The OTU, official line isn't that it is illegal to have psionic ability. However Psionic Institutes, depending on timeframe, but basically beginning just before the Fourth Frontier War is the timeframe for this, are illegal. Also in the same period people with psionics are regarded with suspiscion, mistrust, and hostility by the general population. During the period before that, Psionic Institutes actually held Imperial Charters.