Application of the Emoluments Clause of the Constitution and the Foreign Gifts and Decorations Act

Application of the Emoluments Clause of the Constitution and the Foreign Gifts and Decorations Act T he E m olum ents C lause o f the Constitution prohibits governm ent em ployees from accepting any sort o f paym ent from a foreign governm ent, except w ith the consent of C ongress Congress has consented to the receipt o f minimal g ifts from a foreign state, 5 U .S .C . § 7342, but has not consented to receipt o f com pensation for services rendered. T he fact that an em ployee o f the N uclear R egulatory C om m ission would be paid by an A m erican consulting firm fo r services he rendered in connection w ith construction of a nuclear power plant in M exico w ould not, under the circum stances presented h ere, avoid the Em olum ents Clause, since the M exican governm ent would be th e actual source o f the paym ent February 24, 1982 M EM ORANDUM OPINION FOR THE ASSISTANT GENERAL COUNSEL, U NITED STATES NUCLEAR REGULATORY COMMISSION This responds to your letter asking for an interpretation of the Emoluments Clause of the Constitution, A rticle I, § 9, cl. 8, and the Foreign Gifts and Decorations A ct, 5 U .S .C . § 7342 (Supp. Ill 1979). A ccording to your letter and subsequent conversations with Nuclear Regulato­ ry Com m ission (NRC) staff, an employee of the NRC is seeking authorization to work on his leave tim e for an Am erican consulting firm. In that capacity he would review the design of a nuclear power plant being constructed in Mexico. The plant is being built by the M exican governm ent through its Federal Electrical Com m ission. The A m erican consulting firm would be under contract to the Federal Elec­ trical C om m ission; that firm would com pensate the NRC employee for his expenses and services. The A m erican firm has no other nuclear contracts and would be relying solely on the experience of this employee in securing the contract. The em ployee’s work at NRC involves the assessment of operating reactors. This is the sam e job he will perform in Mexico. The consulting firm is a small firm that has three other engineers in unrelated fields. It has not been created for the purpose of securing this particular contract or. insulating the em ployee from the Mexican governm ent. The employee would be paid from the funds received from the Mexican governm ent in connection with the proposed contract, although not all of th e proceeds from the contract will go to him. 156 The employee expects to spend from seven to ten work days on the contract. He has worked previously on this project in an official capacity when he was made available for a year to work on it under the auspices of the State Department and the International Atomic Energy Agency. As a result, when the em ployee, together with others from the NRC, circulated a proposal to act as consultants, the Mexican government initiated discussions with him personally. Subsequent negotiations, we understand, have been conducted through the consulting firm. At the outset we note that your agency has concluded that the proposed activity is permissible under the NRC conflict of interest regulations governing outside employment by NRC employees. 10 C.F.R. § 0 .7 3 5-50 (1981). We have not been asked for our views concerning these regulations and therefore take no position as to them. The Foreign Gifts and Decorations Act, 5 U .S.C . § 7342 (Supp. Ill 1979), generally prohibits employees from requesting or otherwise encouraging the tender of a gift or decoration, or from accepting or retaining a gift of more than minimal value. That section defines “ g ift” as “ a tangible or intangible present (other than a decoration) tendered by, or received from, a foreign goverment.” It seems clear that this Act only addresses itself to gratuities, rather than com pensa­ tion for services actually performed, as would be the case here. We therefore conclude that 5 U .S.C . § 7342 is not applicable to the conduct contemplated. The Emoluments Clause presents more difficult problems. Article 1, § 9, cl. 8 provides: No Title of Nobility shall be granted by the United States: And no Person holding any Office of Profit or Trust under them, shall, without the Consent of the Congress, accept of any present, Emolument, Office, or Title, of any kind whatever, from any King, Prince, or foreign State. A threshold question is presented as to whether the NRC employee is a “ Person holding any Office of Profit or Trust” under the United States. We understand that he is not employed in a supervisory capacity. In past opinions, this Office seems to have assumed without discussion that the only persons covered by the Emolu­ ments Clause were those holding an “ Office” in the sense used in the Appoint­ ments Clause, Article II, § 2, cl. 2. We so stated in a letter from Deputy Assistant Attorney General Ulman to the General Counsel of your agency on July 26, 1976. It is not clear, however, that the words “ any Office of Profit or T rust,” as used in the Emoluments Clause, should be limited to persons considered “ Of­ ficers” under the Appointments Clause. Both the language and the purpose of the two provisions are significantly different. The latter finds its roots in separation of powers principles. The Supreme Court has said that “ any appointee exercising significant authority pursuant to the laws of the United States” is an officer under the Appointments Clause and must be appointed in the manner prescribed by that Article. Employees are “ lesser functionaries” subordinate to officers. Buckley v. Valeo, 424 U .S. 1, 126 & n. 162 (1976). See generally 424 U .S. at 124—137. The Emoluments Clause, on the 157 other hand, is designed “ to exclude corruption and foreign influence.” 3 M. Farrand, The Records c f the Federal Convention c fl7 8 7 , 327 (Gov. Randolph at the V irginia C onvention) (rev. ed. 1937, 1966 reprint). Even though the Framers may have had the exam ple of high officials such as “ foreign M inisters” in mind when discussing the clause, 2 id. 389, its policy would appear to be just as im portant as applied to subordinates. The problem o f divided loyalties can arise at any level. This may be particularly true in a field where, as here, secrecy is pervasive. It is presum ably for this reason that Congress, in enacting the Foreign Gifts and D ecorations A ct, assumed without discussion that under the Emoluments Clause its consent was necessary for any employee to accept a gift from a foreign governm ent. 5 U .S .C . § 7342(a). E .g ., H .R . Rep. No. 2052, 89th C ong., 2d Sess. (1966). Although the view of Congress is not, by itself, conclusive, we are persuaded that the interpretation suggestion by the Foreign Gifts and Decorations Act is appropriate here. It is not necessary therefore for us to decide whether the NRC em ployee in this case m ust be considered an officer in the Appointments Clause sense. The next issue presented under the Em olum ents Clause is whether the payment in this case is “ from any King, Prince, or foreign State.” As noted, Congress has consented only to the receipt of m inim al gifts from any foreign state as provided by 5 U .S .C . § 7342. Therefore, any other em olum ent stands forbidden unless the conclusion can be reached that the paym ent is not “ from ” a foreign govern­ m ent at all. We m ust thus decide whether payment through the consulting firm, in effect, shields the employee from payment by the Mexican government. The question of w hen a foreign government, as opposed to an intermediary, is the actual source of a gift or paym ent has, as far as we know, only been discussed in w riting once before. In 1980, this Office noted that no relevant opinion or com m entary addressed this issue. We considered a proposed contract under w hich a large university provided expert consultants to a foreign government. The foreign governm ent had no control over the selection of the experts and their paym ent and in the years in which the consulting relationship has been in effect, had never sought to influence the selection of experts. These matters were within the discretion of the university. This Office concluded therefore that the payment o f an individual consultant could not be said to be “ from ” a foreign government. In the present case, the retention of the NRC employee by the consulting firm appears to be the principal reason for selection of the consulting firm by the M exican governm ent. He is the firm ’s sole source of expertise and was, at least in part, selected because of prior experience gained while working on the same project in an official capacity. A s we understand the situation, it seems clear that ultim ate control, including selection of personnel, remains with the Mexican governm ent. It is difficult to state what the outer limits of our earlier opinion may be. Each situation m ust, of course, be judged on its facts. Under the circum ­ stances presented here, however, we cannot conclude that the interposition of the 158 American corporation relieves the NRC employee of the obligations imposed by the Emoluments Clause. Ro bert B . S hanks Deputy Assistant Attorney General Office cf Legal Counsel