees based on violations of conduct standards requiring the avoidance of activities which may create the "appearance" of certain improprieties. Lowery v. Richardson, 390 F. Supp. 356, 359 (E.D. Okla. 1973); Jones v. United States, 617 F.2d 233 (Ct. Claims 1980); see also Wild v. U.S. Dept. of HUD, 692 F.2d 1129, 1131 (7th Cir. 1982), United States v. Kenealy, 646 F.2d 699, 704 (1st Cir. 1981), Gulf & Western Industries, Inc. v. United States, 671 F.2d 1322, 1325-1326 (Ct. Claims 1982), and Wathen v. United States, 527 F.2d 1191 (Ct. Claims 1975) concerning violations of general standards of conduct in agency regulations and the "appearances" such conduct creates as to causes of action. The court in Lowery v. Richardson, supra, quoting from the decision of the former Civil Service Board of Appeals and Review, agreed that "it is the appearance of impropriety in such relations that more than anything else creates the cause of action." 390 F. Supp. at 359. Issues may arise as to the "vagueness" of the "appearance" standard if the activity or conduct in question does not involve employment, financial interests or the receipt of gifts or things of value, but instead 11 involves activity protected by the First Amendment. In such cases, courts have found that regulations on First Amendment rights require a greater deal of specificity and precision than do regulations on economic rights. Keeffe v. Library of Congress, 588 F. Supp. 778, 789-790, appeal docketed No. 84-54 64 (D.C. Cir.), citing Grayned v. City of Rockford, 408 U.S. 104, at 109 (1972); also Smith v. Goguen, 415 U.S. 566, at 573, note 10 (1974). Additionally, the "appearance of impropriety" standard may not prove actionable in cases brought by private parties, rather than disciplinary measures initiated by the government, to set aside, for example, the awarding of a contract or to overturn an agency decision to allow an employee to work on a particular governmental matter. CACI, Inc. - Federal v. United States, 719 F. 2d 1567 (Fed. Cir. 1982); Center for Auto Safety v. F.T.C., 586 F. Supp. 1254 (D.C.C. 1984). However, as to disciplinary measures brought by federal agencies against employees under the "appearances" standards of federal regulations, the courts have allowed a great deal of discretion to the agencies and the executive branch in such personnel matters, generally reviewing such disciplinary proceedings merely for procedural irregularities, to determine whether the facts are supported by substantial evidence, or for arbitrary and capricious conduct on behalf of the government. United States v. Jones, supra at 236; Wild v. HUD, supra at 1133-1134; Wathen v. United States, supra at 1200-1201, 1203. THE APPEARANCE OF IMPROPRIETY AS A STANDARD FOR This report discusses whether or not the "appearance of impropriety", or the "appearance" of a conflict of interest or use of one's office for personal gain, is and may be used as a basis for disciplining federal employees, including removal from federal service. The standard of conduct, the avoidance of appearances of improprieties or the appearances of conflicts of interest or using federal office for one's personal gain, derives substantially from Executive Order Number 11222, Sec1/ tions 201(c), 202, and 203. Under the authority of this Executive Order (Section 701), the Office of Personnel Management is instructed to issue standards of conduct for all federal employees implementing the guidelines and standards expressed in the Executive Order. The OPM regulations reiterate the basic standard of conduct with respect to avoiding actions which may result in or "create the appearance of": using public office for personal gain, impeding government efficiency or economy, losing complete independence or 1/ 30 F.R. 6469, May 8, 1965, as amended by Executive Order No. 11590, April 23, 1971, 36 F.R. 7831, and Executive Order No. 12107, December 28, 1978, 44 F.R. 1055. See now 18 U.S.C. 201, note. CRS-2 interest. • impartiality, making a government decision outside of official channels or affecting adversely the confidence of the public in the integrity of the government. 5 C.F.R. $735.201a. The OPM regulations further restrict outside compensation, gifts, or payments of expenses "in circumstances in which acceptance may result in, or create the appearance of, conflicts of ." (5 C.F.R. § 35.203(a)); and prohibit financial interests which conflict substantially "or appear to conflict substantially" with one's official duties. 5 C.F.R. § 735.204(a). The OPM regulations require each agency head to in turn issue standards of conduct regulations for agency employees which implement the requirements and standards of the OPM regulations and the Executive Order. 5 C.F.R. $735.104. The conduct standard in question, therefore, will appear in the standard of conduct regulations of each executive branch and independent agency of the federal government, as well as in the OPM regulations and Executive Order No. 11222. It appears that the standard of conduct in question, that is, "appearance" of improprieties, conflicts of interest or use of one's office for personal gain, is one which is clearly used as a basis for disciplinary action by federal agencies in the federal service, including removal from service, and one which has been upheld as a basis for removal of employees by several federal court decisions. As to removal from service, under federal statutory law even a federal employee with job protection in the competitive service may be removed or suspended from office "for such cause as will promote the efficiency of the service." 5 U.S.C. $ 7513(a). See Office of Personnel Management regulations at 5 C.F.R. Part 752. As explained in the Federal Personnel Manual, published |