Patent Office Professional Association and Patent and Trademark Office, 0-NG-2613, September 30, 2003, 59 FLRA No. 50.

In an 88-page decision, the Authority (Member Pope dissenting in part) held that 11 of 12 disapproved provisions (some of which had been ordered by FSIP) dealing with financial disclosure determinations were outside the duty to bargain because inconsistent with the Government-wide regulations of the Office of Government Ethics (OGE). In reaching its conclusions, the Authority deferred to OGE's interpretation of its regulations as giving agencies sole and exclusive discretion to make the determinations required by OGE's regulations, thus barring collective bargaining over the exercise of that discretion. It announced that the Authority's contrary conclusion in POPA II, 53 FLRA at 655-56, will no longer be followed.

# 1. Filing deadlines. A provision requiring the agency to automatically grant employees receiving financial disclosure forms less than 6 weeks before the filing deadline an extension so that they would have a full 6 weeks for filing is inconsistent with 5 CFR 2634.903(d), which establishes an absolute filing deadline of 90 days from October 31.

# 2. Counseling. Requiring the agency, upon learning that an employee is involved "in a conflict of interest in violation of [18 U.S.C.] § 208, to 'first' counsel the employee . . . is inconsistent with 5 U.S.C. § 535 and with 5 C.F.R. § 2638.501(b)(1), 2638.501(c), and 2638.603 which, read together, require the DAEO [Designated Agency Ethics Official] to refer the matter to the Attorney General." In dissenting, Member Pope said the following:

I would find that the provision is limited to the agency's internal processing of a conflict, and that the provision would not interfere in any way with the Agency's obligation under 28 U.S.C. § 535 and 5 C.F.R. 2638.501 to make an expeditious external referral or report certain matters to the Attorney General.

# 3. Positions not subject to financial disclosure requirements. A provision excluding certain employees from the requirement to file financial disclosure statements is inconsistent with Government-wide regulations "affording agencies sole and exclusive discretion to determine who is required to complete and submit confidential financial disclosure forms."

It is well settled that where a law or regulation indicates that an agency's discretion is intended to be exercised only by an agency—referred to by the Authority as "sole and exclusive" discretion—it would be contrary to law to require that such discretion be exercised through collective bargaining. See Mile High Chapter, 53 FLRA at 1412 (citing POPA II, 53 FLRA at 648); Plate Printers, 50 FLRA at 681 82. OGE's regulations, 5 C.F.R. § 2634.904 and 905, prescribe criteria governing an agency's discretion to determine which employees are required to file confidential financial disclosure forms. Deferring to OGE's interpretation of its regulations as affording agencies sole and exclusive discretion to determine who is required to complete and submit confidential financial disclosure forms, Provision 3, by prescribing criteria governing such filing, is inconsistent with § 2634.904 and 905, which are Government-wide regulations, POPA II, 53 FLRA at 629, because it resulted from negotiation with respect to the exercise of the Agency's sole and exclusive discretion under that regulation.

Although Member Pope agreed with the majority that Provision 3 was properly disapproved, her conclusion was based solely on finding the provision inconsistent with § 2634.906, which provides that claims by employees that their positions were improperly determined to require the submission of financial disclosure statements can only be reviewed by the head of the agency (or his or her designee), and that such determinations are final. (In a note accompanying this particular regulation, OGE says the following: "The provision in this section for a final decision by the agency head or designee is intended to preclude administrative or negotiated grievances, arbitration procedures, and any other review or appeal, either within or outside the agency.") Member Pope reasoned that since the review procedure described by § 2634.906 is intended to be exclusive, and since disputes under the provision would be subject to resolution under the negotiated grievance procedure, Provision 3 is inconsistent with § 2634.906.

#4. Request for guidance. FLRA found this provision, requiring that an employee seeking agency guidance to provide it with "all relevant and correct information" regarding potential conflict of interest, to be negotiable--i.e., consistent with 5 CFR 2635.107(b). FLRA found no meaningful distinction between "all relevant and correct information" (the provision's language) and "full disclosure of all relevant circumstances" (the expression used in § 2635.107(b)).

#5. Definition of an examiner's technological area. This provision (ordered by FSIP) prescribed a process and criteria to be used by a joint labor-management committee for reviewing and making recommendations concerning the agency's determination of the technological area within which an employee performs his or her duties. FLRA (Member Pope dissenting) found the provision inconsistent with 5 CFR § 2635.403(b).

Provision 5 establishes a process and criteria the Agency must employ in determining the technological area associated with the official duties of a given position. The process and those criteria will shape the Agency's ultimate determination as to the financial interests that may or may not be acquired or held by employees who perform the duties of those positions. . . . However, the agency determinations required under 5 C.F.R. § 2635.403(b), as under other provisions of OGE regulations, are within the sole and exclusive discretion of the agency.

Although agreeing with the majority that an agency's discretion to determine that a conflict exists and to prohibit employees from acquiring or holding particular financial interests is sole and exclusive, Member Pope saw no inconsistency between the provision and § 2635.403(b). "Provision 5 would result only in recommendations . . . and the Agency would be free to accept or reject any and all of the recommendations. Put simply, with or without the provision, Agency officials retain sole and exclusive discretion to determine whether there is a conflict and/or to prohibit employees from acquiring or holding particular financial interests."

#6. Conflicts of interest caused by changes in work assignments. A provision establishing a process and criteria governing the actions an agency will take to deal with an employee's conflict of interest resulting from the reassignment of the employee is inconsistent with 5 CFR §§ 2634.605(b) and 2635.403(b). "As such, it concerns management's choice from among the options specified in 5 C.F.R. §§ 2634.605(b) and 2635.403(b). It has been determined, however, . . . that the Agency has sole and exclusive discretion to make the decisions provided for under OGE regulations."

#7. Actions the agency will take in specific conflict-of-interest situations. A provision prescribing the actions management will take when a conflict of interest results from atypical or temporary work assignments is inconsistent with 5 C.F.R. §§ 2634.605(b) and 2635.403(b), under which an agency has sole and exclusive discretion regarding the actions it'll take to address an employee's conflict of interest.

#8. "Intractable conflict of interest". A provision stating that the normal remedy for an "intractable conflict of interest" (a conflict in which the employee cannot divest, or has no control over divesting an asset) is recusal or a waiver is inconsistent with 5 C.F.R. §§ 2634.605(b) and 2635.403(b). "Because Provision 8 limits the actions that the agency will be able to take in addressing 'intractable' conflict of interest situations, it concerns how the agency will exercise its sole and exclusive discretion under those regulations."

#9. Conflict of interest arising from employment of child or spouse. A provision providing for the recusal/waiver options when the conflict involves the employment of a child or spouse has the same result as Provision #8.

#10. Information the agency must obtain from the employee. A provision specifying the type of information an agency must get from an employee as part of its contact with the employee under 5 CFR § 2634.605(b)(4) is inconsistent with that regulation because "that is a matter that is within the sole and exclusive discretion of the Agency under OGE regulations."

#11. Condition precedent to divestiture. A FSIP-ordered provision requiring that an employee be provided the opportunity to request a certificate of divestiture prior to being required to divest a financial interest is inconsistent with 5 CFR § 2634.1002(b).

Provision 11 allows an employee who is directed to divest a financial interest an opportunity to be granted a CoD prior to any final requirement to divest. Because the provision would establish the employee's request, through the DAEO, for a CoD as a condition precedent to the finality of the requirement to divest, it is inconsistent with an applicable Government-wide regulation, 5 C.F.R. § 2634.1002(b) . . . .

#12. Divestiture deadline. A FSIP-ordered provision requiring the agency give employees "30 days for divestiture, but not before a requested COD has been granted or denied" is inconsistent with 5 CFR §§ 2634.802(b) and 2634.1002(b)(1)(A). "[T]o the extent that Provision 12 would require a extension of the deadlines for divestiture . . . a matter within the discretion of the Director of OGE, it is inconsistent with 5 C.F.R. §§ 2634.802(b) and 2634.1002(b)(1)(A)[.]"

Member Pope agreed the provision was contrary to law, but her conclusion was based solely on finding the provision inconsistent with 5 CFR 2635.403(d). "There is no dispute that Provision 12 would, in some circumstances, result in a period of time for divestiture exceeding the 90-day period provided in § 2635.403(d)."

A key question in this case involved the deference that FLRA owed to OGE's interpretation of its Government-wide regulations "as affording agencies sole and exclusive discretion to make the determinations required thereunder so as to preclude collective bargaining over the exercise of that discretion."

In examining the Ethics Act and its legislative history FLRA found that Congress directed the OGE establish, by regulation, a uniform system of requirements governing the filing of financial disclosure statements and criteria governing the determination of conflicts of interest. It also authorized OGE to interpret those regulations.

"[A]s interpreted by OGE, the ethics program created by Congress for the Executive branch of the Federal Government is a comprehensive, self-contained system that establishes OGE as the final authority for the promulgation, interpretation and enforcement of the ethical principles applicable therein. This system ensures a unitary and consistent treatment of ethical issues in the executive branch of the Federal Government. Permitting agencies to subject ethical matters under OGE's regulations to modification through negotiation of collective bargaining agreement provisions regulating that discretion would undermine the consistent and uniform application of the ethical principles set forth in those regulations. . . .

It found persuasive OGE's interpretation of its regulations as giving agencies sole and exclusive discretion and warranted FLRA's deference.

FLRA also commented on the significance of Government-wide regulations:

[B]y establishing Government-wide regulations as a bar to inconsistent provisions, under §§ 7114(c) and 7117(a)(1), Congress authorized agencies with the requisite regulatory authority to remove subjects from the bargaining table. See IRS, 996 F.2d [1246] at 1250 (§ 7117(a)(1) exempts from the duty to bargain any proposal inconsistent with a Government-wide regulation and such "exemption essentially permits the government to pull a subject out of the bargaining process by issuing a government-wide rule that creates a regime inconsistent with bargaining.")