[Federal Register Volume 81, Number 193 (Wednesday, October 5, 2016)]
[Proposed Rules]
[Pages 69204-69238]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-22958]



[[Page 69203]]

Vol. 81

Wednesday,

No. 193

October 5, 2016

Part II





Office of Government Ethics





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5 CFR Part 2634





 Executive Branch Financial Disclosure, Qualified Trusts, and 
Certificates of Divestiture; Proposed Rule

  Federal Register / Vol. 81 , No. 193 / Wednesday, October 5, 2016 / 
Proposed Rules  

[[Page 69204]]


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OFFICE OF GOVERNMENT ETHICS

5 CFR Part 2634

RIN 3209-AA00


Executive Branch Financial Disclosure, Qualified Trusts, and 
Certificates of Divestiture

AGENCY: Office of Government Ethics (OGE).

ACTION: Proposed rule.

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SUMMARY:  The Stop Trading on Congressional Knowledge Act (STOCK Act) 
was enacted on April 4, 2012. The Act imposed additional financial 
disclosure requirements on individuals required to file public 
financial disclosure statements pursuant to the Ethics in Government 
Act. Pursuant to section 402(b) of the Ethics in Government Act, the 
U.S. Office of Government Ethics (OGE) is revising the regulations 
governing financial disclosure to incorporate the new reporting 
requirements imposed by the STOCK Act. As a part of the revision, OGE 
also is modernizing language, making changes to the confidential filing 
requirements, adding and updating examples, and conforming the language 
of the regulation more closely to that of the Ethics in Government Act. 
In addition, OGE is proposing an updated definition of ``widely 
diversified'' for Excepted Investment Fund purposes that brings the 
definition in line with the definition of ``diversified'' found in the 
exemptions to the conflicts of interest law governing personal 
financial interests.

DATES: Written comments are invited and must be received on or before 
December 5, 2016.

ADDRESSES: You may submit comments, in writing, to OGE on this proposed 
rule, identified by RIN 3209-AA00, by any of the following methods:
    E-Mail: [email protected]. Include the reference ``Proposed Revisions 
to Financial Disclosure Regulations'' in the subject line of the 
message.
    Fax: (202) 482-9237.
    Mail/Hand Delivery/Courier: Office of Government Ethics, Suite 500, 
1201 New York Avenue NW., Washington, DC 20005-3917, Attention: 
``Proposed Revisions to Financial Disclosure Regulations.''
    Instructions: All submissions must include OGE's agency name and 
the Regulation Identifier Number (RIN), 3209-AA00, for this proposed 
rulemaking. All comments, including attachments and other supporting 
materials, will become part of the public record and subject to public 
disclosure. Comments may be posted on OGE's Web site, www.oge.gov. 
Sensitive personal information, such as account numbers or Social 
Security numbers, should not be included. Comments generally will not 
be edited to remove any identifying or contact information.

FOR FURTHER INFORMATION CONTACT: Heather A. Jones, Senior Counsel for 
Financial Disclosure, Office of Government Ethics, Suite 500, 1201 New 
York Avenue NW., Washington, DC 20005-3917; Telephone: 202-482-9300; 
TTY: 800-877-8339; FAX: 202-482-9237.

SUPPLEMENTARY INFORMATION:

I. Background

    On October 26, 1978, President Carter signed into law the Ethics in 
Government Act of 1978 (EIGA) (Pub. L. 95-521, 92 Stat. 1824). This 
sweeping legislation established the Office of Government Ethics within 
the Civil Service Commission (which became the Office of Personnel 
Management in 1979), and charged it with providing the overall 
direction of executive branch policies related to the prevention of 
conflicts of interest. 5 U.S.C. App., sec. 402(a). It also created the 
first public financial disclosure requirement. On April 12, 1989, 
President Bush issued Executive Order 12674, as modified by Executive 
Order 12731, that directed OGE to establish a new, uniform branch-wide 
confidential financial disclosure system to complement the public 
financial disclosure system that had been established by the Ethics 
Act. Sec. 201(d) of Executive Order 12674. Also, on November 30, 1989, 
President Bush signed into law the Ethics Reform Act of 1989 (Pub. L. 
101-194, 103 Stat. 1716), which contained a modified provision for 
confidential disclosure as prescribed by each supervising ethics 
office, OGE for the executive branch. 5 U.S.C. app., sec. 107(a). In 
response, OGE published an interim regulation covering both the public 
and confidential financial disclosure systems in a revised 5 CFR part 
2634. 57 FR 11800, Apr. 2, 1992, as corrected at 57 FR 21854, May 22, 
1992, and 62605, Dec. 31, 1992.
    On April 4, 2012, President Obama signed into law the STOCK Act. 
(Pub. L. 112-105, 126 Stat. 291). The law imposed additional reporting 
requirements on public financial disclosure filers, including 
transaction reporting throughout the year and the reporting of 
mortgages on personal residences for some filers.

II. Regulatory Amendments to 5 CFR Part 2634

A. Technical Changes

    OGE proposes amending the Table of Contents to conform to the 
proposed substantive amendments to this part, which are explained 
elsewhere in this document. OGE also proposes a number of general 
technical and non-substantive changes that would apply throughout this 
part to enhance clarity and readability and to remove gender-specific 
terms from the substantive regulatory text. OGE proposes to replace the 
term ``shall'' as used throughout the regulation with the terms 
``will,'' ``must,'' or ``does'' where the term is used to indicate an 
affirmative obligation or requirement, and to replace the term ``shall 
not'' with the terms ``may not'' or ``does not'' as appropriate. In 
addition, OGE has added and updated examples throughout this part. 
These changes are intended to enhance clarity and do not constitute a 
substantive change to the regulation. Because of the extensive 
rewriting of the regulation being proposed, we are publishing the full 
text of the regulation as proposed for revision.

B. Changes Resulting From the STOCK Act

    OGE is proposing revisions to the regulations to implement the 
requirements of the STOCK Act. OGE proposes to revise Sec. Sec.  
2634.201(f) and 2634.309 and add Sec.  2634.310(d) to include in the 
regulations the requirement that transactions be reported throughout 
the calendar year. OGE proposes to move the provisions currently found 
at Sec. Sec.  2634.201(f) and 2634.309 to Sec. Sec.  2634.201(g) and 
2634.311 respectively. OGE is proposing to modify Sec.  2634.305 to add 
the requirement for certain financial disclosure filers to report 
mortgages secured by a personal residence and to reorganize the section 
to provide greater clarity. OGE also proposes to revise Sec.  2634.601 
to reference the new disclosure forms developed for transaction 
reporting and for the internet-based filing system, Integrity, that the 
STOCK Act required OGE to develop.

C. Changes To Establish Consistency With the EIGA

    In the current regulations there are requirements that differ 
somewhat from the requirements of the EIGA or provisions contained in 
the EIGA that are not reflected in the current regulations. To 
establish consistency between the regulation and the statute, OGE 
proposes to make the following

[[Page 69205]]

changes. OGE proposes to add Sec.  2634.201(h) to include a provision 
so that filers can receive an extension of the filing deadline when 
they are serving in a combat zone. OGE also proposes revising Sec.  
2634.302, Sec.  2634.308 (revised Sec.  2634.310 in the proposed rule), 
Sec.  2634.309 (revised Sec.  2634.311 in the proposed rule), Sec.  
2634.310 (proposed Sec.  2634.312 in the revised regulation), and Sec.  
2634.907 so that filers report income that is ``received,'' rather than 
income that is ``received or accrued'' or ``received or accrued to his 
benefit.''
    Under section 101(f)(5) of the EIGA, the Director may exclude any 
individual or group of individuals from filing by rule. Section 
2634.203 of the current regulations requires a case-by-case 
determination by the Director regarding whether an employee can be 
excluded from filing a financial disclosure statement by OGE without 
regard to grade level. OGE is proposing to modify Sec.  2634.203 to 
exclude, as a group, certain GS-13 employees and below from filing 
public financial disclosure statement by rule and retain the 
requirement to exclude certain GS-14 and GS-15 employees on a case-by-
case basis. The revised regulations will permit the Designated Agency 
Ethics Official to make those determinations for employees who are GS-
13s or below and meet the criteria stated in the proposed rule.

D. Additional Changes to Public Reporting Requirements

    OGE proposes revising Sec.  2634.201(e) to permit a termination 
filer to submit the termination report up to 15 days prior to the 
termination date with an obligation to update the report if there are 
any changes. OGE believes this change will result in more timely 
filings of termination reports because it is often difficult to collect 
termination reports after an employee has left government service.
    OGE proposes revising Sec.  2634.304 to clarify that filers are not 
required to report travel paid for or travel reimbursements in 
connection with their non-Federal employment. OGE considers these 
travel payments an expense of the business that employs the filer 
rather than a gift or travel reimbursement to the filer. OGE also 
proposes revising the language of paragraph (f) of that section to 
clarify the procedures for seeking a waiver of the gift reporting 
requirement, though the proposed language would not change the process. 
In addition, OGE proposes a note to explain how the gift reporting 
threshold is set and to inform readers that it is revised every three 
years. In order to improve clarity, the proposed modification to Sec.  
2634.308 would narrow the scope of that section to focus only on the 
rules concerning the disclosure of compensation in excess of $5,000. 
OGE proposes to move other subjects currently addressed in the existing 
Sec.  2634.308 to a revised Sec.  2634.310. In addition, OGE proposes 
to add information from DAEOgram DO-06-011 to the example to Sec.  
2634.308, in order to explain the circumstances under which the name of 
a client is considered privileged.
    In addition, proposed Sec.  2634.312(c), which is Sec.  2634.310(c) 
in the current regulations, is revised to change the definition of 
``widely-diversified'' so that it tracks the definition of 
``diversified'' at 5 CFR 2640.102(a). This change will permit 
investment funds that qualify for an exemption under part 2640 to also 
qualify as excepted investment funds under Sec.  2634.310(c).
    Finally, OGE proposes revising Sec.  2634.311, which will be Sec.  
2634.313 in the revised regulation, to remove the requirement that 
filers specify that reported sales were made pursuant to a certificate 
of divesture and, for filers not reviewed by OGE, to allow attachments 
to the report in lieu of restating information in the report, provided 
that the attachments are approved by the Designated Agency Ethics 
Official as being both readily understood and complete as to all 
required elements. This proposed change is consistent with section 
103(g) of the EIGA.

E. Changes to the Confidential Reporting Requirements

    OGE proposes to revise Sec.  2634.903 so that an employee who has 
left a filing position prior to the confidential report due date is not 
required to file. OGE is proposing to revise Sec.  2634.904 to provide 
more guidance regarding which special Government employees should file 
the confidential financial disclosure report. Proposed Sec.  2634.905 
is modified to encourage the use of alternative procedures for filing 
confidential disclosure reports and to remove the Form 450-A as the 
default alternative procedure. OGE intends to encourage agencies to 
consider the information that they need to make a thorough conflicts 
determination for confidential filers and then design an alternative 
form that captures that information required to make such a 
determination.
    OGE is proposing several revisions to Sec. Sec.  2634.907 and 
2634.908 that would change the information required to be reported by 
confidential filers. OGE is proposing to increase the threshold for 
reportable income from over $200 to over $1,000, to no longer require 
filers to report the agreement to participate in a defined contribution 
plan to which the former employer is no longer contributing, and to no 
longer require filers to report a diversified fund held in an employee 
benefit plan. In addition, OGE is proposing that new entrant filers are 
no longer required to report holdings that were sold before their entry 
into Federal service, even if those holdings generated income prior to 
entering Federal service. OGE believes these changes will simplify the 
reporting requirements for filers without reducing the ability of 
ethics officials to complete a conflicts analysis.

F. Changes to Certificates of Divestiture

    OGE proposes to revise Sec.  2634.1005 to require Designated Agency 
Ethics Officials to inform OGE of any circumstances that weigh against 
granting a certificate of divesture. Proposed Sec.  2634.1007 is 
modified to inform employees that certificates of divesture will not be 
granted for the sale of assets held in tax-deferred or tax-advantaged 
accounts that do not incur capital gains.

G. Miscellaneous Changes

    OGE proposes to revise Sec.  2634.605 to clarify that the standard 
for review of financial disclosure forms should focus on identifying 
and resolving conflicts of interest. It also provides guidance 
regarding timelines for receiving additional information from filers. 
Proposed Sec.  2634.606 is modified to clarify the procedure for 
submitting a five-day update letter to the Senate. OGE also proposes 
updating Sec.  2634.607 to include an explanation about the effect of 
seeking and following ethics advice on potential disciplinary action.
    OGE proposes to revise Sec.  2634.803(a) to notify agencies and 
filers that an ethics agreement that was approved by OGE during the 
nomination process for a filer who was nominated by the President and 
confirmed by the Senate may not be modified without the approval of 
OGE. In addition, OGE proposes to remove the appendices. The model 
documents in Appendix A and Appendix B will be available on the OGE Web 
site, www.oge.gov.

III. Matters of Regulatory Procedure

Regulatory Flexibility Act

    As Director of the Office of Government Ethics, I certify under the 
Regulatory Flexibility Act (5 U.S.C. chapter 6) that this proposed rule 
will not have a significant economic impact on a substantial number of 
small entities because it primarily affects Federal executive branch 
employees.

[[Page 69206]]

Paperwork Reduction Act

    No additional clearance is needed under the Paperwork Reduction Act 
(44 U.S.C. chapter 35) for the proposed rule, because it would not 
affect the public financial disclosure, the financial disclosure 
request, financial disclosure waiver, the confidential financial 
disclosure, or qualified trusts information collection requirements in 
the regulation that are currently approved under OMB paperwork control 
numbers 3209-001, 3209-002, 3209-004, 3209-006, and 3209-0007.

Unfunded Mandates Reform Act

    For purposes of the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 
chapter 25, subchapter II), this proposed rule will not significantly 
or uniquely affect small governments and will not result in increased 
expenditures by State, local, and tribal governments, in the aggregate, 
or by the private sector, of $100 million or more (as adjusted for 
inflation) in any one year.

Executive Order 12866 and Executive Order 13563

    Executive Orders 12866 and 13563 direct agencies to assess all 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits. Executive Order 13563 emphasizes the importance of 
quantifying both costs and benefits, of reducing costs, of harmonizing 
rules, and of promoting flexibility. This proposed rule has been 
designated a ``significant regulatory action'' although not 
economically significant, under section 3(f) of Executive Order 12866. 
Accordingly, the rule has been reviewed by the Office of Management and 
Budget.

Executive Order 12988

    As Director of the Office of Government Ethics, I have reviewed 
this proposed rule in light of section 3 of Executive Order 12988, 
Civil Justice Reform, and certify that it meets the applicable 
standards provided therein.

List of Subjects in 5 CFR Part 2634

    Certificates of divestiture, Conflict of interests, Financial 
disclosure, Government employees, Penalties, Privacy, Reporting and 
recordkeeping requirements, Trusts and trustees.

    Approved: September 20, 2016.
Walter M. Shaub, Jr.,
Director, Office of Government Ethics.

    Accordingly, for the reasons set forth in the preamble, the Office 
of Government Ethics proposes to revise 5 CFR part 2634 to read as 
follows:

PART 2634--EXECUTIVE BRANCH FINANCIAL DISCLOSURE, QUALIFIED TRUSTS, 
AND CERTIFICATES OF DIVESTITURE

Subpart A--General Provisions
Sec.
2634.101 Authority.
2634.102 Purpose and overview.
2634.103 Executive agency supplemental regulations.
2634.104 Policies.
2634.105 Definitions.
Subpart B--Persons Required To File Public Financial Disclosure Reports
2634.201 General requirements, filing dates, and extensions.
2634.202 Public filer defined.
2634.203 Persons excluded by rule.
2634.204 Employment of sixty days or less.
2634.205 Special waiver of public reporting requirements.
Subpart C--Contents of Public Reports
2634.301 Interests in property.
2634.302 Income.
2634.303 Purchases, sales, and exchanges.
2634.304 Gifts and reimbursements.
2634.305 Liabilities.
2634.306 Agreements and arrangements.
2634.307 Outside positions.
2634.308 Filer's sources of compensation exceeding $5,000 in a year.
2634.309 Periodic reporting of transactions.
2634.310 Reporting periods.
2634.311 Spouses and dependent children.
2634.312 Trusts, estates, and investment funds.
2634.313 Special rules.
Subpart D--Qualified Trusts
2634.401 Overview.
2634.402 Definitions.
2634.403 General description of trusts.
2634.404 Summary of procedures for creation of a qualified trust.
2634.405 Standards for becoming an independent trustee or other 
fiduciary.
2634.406 Initial portfolio.
2634.407 Certification of qualified trust by the Office of 
Government Ethics.
2634.408 Administration of a qualified trust.
2634.409 Pre-existing trusts.
2634.410 Dissolution.
2634.411 Reporting on financial disclosure reports.
2634.412 Sanctions and enforcement.
2634.413 Public access.
2634.414 OMB control number.
Subpart E--Revocation of Trust Certificates and Trustee Approvals
2634.501 Purpose and scope.
2634.502 Definitions.
2634.503 Determinations.
Subpart F--Procedure
2634.601 Report forms.
2634.602 Filing of reports.
2634.603 Custody of and access to public reports.
2634.604 Custody of and denial of public access to confidential 
reports.
2634.605 Review of reports.
2634.606 Updated disclosure of advice-and-consent nominees.
2634.607 Advice and opinions.
Subpart G--Penalties
2634.701 Failure to file or falsifying reports.
2634.702 Breaches by trust fiduciaries and interested parties.
2634.703 Misuse of public reports.
2634.704 Late filing fee.
Subpart H--Ethics Agreements
2634.801 Scope.
2634.802 Requirements.
2634.803 Notification of ethics agreements.
2634.804 Evidence of compliance.
2634.805 Retention.
Subpart I--Confidential Financial Disclosure Reports
2634.901 Policies of confidential financial disclosure reporting.
2634.902 [Reserved]
2634.903 General requirements, filing dates, and extensions.
2634.904 Confidential filer defined.
2634.905 Use of alternative procedures.
2634.906 Review of confidential filer status.
2634.907 Report contents.
2634.908 Reporting periods.
2634.909 Procedures, penalties, and ethics agreements.
Subpart J--Certificates of Divestiture
2634.1001 Overview.
2634.1002 Role of the Internal Revenue Service.
2634.1003 Definitions.
2634.1004 General rule.
2634.1005 How to obtain a Certificate of Divestiture.
2634.1006 Rollover into permitted property.
2634.1007 Cases in which Certificates of Divestiture will not be 
issued.
2634.1008 Public access to a Certificate of Divestiture.

    Authority: 5 U.S.C. App.; 26 U.S.C. 1043; Pub. L. 101-410, 104 
Stat. 890, 28 U.S.C. 2461 note, as amended by Sec. 31001, Pub. L. 
104-134, 110 Stat. 1321 and Sec. 701, Pub. L. 114-74; Pub. L. 112-
105, 126 Stat. 291; E.O. 12674, 54 FR 15159, 3 CFR, 1989 Comp., p. 
215, as modified by E.O. 12731, 55 FR 42547, 3 CFR, 1990 Comp., p. 
306.

Subpart A--General Provisions


Sec.  2634.101   Authority.

    The regulation in this part is issued pursuant to the authority of 
the Ethics in Government Act of 1978, as amended; 26 U.S.C. 1043; the 
Federal Civil Penalties Inflation Adjustment Act of 1990, as amended by 
the Debt Collection Improvement Act of 1996 and the Federal Civil 
Penalties Inflation Adjustment Act Improvements Act of 2015; the Stop 
Trading on Congressional Knowledge Act (STOCK Act), as amended; and 
Executive Order 12674 of April 12, 1989, as modified by Executive Order 
12731 of October 17, 1990.

[[Page 69207]]

Sec.  2634.102   Purpose and overview.

    (a) The regulation in this part supplements and implements title I 
of the Act, sections 8 (a)-(b) and 11 of the STOCK Act, and section 
201(d) of Executive Order 12674 (as modified by Executive Order 12731) 
with respect to executive branch employees, by setting forth more 
specifically the uniform procedures and requirements for financial 
disclosure and for the certification and use of qualified blind and 
diversified trusts. Additionally, this regulation implements section 
502 of the Reform Act by establishing procedures for executive branch 
personnel to obtain Certificates of Divestiture, which permit deferred 
recognition of capital gain in certain instances.
    (b) The rules in this part govern both public and confidential 
(nonpublic) financial disclosure systems. Subpart I of this part 
contains the rules applicable to the confidential disclosure system.


Sec.  2634.103   Executive agency supplemental regulations.

    (a) The regulation in this part is intended to provide uniformity 
for executive branch financial disclosure systems. However, an agency 
may, subject to the prior written approval of the Office of Government 
Ethics (OGE), issue supplemental regulations implementing this part, if 
necessary to address special or unique agency circumstances. Such 
regulations:
    (1) Must be consistent with the Act, the STOCK Act, Executive 
Orders 12674 and 12731, and this part; and
    (2) Must not impose additional reporting requirements on either 
public or confidential filers, unless specifically authorized by the 
Office of Government Ethics as supplemental confidential reporting.

    Note to paragraph (a): Supplemental regulations will not be used 
to satisfy the separate requirement of 5 U.S.C. App. (Ethics in 
Government Act of 1978, section 402(d)(1)) that each agency have 
established written procedures on how to collect, review, evaluate, 
and, where appropriate, make publicly available, financial 
disclosure statements filed with it.

    (b) Requests for approval of supplemental regulations under 
paragraph (a) of this section must be submitted in writing to the 
Office of Government Ethics, and must set forth the agency's need for 
any proposed supplemental reporting requirements. See Sec.  2634.901(b) 
and (c).
    (c) Agencies should review all of their existing financial 
disclosure regulations to determine which of those regulations must be 
modified or revoked in order to conform with the requirements of this 
part. Any amendatory agency regulations will be processed in accordance 
with paragraphs (a) and (b) of this section.


Sec.  2634.104   Policies.

    (a) Title I of the Act requires that high-level Federal officials 
disclose publicly their personal financial interests, to ensure 
confidence in the integrity of the Federal Government by demonstrating 
that they are able to carry out their duties without compromising the 
public trust. Title I also authorizes the Office of Government Ethics 
to establish a confidential (nonpublic) financial disclosure system for 
less senior executive branch personnel in certain designated positions, 
to facilitate internal agency conflict-of-interest review.
    (b) Public and confidential financial disclosure serves to prevent 
conflicts of interest and to identify potential conflicts, by providing 
for a systematic review of the financial interests of both current and 
prospective officers and employees. These reports assist agencies in 
administering their ethics programs and providing counseling to 
employees.
    (c) Financial disclosure reports are not net worth statements. 
Financial disclosure systems seek only the information that the 
President, Congress, or OGE as the supervising ethics office for the 
executive branch has deemed relevant to the administration and 
application of the criminal conflict of interest laws, other statutes 
on ethical conduct or financial interests, and Executive orders or 
regulations on standards of ethical conduct.
    (d) Nothing in the Act, the STOCK Act, or this part requiring 
reporting of information or the filing of any report will be deemed to 
authorize receipt of income, honoraria, gifts, or reimbursements; 
holding of assets, liabilities, or positions; or involvement in 
transactions that are prohibited by law, Executive order, or 
regulation.
    (e) The provisions of title I of the Act, the STOCK Act, and this 
part requiring the reporting of information supersede any general 
requirement under any other provision of law or regulation on the 
reporting of information required for purposes of preventing conflicts 
of interest or apparent conflicts of interest. However, the provisions 
of title I and this part do not supersede the requirements of 5 U.S.C. 
7342 (the Foreign Gifts and Decorations Act).
    (f) This regulation is intended to be gender-neutral; therefore, 
use of the terms he, his, and him include she, hers, and her, and vice 
versa.


Sec.  2634.105   Definitions.

    For purposes of this part:
    (a) Act means the Ethics in Government Act of 1978 (Pub. L. 95-
521), as amended, as modified by the Ethics Reform Act of 1989 (Pub. L. 
101-194), as amended.
    (b) Agency means any executive agency as defined in 5 U.S.C. 105 
(any executive department, Government corporation, or independent 
establishment in the executive branch), any military department as 
defined in 5 U.S.C. 102, and the Postal Service and the Postal 
Regulatory Commission. It does not include the Government 
Accountability Office.
    (c) Confidential filer. For the definition of ``confidential 
filer,'' see Sec.  2634.904.
    (d) Dependent child means, when used with respect to any reporting 
individual, any individual who is a son, daughter, stepson, or 
stepdaughter and who:
    (1) Is unmarried, under age 21, and living in the household of the 
reporting individual; or
    (2) Is a dependent of the reporting individual within the meaning 
of section 152 of the Internal Revenue Code of 1986, see 26 U.S.C. 152.
    (e) Designated agency ethics official means the primary officer or 
employee who is designated by the head of an agency to administer the 
provisions of title I of the Act and this part within an agency, and in 
the designated agency ethics official's absence the alternate who is 
designated by the head of the agency. The term also includes a delegate 
of such an official, unless otherwise indicated. See part 2638 of this 
chapter on the appointment and additional responsibilities of a 
designated agency ethics official and alternate.
    (f) Executive branch means any agency as defined in paragraph (b) 
of this section and any other entity or administrative unit in the 
executive branch.
    (g) Filer is used interchangeably with ``reporting individual,'' 
and may refer to a ``confidential filer'' as defined in paragraph (c) 
of this section, a ``public filer'' as defined in paragraph (m) of this 
section, or a nominee or candidate as described in Sec.  2634.201.
    (h) Gift means a payment, advance, forbearance, rendering, free 
attendance at an event, deposit of money, or anything of value, unless 
consideration of equal or greater value is received by the donor, but 
does not include:
    (1) Bequests and other forms of inheritance;
    (2) Suitable mementos of a function honoring the reporting 
individual;

[[Page 69208]]

    (3) Food, lodging, transportation, and entertainment provided by a 
foreign government within a foreign country or by the United States 
Government, the District of Columbia, or a State or local government or 
political subdivision thereof;
    (4) Food and beverages, unless they are consumed in connection with 
a gift of overnight lodging;
    (5) Communications to the offices of a reporting individual, 
including subscriptions to newspapers and periodicals;
    (6) Consumable products provided by home-state businesses to the 
offices of the President or Vice President, if those products are 
intended for consumption by persons other than the President or Vice 
President; or
    (7) Exclusions and exceptions as described at Sec.  2634.304(c) and 
(d).
    (i) Honorarium means a payment of money or anything of value for an 
appearance, speech, or article.
    (j) Income means all income from whatever source derived. It 
includes but is not limited to the following items: Earned income such 
as compensation for services, fees, commissions, salaries, wages, and 
similar items; gross income derived from business (and net income if 
the individual elects to include it); gains derived from dealings in 
property including capital gains; interest; rents; royalties; 
dividends; annuities; income from the investment portion of life 
insurance and endowment contracts; pensions; income from discharge of 
indebtedness; distributive share of partnership income; and income from 
an interest in an estate or trust. The term includes all income items, 
regardless of whether they are taxable for Federal income tax purposes, 
such as interest on municipal bonds. Generally, income means ``gross 
income'' as determined in conformity with the Internal Revenue Service 
principles at 26 CFR 1.61-1 through 1.61-15 and 1.61-21.
    (k) Personal hospitality of any individual means hospitality 
extended for a nonbusiness purpose by an individual, not a corporation 
or organization, at the personal residence of or on property or 
facilities owned by that individual or the individual's family.
    (l) Personal residence means any property used exclusively as a 
private dwelling by the reporting individual or his spouse, which is 
not rented out during any portion of the reporting period. The term is 
not limited to one's domicile; there may be more than one personal 
residence, including a vacation home.
    (m) Public filer. For the definition of ``public filer,'' see Sec.  
2634.202.
    (n) Reimbursement means any payment or other thing of value 
received by the reporting individual (other than gifts, as defined in 
paragraph (h) of this section) to cover travel-related expenses of such 
individual, other than those which are:
    (1) Provided by the United States Government, the District of 
Columbia, or a State or local government or political subdivision 
thereof;
    (2) Required to be reported by the reporting individual under 5 
U.S.C. 7342 (the Foreign Gifts and Decorations Act); or
    (3) Required to be reported under section 304 of the Federal 
Election Campaign Act of 1971 (52 U.S.C. 30104) (relating to reports of 
campaign contributions).

    Note to paragraph (n): Payments which are not made to the 
individual are not reimbursements for purposes of this part. Thus, 
payments made to the filer's employing agency to cover official 
travel-related expenses do not fit this definition of reimbursement. 
For example, payments being accepted by the agency pursuant to 
statutory authority such as 31 U.S.C. 1353, as implemented by 41 CFR 
part 304-1, are not considered reimbursements under this part, 
because they are not payments received by the reporting individual. 
On the other hand, travel payments made to the employee by an 
outside entity for private travel are considered reimbursements for 
purposes of this part. Likewise, travel payments received from 
certain nonprofit entities under authority of 5 U.S.C. 4111 are 
considered reimbursements, even though for official travel, since 
that statute specifies that such payments must be made to the 
individual directly (with prior approval from the individual's 
agency).

    (o) Relative means an individual who is related to the reporting 
individual, as father, mother, son, daughter, brother, sister, uncle, 
aunt, great-uncle, great-aunt, first cousin, nephew, niece, husband, 
wife, grandfather, grandmother, grandson, granddaughter, father-in-law, 
mother-in-law, son-in-law, daughter-in-law, brother-in-law, sister-in-
law, stepfather, stepmother, stepson, stepdaughter, stepbrother, 
stepsister, half-brother, half-sister, or who is the grandfather or 
grandmother of the spouse of the reporting individual, and will be 
deemed to include the fianc[eacute] or fianc[eacute]e of the reporting 
individual.
    (p) Reporting individual is used interchangeably with ``filer,'' 
and may refer to a ``confidential filer'' as defined in Sec.  2634.904, 
a ``public filer'' as defined in Sec.  2634.202, or a nominee or 
candidate as described in Sec.  2634.201(c) and (d).
    (q) Reviewing official means the designated agency ethics official 
or the delegate, the Secretary concerned, the head of the agency, or 
the Director of the Office of Government Ethics.
    (r) Secretary concerned has the meaning set forth in 10 U.S.C. 
101(a)(9) (relating to the Secretaries of the Army, Navy, Air Force, 
and for certain Coast Guard matters, the Secretary of Homeland 
Security); and, in addition, means:
    (1) The Secretary of Commerce, in matters concerning the National 
Oceanic and Atmospheric Administration;
    (2) The Secretary of Health and Human Services, with respect to 
matters concerning the Public Health Service; and
    (3) The Secretary of State with respect to matters concerning the 
Foreign Service.
    (s) Special Government employee has the meaning given to that term 
by the first sentence of 18 U.S.C. 202(a): An officer or employee of an 
agency who is retained, designated, appointed, or employed to perform 
temporary duties, with or without compensation, for not to exceed 130 
days during any period of 365 consecutive days, either on a full-time 
or intermittent basis.
    (t) STOCK Act means the Stop Trading on Congressional Knowledge Act 
(Pub. L. 112-105), as amended.
    (u) Value means a good faith estimate of the fair market value if 
the exact value is neither known nor easily obtainable by the reporting 
individual without undue hardship or expense. In the case of any 
interest in property, see the alternative valuation options in Sec.  
2634.301(e). For gifts and reimbursements, see Sec.  2634.304(e).

Subpart B--Persons Required To File Public Financial Disclosure 
Reports


Sec.  2634.201   General requirements, filing dates, and extensions.

    (a) Incumbents. A public filer as defined in Sec.  2634.202 who, 
during any calendar year, performs the duties of the position or 
office, as described in that section, for a period in excess of 60 days 
must file a public financial disclosure report containing the 
information prescribed in subpart C of this part, on or before May 15 
of the succeeding year.

    Example 1: An SES official commences performing the duties of 
his position on November 15. He will not be required to file an 
incumbent report for that calendar year.
    Example 2: An employee, who is classified at GS-15, is formally 
assigned to fill an SES position in an acting capacity, from October 
15 through December 31. Having performed the duties of a covered 
position for more than 60 days during the calendar year, he will be 
required to file an incumbent report. In addition, he must file a 
new entrant report the first time he serves more than 60 days in

[[Page 69209]]

a calendar year in the position, in accordance with Sec.  
2634.201(b) and Sec.  2634.204(c)(1).
    Example 3: An SES employee terminates her employment with an 
agency on March 7, 2015. The employee will file a termination report 
by April 6, 2015, in accordance with Sec.  2634.201(e), but will not 
file an incumbent report on May 15.

    (b) New entrants. (1) Within 30 days of assuming a public filer 
position or office described in Sec.  2634.202, an individual must file 
a public financial disclosure report containing the information 
prescribed in subpart C of this part.
    (2) However, no report will be required if the individual:
    (i) Has, within 30 days prior to assuming such position, left 
another position or office for which a public financial disclosure 
report under the Act was required to be filed; or
    (ii) Has already filed such a report as a nominee or candidate for 
the position.

    Example: Y, an employee of the Treasury Department who has 
previously filed reports in accordance with the rules of this 
section, terminates employment with that Department on January 10, 
2015, and begins employment with the Commerce Department on January 
11, 2015, in a Senior Executive Service position. Y is not a new 
entrant because he has assumed a position described in Sec.  
2634.202 within thirty days of leaving another position so 
described. Accordingly, he need not file a new report with the 
Commerce Department.

    Note to example: While Y did not have to file a new entrant 
report with the Commerce Department, that Department should request 
a copy of the last report which he filed with the Treasury 
Department, so that Commerce could determine whether or not there 
would be any conflicts or potential conflicts in connection with Y's 
new employment. Additionally, Y will have to file an incumbent 
report covering the 2014 calendar year, in accordance with paragraph 
(a) of this section, due not later than May 15, 2015, with Commerce, 
which should provide a copy to Treasury so that both may review it.

    (c) Nominees. (1) At any time after a public announcement by the 
President or President-elect of the intention to nominate an individual 
to an executive branch position, appointment to which requires the 
advice and consent of the Senate, such individual may, and in any event 
within five days after the transmittal of the nomination to the Senate 
must, file a public financial disclosure report containing the 
information prescribed in subpart C of this part.
    (2) This requirement will not apply to any individual who is 
nominated to a position as:
    (i) An officer of the uniformed services; or
    (ii) A Foreign Service Officer.

    Note to paragraph (c)(2)(1): Although the statute, 5 U.S.C. app. 
(Ethics in Government Act of 1978, section 101(b)(1)), exempts 
uniformed service officers only if they are nominated for 
appointment to a grade or rank for which the pay grade is 0-6 or 
below, the Senate confirmation committees have adopted a practice of 
exempting all uniformed service officers, unless otherwise specified 
by the committee assigned.

    (3) Section 2634.605(c) provides expedited procedures in the case 
of individuals described in paragraph (c)(1) of this section. Those 
individuals referred to in paragraph (c)(2) of this section as being 
exempt from filing nominee reports must file new entrant reports, if 
required by paragraph (b) of this section.
    (d) Candidates. A candidate (as defined in section 301 of the 
Federal Election Campaign Act of 1971, 52 U.S.C. 30101) for nomination 
or election to the office of President or Vice President (other than an 
incumbent) must file a public financial disclosure report containing 
the information prescribed in subpart C of this part, in accordance 
with the following:
    (1) Within 30 days of becoming a candidate or on or before May 15 
of the calendar year in which the individual becomes a candidate, 
whichever is later, but in no event later than 30 days before the 
election; and
    (2) On or before May 15 of each successive year an individual 
continues to be a candidate. However, in any calendar year in which an 
individual continues to be a candidate but all elections relating to 
such candidacy were held in prior calendar years, the individual need 
not file a report unless the individual becomes a candidate for a 
vacancy during that year.

    Example: P became a candidate for President in January 2015. P 
will be required to file a public financial disclosure report on or 
before May 15, 2015. If P had become a candidate on June 1, 2015, P 
would have been required to file a disclosure report within 30 days 
of that date.

    (e) Termination of employment. (1) On or before the thirtieth day 
after termination of employment from a public filer position or office 
described in Sec.  2634.202 but no more than 15 days prior to 
termination, an individual must file a public financial disclosure 
report containing the information prescribed in subpart C of this part. 
If the individual files prior to the termination date and there are any 
changes between the filing date and the termination date, the 
individual must update the report.
    (2) However, if within 30 days of such termination the individual 
assumes employment in another position or office for which a public 
report under the Act is required to be filed, no report will be 
required by the provisions of this paragraph. See the related Example 
in paragraph (b) of this section.
    (f) Transactions occurring throughout the calendar year. (1) A 
public filer as defined in Sec.  2634.202 who, during any calendar 
year, performs, or is reasonably expected to perform, the duties of his 
position or office, as described in that section, for a period in 
excess of 60 days must file a transaction report within 30 days of 
receiving notification of a covered transaction, but not later than 45 
days after such transaction. The report must contain the information 
prescribed in subpart C of this part.
    (2) A covered transaction is any purchase, sale, or exchange 
required to be reported according to the provisions of Sec.  2634.309.

    Example: A filer receives a statement on October 10 notifying 
her of all of the covered transactions executed by her broker on her 
behalf in September. Although each transaction may have a different 
due date, if the filer reports all the covered transactions from 
September on a report filed on or before October 15, the filer will 
ensure that all transactions have been timely reported.

    (g) Extensions generally. The reviewing official may, for good 
cause shown, grant to any public filer or class thereof an extension of 
time for filing which must not exceed 45 days. The reviewing official 
may, for good cause shown, grant an additional extension of time which 
must not exceed 45 days. The employee must set forth in writing 
specific reasons why such additional extension of time is necessary. 
The reviewing official must approve or deny such requests in writing. 
Such records must be maintained as part of the official report file. 
For extensions on confidential financial disclosure reports, see Sec.  
2634.903(d).
    (h) Exceptions for individuals in combat zones. In the case of an 
individual who is serving in the Armed Forces, or serving in support of 
the Armed Forces, in an area while that area is designated by the 
President by Executive order as a combat zone for purposes of section 
112 of the Internal Revenue Code of 1986:
    (1) The date for the filing of any report will be extended so that 
the date is 180 days after the later of:
    (i) The last day of the individual's service in such area during 
such designated period; or
    (ii) The last day of the individual's hospitalization as a result 
of injury received or disease contracted while serving in such area; 
and
    (2) The exception described in this paragraph will apply 
automatically to any individual who qualifies for the

[[Page 69210]]

exception, unless the Secretary of Defense establishes written 
guidelines for determining eligibility or for requesting an extension 
under this paragraph.


Sec.  2634.202  Public filer defined.

    The term public filer includes:
    (a) The President;
    (b) The Vice President;
    (c) Each officer or employee in the executive branch, including a 
special Government employee as defined in 18 U.S.C. 202(a), whose 
position is classified above GS-15 of the General Schedule prescribed 
by 5 U.S.C. 5332, or the rate of basic pay for which is fixed, other 
than under the General Schedule, at a rate equal to or greater than 
120% of the minimum rate of basic pay for GS-15 of the General 
Schedule; each member of a uniformed service whose pay grade is at or 
in excess of O-7 under 37 U.S.C. 201; and each officer or employee in 
any other position determined by the Director of the Office of 
Government Ethics to be of equal classification;
    (d) Each employee who is an administrative law judge appointed 
pursuant to 5 U.S.C. 3105;
    (e) Any employee not otherwise described in paragraph (c) of this 
section who is in a position in the executive branch which is excepted 
from the competitive service by reason of being of a confidential or 
policy-making character, unless excluded by virtue of a determination 
under Sec.  2634.203;
    (f) The Postmaster General, the Deputy Postmaster General, each 
Governor of the Board of Governors of the United States Postal Service 
and each officer or employee of the United States Postal Service or 
Postal Regulatory Commission whose basic rate of pay is equal to or 
greater than 120% of the minimum rate of basic pay for GS-15 of the 
General Schedule;
    (g) The Director of the Office of Government Ethics and each 
agency's designated agency ethics official;
    (h) Any civilian employee not otherwise described in paragraph (c) 
of this section who is employed in the Executive Office of the 
President (other than a special Government employee, as defined in 18 
U.S.C. 202(a)) and holds a commission of appointment from the 
President; and
    (i) Anyone whose employment in a position or office described in 
paragraphs (a) through (h) of this section has terminated, but who has 
not yet satisfied the filing requirements of Sec.  2634.201(e).


Sec.  2634.203   Persons excluded by rule.

    (a) In general. Any individual or group of individuals described in 
Sec.  2634.202(e) (relating to positions of a confidential or policy-
making character) may be excluded by rule from the public reporting 
requirements of this subpart when the Director of the Office of 
Government Ethics determines, in his sole discretion, that such 
exclusion would not affect adversely the integrity of the Government or 
the public's confidence in the integrity of the Government.
    (b) Exclusion determination for employees at or below the GS-13 
grade level. The determination required by paragraph (a) of this 
section has been made for any individual who, as a factual matter, 
serves in a position that meets the criteria set forth in this 
paragraph. The exclusion applies to a position upon a written 
determination by the designated agency ethics official that the 
position meets the following criteria:
    (1) The position is paid at the GS-13 grade level or below or, in 
the case of a position not under the General Schedule, both the level 
of pay and the nature of responsibilities of the position are 
commensurate with the GS-13 grade level or below; and
    (2) The incumbent in the position does not have a substantial 
policy-making role with respect to agency programs.
    The designated agency ethics official must consider whether the 
position meets the standards for filing a confidential financial 
disclosure report enumerated in Sec.  2634.904(a)(4).
    (c) Exclusion determination for employees at or below the GS-15 
grade level, but above the GS-13 grade level. The exclusion 
determination required by paragraph (a) of this section may also be 
made on a case-by-case basis by the Office of Government Ethics. To 
receive an exclusion determination, an agency must follow the 
procedures set forth in paragraph (d) and must demonstrate that the 
employee:
    (1) Has a position that has been established at the GS-14 or GS-15 
grade level or, in the case of a position not under the General 
Schedule, both the level of pay and the nature of responsibilities of 
the position are commensurate with the GS-14 or GS-15 grade level; and
    (2) Has no policy-making role with respect to agency programs. In 
the event that the Office of Government Ethics permits the requested 
exclusion, the designated agency ethics official must consider whether 
the position meets the standards for filing a confidential financial 
disclosure report enumerated in Sec.  2634.904(a)(4).
    (d) Procedure. (1) The exclusion of any individual from reporting 
requirements pursuant to paragraph (c) of this section will be 
effective as of the time the employing agency files with the Office of 
Government Ethics the name of the employee, the name of any incumbent 
in the position, and a position description. Exclusions should be 
requested prior to due dates for the reports which such employees would 
otherwise have to file. If the position description changes in a 
substantive way, the employing agency must provide the Office of 
Government Ethics with a revised position description.
    (2) If the Office of Government Ethics finds that one or more 
positions has been improperly excluded, it will advise the agency and 
set a date for the filing of any report that is due.

    Example: An agency requests an exclusion for a special 
assistant, who is a Schedule C appointee whose position description 
is classified at the GS-14 level. The position description indicates 
that the employee's duties involve the analysis of policy options 
and the presentation of findings and recommendations to superiors. 
On the basis of this position description, the requested exception 
is denied.


Sec.  2634.204   Employment of 60 days or less.

    (a) In general. Any public filer or nominee who, as determined by 
the official specified in this paragraph, is not reasonably expected to 
perform the duties of an office or position described in Sec.  
2634.201(c) or Sec.  2634.202 for more than 60 days in any calendar 
year will not be subject to the reporting requirements of Sec.  
2634.201(b), (c), or (e). This determination will be made by:
    (1) The designated agency ethics official or Secretary concerned, 
in a case to which the provisions of Sec.  2634.201(b) or (e) (relating 
to new entrant and termination reports) would otherwise apply; or
    (2) The Director of the Office of Government Ethics, in a case to 
which the provisions of Sec.  2634.201(c) (relating to nominee reports) 
would otherwise apply.
    (b) Alternative reporting. Any new entrant who is exempted from 
filing a public financial report under paragraph (a) of this section 
and who is a special Government employee is subject to confidential 
reporting under Sec.  2634.903(b). See Sec.  2634.904(a)(2).
    (c) Exception. If the public filer or nominee actually performs the 
duties of an office or position referred to in paragraph (a) of this 
section for more than 60 days in a calendar year, the public report 
otherwise required by:

[[Page 69211]]

    (1) Section 2634.201(b) or (c) (relating to new entrant and nominee 
reports) must be filed within 15 calendar days after the sixtieth day 
of duty; and
    (2) Section 2634.201(e) (relating to termination reports) must be 
filed as provided in that paragraph.


Sec.  2634.205   Special waiver of public reporting requirements.

    (a) General rule. In unusual circumstances, the Director of the 
Office of Government Ethics may grant a request for a waiver of the 
public reporting requirements under this subpart for an individual who 
is reasonably expected to perform, or has performed, the duties of an 
office or position for fewer than 130 days in a calendar year, but only 
if the Director determines that:
    (1) The individual is a special Government employee, as defined in 
18 U.S.C. 202(a), who performs temporary duties either on a full-time 
or intermittent basis;
    (2) The individual is able to provide services specially needed by 
the Government;
    (3) It is unlikely that the individual's outside employment or 
financial interests will create a conflict of interest; and
    (4) Public financial disclosure by the individual is not necessary 
under the circumstances.
    (b) Procedure. (1) Requests for waivers must be submitted to the 
Office of Government Ethics, via the requester's agency, within 10 days 
after an employee learns that the employee will hold a position which 
requires reporting and that the employee will serve in that position 
for more than 60 days in any calendar year, or upon serving in such a 
position for more than 60 days, whichever is earlier.
    (2) The request must consist of:
    (i) A cover letter which identifies the individual and the 
position, states the approximate number of days in a calendar year 
which the employee expects to serve in that position, and requests a 
waiver of public reporting requirements under this section;
    (ii) An enclosure which states the reasons for the individual's 
belief that the conditions of paragraphs (a) (1) through (4) of this 
section are met in the particular case; and
    (iii) The report otherwise required by this subpart, as a factual 
basis for the determination required by this section. The report must 
bear the legend: ``CONFIDENTIAL: WAIVER REQUEST PENDING PURSUANT TO 5 
CFR 2634.205.''
    (3) The agency in which the individual serves must advise the 
Office of Government Ethics as to the justification for a waiver.
    (4) In the event a waiver is granted, the report will not be 
subject to the public disclosure requirements of Sec.  2634.603; 
however, the waiver request cover letter will be subject to those 
requirements. In the event that a waiver is not granted, the 
confidential legend will be removed from the report, and the report 
will be subject to public disclosure; however, the waiver request cover 
letter will not then be subject to public disclosure.

Subpart C--Contents of Public Reports


Sec.  2634.301   Interests in property.

    (a) In general. Except reports required under Sec.  2634.201(f), 
each financial disclosure report filed pursuant to this subpart must 
include a brief description of any interest in property held by the 
filer at the end of the reporting period in a trade or business, or for 
investment or the production of income, having a fair market value in 
excess of $1,000. The report must designate the category of value of 
the property in accordance with paragraph (d) of this section. Each 
item of real and personal property must be disclosed separately. Note 
that for Individual Retirement Accounts (IRAs), defined contribution 
plans, brokerage accounts, trusts, mutual or pooled investment funds 
and other entities with portfolio holdings, each underlying asset must 
be separately disclosed, unless the entity qualifies for special 
treatment under Sec.  2634.312.
    (b) Types of property reportable. Subject to the exceptions in 
paragraph (c) of this section, examples of the types of property 
required to be reported include, but are not limited to:
    (1) Real estate;
    (2) Stocks, bonds, securities, and futures contracts;
    (3) Mutual funds, exchange-traded funds, and other pooled 
investment funds;
    (4) Pensions and annuities;
    (5) Vested beneficial interests in trusts;
    (6) Ownership interests in businesses or partnerships;
    (7) Deposits in banks or other financial institutions; and
    (8) Accounts receivable.
    (c) Exceptions. The following property interests are exempt from 
the reporting requirements under paragraphs (a) and (b) of this 
section:
    (1) Any personal liability owed to the filer, spouse, or dependent 
child by a spouse, or by a parent, brother, sister, or child of the 
filer, spouse, or dependent child;
    (2) Personal savings accounts (defined as any form of deposit in a 
bank, savings and loan association, credit union, or similar financial 
institution) in a single financial institution or holdings in a single 
money market mutual fund, aggregating $5,000 or less in that 
institution or fund;
    (3) A personal residence of the filer or spouse, as defined in 
Sec.  2634.105(l); and
    (4) Financial interests in any retirement system of the United 
States (including the Thrift Savings Plan) or under the Social Security 
Act.
    (d) Valuation categories. The valuation categories specified for 
property items are as follows:
    (1) None (or less than $1,001);
    (2) $1,001 but not more than $15,000;
    (3) Greater than $15,000 but not more than $50,000;
    (4) Greater than $50,000 but not more than $100,000;
    (5) Greater than $100,000 but not more than $250,000;
    (6) Greater than $250,000 but not more than $500,000;
    (7) Greater than $500,000 but not more than $1,000,000; and
    (8) Greater than $1,000,000;
    (9) Provided that, with respect to items held by the filer alone or 
held jointly by the filer with the filer's spouse and/or dependent 
children, the following additional categories over $1,000,000 will 
apply:
    (i) Greater than $1,000,000 but not more than $5,000,000;
    (ii) Greater than $5,000,000 but not more than $25,000,000;
    (iii) Greater than $25,000,000 but not more than $50,000,000; and
    (iv) Greater than $50,000,000.
    (e) Valuation of interests in property. A good faith estimate of 
the fair market value of interests in property may be made in any case 
in which the exact value cannot be obtained without undue hardship or 
expense to the filer. If a filer is unable to make a good faith 
estimate of the value of an asset, the filer may indicate on the report 
that the ``value is not readily ascertainable.'' Value may also be 
determined by:
    (1) The purchase price (in which case, the filer should indicate 
date of purchase);
    (2) Recent appraisal;
    (3) The assessed value for tax purposes (adjusted to reflect the 
market value of the property used for the assessment if the assessed 
value is computed at less than 100 percent of that market value);
    (4) The year-end book value of nonpublicly traded stock, the year-
end exchange value of corporate stock, or the face value of corporate 
bonds or comparable securities;
    (5) The net worth of a business partnership;

[[Page 69212]]

    (6) The equity value of an individually owned business; or
    (7) Any other recognized indication of value (such as the last sale 
on a stock exchange).

    Example 1: An official has a $4,000 savings account in Bank A. 
The filer's spouse has a $2,500 certificate of deposit issued by 
Bank B and his dependent daughter has a $200 savings account in Bank 
C. The official does not have to disclose the deposits, as the total 
value of the deposits in any one bank does not exceed $5,000.
    Example 2:  Public filer R has a collection of post-
impressionist paintings which have been carefully selected over the 
years. From time to time, as new paintings have been acquired to add 
to the collection, R has made sales of both less desirable works 
from his collection and paintings of various schools which he 
acquired through inheritance. Under these circumstances, R must 
report the value of all the paintings he retains as interests in 
property pursuant to this section, as well as income from the sales 
of paintings pursuant to Sec.  2634.302(b). Recurrent sales from a 
collection indicate that the collection is being held for investment 
or the production of income.
    Example 3: A reporting individual has investments which her 
broker holds as an IRA and invests in stocks, bonds, and mutual 
funds. Each such asset having a value in excess of $1,000 at the 
close of the reporting period must be separately listed, and the 
value must be shown.


Sec.  2634.302   Income.

    (a) Noninvestment income. Except reports required under Sec.  
2634.201(f), each financial disclosure report filed pursuant to this 
subpart must disclose the source, type, and the actual amount or value, 
of earned or other noninvestment income in excess of $200 from any one 
source which is received by the filer during the reporting period, 
including:
    (1) Salaries, fees, commissions, wages and any other compensation 
for personal services (other than from United States Government 
employment);
    (2) Retirement benefits (other than from United States Government 
employment, including the Thrift Savings Plan, or from Social 
Security);
    (3) Any honoraria, and the date services were provided, including 
payments made or to be made to charitable organizations on behalf of 
the filer in lieu of honoraria; and
    (4) Any other noninvestment income, such as prizes, awards, or 
discharge of indebtedness.

    Note to paragraph (a)(3): In calculating the amount of an 
honorarium, subtract any actual and necessary travel expenses 
incurred by the recipient and one relative. If such expenses are 
paid or reimbursed by the honorarium source, they shall not be 
counted as part of the honorarium payment.

    Example 1: An official is a participant in the defined benefit 
retirement plan of Coastal Airlines. Since his retirement from 
Coastal Airlines, the filer receives a $5,000 pension payment each 
month. The pension income must be disclosed as employment-related 
income.
    Example 2: An official serves on the board of directors at a 
bank, for which he receives a $5,000 fee each calendar quarter. He 
also receives an annual fee of $15,000 for service as trustee of a 
private trust. In both instances, such fees received or earned 
during the reporting period must be disclosed, and the actual amount 
must be shown.

    (b) Investment income. Except as indicated in Sec.  2634.309, each 
financial disclosure report filed pursuant to this subpart must 
disclose:
    (1) The source and type of investment income, characterized as 
dividends, rent, interest, capital gains, or income from qualified or 
excepted trusts or excepted investment funds (see Sec.  2634.312), 
which is received by the filer during the reporting period, and which 
exceeds $200 in amount or value from any one source. Examples include, 
but are not limited to, income derived from real estate, collectible 
items, stocks, bonds, notes, copyrights, pensions, mutual funds, the 
investment portion of life insurance contracts, loans, and personal 
savings accounts (as defined in Sec.  2634.301(c)(2)). Note that for 
entities with portfolio holdings, such as brokerage accounts or trusts, 
each underlying source of income must be separately disclosed, unless 
the entity qualifies for special treatment under Sec.  2634.312. The 
amount or value of income from each reported source must also be 
disclosed and categorized in accordance with the following table:
    (i) None (or less than $201);
    (ii) $201 but not more than $1,000;
    (iii) Greater than $1,000 but not more than $2,500;
    (iv) Greater than $2,500 but not more than $5,000;
    (v) Greater than $5,000 but not more than $15,000;
    (vi) Greater than $15,000 but not more than $50,000;
    (vii) Greater than $50,000 but not more than $100,000;
    (viii) Greater than $100,000 but not more than $1,000,000; and
    (ix) Greater than $1,000,000;
    (x) Provided that, with respect to investment income of the filer 
alone or joint investment income of the filer with the filer's spouse 
and/or dependent children, the following additional categories over 
$1,000,000 will apply:
    (A) Greater than $1,000,000 but not more than $5,000,000; and
    (B) Greater than $5,000,000.
    (2) The source, type, and the actual amount or value of gross 
income from a business, distributive share of a partnership, joint 
business venture income, payments from an estate or an annuity or 
endowment contract, or any other items of income not otherwise covered 
by paragraphs (a) or (b)(1) of this section which are received by the 
filer during the reporting period and which exceed $200 from any one 
source.

    Example 1: An official rents out a portion of his residence. He 
receives rental income of $6,000 from one individual for four months 
and $12,000 from another individual for the remaining eight months 
of the year covered by his incumbent financial disclosure report. He 
must identify the property, specify the type of income (rent), and 
indicate the category of the total amount of rent received. (He must 
also disclose the asset information required by Sec.  2634.301.)
    Example 2: An official has an ownership interest in a fast-food 
restaurant, from which she receives $25,000 in annual income. She 
must specify on her financial disclosure report the type of income, 
such as partnership distributive share or gross business income, and 
indicate the actual amount of such income. (Additionally, she must 
describe the business and categorize its asset value, pursuant to 
Sec.  2634.301.)
    Example 3: A reporting individual owned stock in XYZ, a 
publicly-traded corporation. During the reporting period, she 
received $85 in dividends and, when she sold her shares, $175 in 
capital gains. The individual must disclose XYZ Corporation because 
the stock generated more than $200 in income. She also must specify 
the type of income (dividends and capital gains), and indicate the 
category of the total amount of income received. (She must also 
disclose the asset information required by Sec.  2634.301.)


Sec.  2634.303   Purchases, sales, and exchanges.

    (a) In general. Except for reports required under Sec.  2634.201(f) 
and as indicated in Sec.  2634.310(b), each financial disclosure report 
filed pursuant to this subpart must include a brief description, the 
date, and value (using the categories of value in Sec.  2634.301(d)(2) 
through (9)) of any purchase, sale, or exchange by the filer during the 
reporting period, in which the amount involved in the transaction 
exceeds $1,000. The acquisition of an asset through inheritance is not 
considered a transaction for purposes of this section. Reportable 
transactions include:
    (1) Of real property, other than a personal residence of the filer 
or spouse, as defined in Sec.  2634.105(l); and
    (2) Of stocks, bonds, commodity futures, mutual fund shares, and 
other forms of securities.
    (b) Exceptions. The following transactions need not be reported 
under paragraph (a) of this section:

[[Page 69213]]

    (1) Transactions solely by and between the reporting individual, 
the reporting individual's spouse, or the reporting individual's 
dependent children;
    (2) Transactions involving Treasury bills, notes, and bonds; money 
market mutual funds or accounts; and bank accounts (as defined in Sec.  
2634.301(c)(2)), provided they occur at rates, terms, and conditions 
available generally to members of the public;
    (3) Transactions involving holdings of trusts and investment funds 
described in Sec.  2634.312(b) and (c);
    (4) Transactions which occurred at a time when the reporting 
individual was not a public financial disclosure filer or was not a 
Federal Government officer or employee; and
    (5) Transactions fully disclosed in any public financial disclosure 
report filed during the calendar year pursuant to Sec.  2634.309.

    Example 1: An employee sells her personal residence in Virginia 
for $650,000 and purchases a personal residence in the District of 
Columbia for $800,000. She did not rent out any portion of the 
Virginia property and does not intend to rent out the property in 
DC. She need not report the sale of the Virginia residence or the 
purchase of the DC residence.
    Example 2: An official sells his beach home in Maryland for 
$350,000. Because he has rented it out for one month every summer, 
it does not qualify as a personal residence. He must disclose the 
sale under this section and any capital gain over $200 realized on 
the sale under Sec.  2634.302.
    Example 3: An official sells a ranch to his dependent daughter. 
The official need not report the sale because it is a transaction 
between the reporting individual and a dependent child; however, any 
capital gain, except for that portion attributable to a personal 
residence, is required to be reported under Sec.  2634.302.
    Example 4: An official sells an apartment building and realizes 
a loss of $100,000. He must report the sale of the building if the 
sale price of the property exceeds $1,000; however, he need not 
report anything under Sec.  2634.302, as the sale did not result in 
a capital gain.
    Example 5: An official buys shares in an S&P 500 mutual fund 
worth $12,000 in the 401(k) account that he has with a previous 
employer. He must disclose the purchase under this section. To make 
the purchase, he sold $12,000 worth of shares in a money market fund 
also held in the 401(k). He does not need to disclose the sale of 
the money market fund shares.
    Example 6: An official sells her interest in a private business 
for $75,000. She must disclose the sale under this section, and she 
must disclose any capital gain over $200 realized on the sale under 
Sec.  2634.302.


Sec.  2634.304   Gifts and reimbursements.

    (a) Gifts. Except reports required under Sec.  2634.201(f) and as 
indicated in Sec.  2634.310(b), each financial disclosure report filed 
pursuant to this subpart must contain the identity of the source, a 
brief description, and the value of all gifts aggregating more than 
$375 in value which are received by the filer during the reporting 
period from any one source. For in-kind travel-related gifts, include a 
travel itinerary, dates, and nature of expenses provided.

    Note to paragraph (a): Under sections 102(a)(2)(A) and (B) of 
the Ethics in Government Act, the reporting thresholds for gifts, 
reimbursements, and travel expenses are tied to the dollar amount 
for the ``minimal value'' threshold for foreign gifts established by 
the Foreign Gifts and Decoration Act, 5 U.S.C. 7342(a)(5). The 
General Services Administration (GSA), in consultation with the 
Secretary of State, redefines the value every 3 years. In 2014, the 
amount was set at $375. In subsection (d) the Office of Government 
Ethics sets the aggregation exception amount and redefines the value 
every 3 years. In 2014, the amount was set at $150. The Office of 
Government Ethics will update this regulation in 2017 and every 
three years thereafter to reflect the new amounts.

    (b) Reimbursements. Except as indicated in Sec. Sec.  2634.309 and 
2634.310(b), each financial disclosure report filed pursuant to this 
subpart must contain the identity of the source, a brief description 
(including a travel itinerary, dates, and the nature of expenses 
provided), and the value of any travel-related reimbursements 
aggregating more than $375 in value, which are received by the filer 
during the reporting period from any one source. The filer is not 
required to report travel reimbursements received from the filer's non-
Federal employer.
    (c) Exclusions. Reports need not contain any information about 
gifts and reimbursements to which the provisions of this section would 
otherwise apply which are received from relatives (see Sec.  
2634.105(o)) or during a period in which the filer was not an officer 
or employee of the Federal Government. Additionally, any food, lodging, 
or entertainment received as ``personal hospitality of any 
individual,'' as defined in Sec.  2634.105(k), need not be reported. 
See also exclusions specified in the definitions of gift and 
reimbursement, at Sec.  2634.105(h) and (n).
    (d) Aggregation exception. Any gift or reimbursement with a fair 
market value of $150 or less need not be aggregated for purposes of the 
reporting rules of this section. However, the acceptance of gifts, 
whether or not reportable, is subject to the restrictions imposed by 
Executive Order 12674, as modified by Executive Order 12731, and the 
implementing regulations on standards of ethical conduct.

    Example 1: An official accepts a print, a pen and pencil set, 
and a letter opener from a community service organization he has 
worked with solely in his private capacity. He determines, in 
accordance with paragraph (e) of this section, that these gifts are 
valued as follows:
Gift 1--Print: $220
Gift 2--Pen and pencil set: $185
Gift 3--Letter opener: $20
    The official must disclose Gifts 1 and 2, since together they 
aggregate more than $375 in value from the same source. Gift 3 need 
not be aggregated, because its value does not exceed $150.
    Example 2: An official receives the following gifts from a 
single source:
    1. Dinner for two at a local restaurant--$200.
    2. Round-trip taxi fare to meet donor at the restaurant--$25.
    3. Dinner at donor's city residence--(value uncertain).
    4. Round-trip airline transportation and hotel accommodations to 
visit Epcot Center in Florida--$600.
    5. Weekend at donor's country home, including duck hunting and 
tennis match--(value uncertain).
    Based on the minimal value threshold established in 2014, the 
official need only disclose Gift 4. Gift 1 falls within the 
exclusion in Sec.  2634.105(h)(4) for food and beverages not 
consumed in connection with a gift of overnight lodging. Gifts 3 and 
5 need not be disclosed because they fall within the exception for 
personal hospitality of an individual. Gift 2 need not be aggregated 
and reported, because its value does not exceed $150.
    Example 3: A non-Federal organization asks an official to speak 
at an out-of-town meeting on a matter that is unrelated to her 
official duties and her agency. She accepts the invitation and 
travels on her own time to the event. The round-trip airfare costs 
$500. Based on the minimal value threshold established in 2014, the 
official must disclose the value of the plane ticket whether the 
organization pays for the ticket directly or reimburses her for her 
purchase of the ticket.

    (e) Valuation of gifts and reimbursements. The value to be assigned 
to a gift or reimbursement is its fair market value. For most 
reimbursements, this will be the amount actually received. For gifts, 
the value should be determined in one of the following manners:
    (1) Except as provided in paragraph (e)(4) of this section, if the 
gift is readily available in the market, the value is its retail price. 
The filer need not contact the donor, but may contact a retail 
establishment selling similar items to determine the present cost in 
the market.
    (2) If the item is not readily available in the market, such as a 
piece of art, a handmade item, or an antique, the filer may make a good 
faith estimate of the value of the item.

[[Page 69214]]

    (3) The term ``readily available in the market'' means that an item 
generally is available for retail purchase.
    (4) The market value of a ticket entitling the holder to attend an 
event which includes food, refreshments, entertainment, or other 
benefits is the face value of the ticket, which may exceed the actual 
cost of the food and other benefits.

    Example: Items such as a pen and pencil set, letter opener, 
leather case, or engraved pen are generally available in the market 
and can be determined by researching the retail price for each item 
online.

    (f) Waiver rule in the case of certain gifts. In unusual cases, the 
value of a gift as defined in Sec.  2634.105(h) need not be aggregated 
for reporting threshold purposes under this section, and therefore the 
gift need not be reported on a public financial disclosure report, if 
the Director of the Office of Government Ethics grants a publicly 
available waiver to a public filer.
    (1) Standard. If the Director receives a written request for a 
waiver, the Director will issue a waiver upon determining that:
    (i) Both the basis of the relationship between the grantor and the 
grantee and the motivation behind the gift are personal; and
    (ii) No countervailing public purpose requires public disclosure of 
the nature, source, and value of the gift.

    Example: The Secretary of Education and her spouse receive the 
following two wedding gifts: (A) A crystal decanter valued at $450 
from the Secretary's former college roommate and lifelong friend, 
who is a real estate broker in Wyoming; and (B) A gift of a print 
valued at $500 from a business partner of the spouse, who owns a 
catering company. Under these circumstances, the Director of OGE may 
grant a request for a waiver of the requirement to report on a 
public financial disclosure report each of these gifts.

    (2) Public disclosure of waiver request. If approved in whole or in 
part, the cover letter requesting the waiver and the waiver will be 
subject to the public disclosure requirements in Sec.  2634.603. 
Enclosures to the cover letter, required by paragraph (3)(ii) of this 
section, are not covered by Sec.  2634.603.
    (3) Procedure. (i) A public filer seeking a waiver under this 
section must submit a request to the designated agency ethics official 
for the employee's agency. The designated agency ethics official must 
sign a cover letter that identifies the filer and the filer's position 
and states that a waiver is requested under this section. To the extent 
practicable, the designated agency ethics official should avoid 
including other personal identifying information about the employee in 
the cover letter.
    (ii) In an enclosure to the cover letter, the filer must set forth:
    (A) The identity and occupation of the donor;
    (B) A statement that the relationship between the donor and the 
filer is personal in nature;
    (C) An explanation of all relevant circumstances surrounding the 
gift, including whether any donor is a prohibited source, as defined in 
Sec.  2635.203(d), or represents a prohibited source and whether the 
gift was given because of the employee's official position; and
    (D) A brief description of the gift and the value of the gift.
    (iii) With respect to the information required in paragraph 
(f)(3)(ii) of this section, if a gift has more than one donor, the 
filer shall provide the necessary information for each donor.
    (iv) The Director will approve or disapprove any request for a 
waiver in writing. In the event that a waiver is granted, the Director 
will avoid including personal information about the filer to the extent 
practicable.


Sec.  2634.305   Liabilities.

    (a) In general. Except reports required under Sec.  2634.201(f), 
each financial disclosure report filed pursuant to this subpart must 
identify and include a brief description of the filer's liabilities 
exceeding $10,000 owed to any creditor at any time during the reporting 
period, and the name of the creditors to whom such liabilities are 
owed. The report also must designate the category of value of the 
liabilities in accordance with Sec.  2634.301(d) based on the greatest 
amount owed to the creditor during the period, except that the amount 
of a revolving charge account is based on the balance at the end of the 
reporting period.
    (b) Exceptions. The following are not required to be reported under 
paragraph (a) of this section:
    (1) Personal liabilities owed to a spouse or to the parent, 
brother, sister, or child of the filer, spouse, or dependent child; and
    (2) Any loan secured by a personal motor vehicle, household 
furniture, or appliances, provided that the loan does not exceed the 
purchase price of the item which secures it; and
    (c) Limited exception for mortgages on personal residences. (1) The 
President, the Vice President, and a filer nominated for or appointed 
by the President to a position that requires the advice and consent of 
the Senate, other than those identified in paragraph (c)(2) of this 
section, must disclose a mortgage on a personal residence.
    (2) Other public filers are not required to disclose a mortgage on 
a personal residence. Such filers include individuals who are nominated 
or appointed by the President to a Senate-confirmed position as a 
Foreign Service Officer below the rank of ambassador or a special 
Government employee.

    Example 1: A career official in the Senior Executive Service has 
the following debts outstanding during the reporting period:
    1. Mortgage on personal residence--$200,000.
    2. Mortgage on rental property--$150,000.
    3. VISA Card--$1,000.
    4. Loan balance of $15,000, secured by family automobile 
purchased for $16,200.
    5. Loan balance of $10,500, secured by antique furniture 
purchased for $8,000.
    6. Loan from parents--$20,000.
    7. A personal line of credit up to $20,000 on which no draws 
have been made.
    The loans indicated in items 2 and 5 must be disclosed in the 
official's annual financial disclosure report. Loan 1 is exempt from 
disclosure under paragraph (c) of this section because it is secured 
by the personal residence and the filer is not covered by the STOCK 
Act provision requiring reporting. Loan 3 need not be disclosed 
under paragraph (a) of this section because it is considered to be a 
revolving charge account with an outstanding liability that does not 
exceed $10,000 at the end of the reporting period. Loan 4 need not 
be disclosed under paragraph (b)(2) of this section because it is 
secured by a personal motor vehicle which was purchased for more 
than the value of the loan. Loan 6 need not be disclosed because the 
creditors are persons specified in paragraph (b)(1) of this section. 
Loan 7 need not be disclosed because the filer has not drawn on the 
line of credit and, as a result, had no outstanding liability 
associated with the line of credit during the reporting period.
    Example 2: An incumbent official has $15,000 of outstanding debt 
in an American Express account in July. On December 31, the 
outstanding liability is $7,000. The liability does not need to be 
disclosed in the official's annual financial disclosure report 
because it does not exceed $10,000 at the end of the reporting 
period.
    Example 3: A Secretary of a Department has an outstanding home 
improvement loan in the amount of $25,000, which is secured by her 
home. This liability must be disclosed on the annual financial 
disclosure report.


Sec.  2634.306   Agreements and arrangements.

    Except reports required under Sec.  2634.201(f), each financial 
disclosure report filed pursuant to this subpart must identify the 
parties to and the date of, and must briefly describe the terms of, any 
agreement or arrangement of the filer in existence at any time during 
the reporting period with respect to:
    (a) Future employment;
    (b) A leave of absence from employment during the period of the

[[Page 69215]]

reporting individual's Government service;
    (c) Continuation of payments by a former employer other than the 
United States Government; and
    (d) Continuing participation in an employee welfare or benefit plan 
maintained by a former employer, other than the United States 
Government.


Sec.  2634.307   Outside positions.

    (a) In general. Except reports required under Sec.  2634.201(f), 
each financial disclosure report filed pursuant to this subpart must 
identify all positions held at any time by the filer during the 
reporting period, as an officer, director, trustee, general partner, 
proprietor, representative, executor, employee, or consultant of any 
corporation, company, firm, partnership, trust, or other business 
enterprise, any nonprofit organization, any labor organization, or any 
educational or other institution other than the United States.
    (b) Exceptions. The following need not be reported under paragraph 
(a) of this section:
    (1) Positions held in any religious, social, fraternal, or 
political entity; and
    (2) Positions solely of an honorary nature, such as those with an 
emeritus designation.

    Example 1: An official recently terminated her role as the 
managing member of a limited liability corporation upon appointment 
to a position in the executive branch. The managing member position 
must be disclosed in the official's new entrant financial disclosure 
report pursuant to this section.
    Example 2: An official is a member of the board of his church. 
The official does not need to disclose the position in his financial 
disclosure report.
    Example 3: An official is an officer in a fraternal organization 
that exists for the purpose of performing service work in the 
community. The official does not need to disclose this position in 
her financial disclosure report.
    Example 4: An official is the ceremonial Parade Marshal for a 
local town's annual Founders' Day event and, in that capacity, leads 
a parade and serves as Master of Ceremonies for an awards ceremony 
at the town hall. The official does not need to disclose this 
position in her financial disclosure report.
    Example 5: An official recently terminated his role as a 
campaign manager for a candidate for the Office of the President of 
the United States upon appointment to a noncareer position in the 
executive branch. The official does not need to disclose the 
campaign manager position in his financial disclosure report.
    Example 6: Immediately prior to her recent appointment to a 
position in an agency, an official terminated her employment as a 
corporate officer. In connection with her employment, she served for 
several years as the corporation's representative to an association 
that represents members of the industry in which the corporation 
operates. She does not need to disclose her role as her employer's 
representative to the association because she performed her 
representative duties in her capacity as a corporate officer.
    Example 7: An official holds a position on the board of 
directors of the local food bank. The official must disclose the 
position in his financial disclosure report.


Sec.  2634.308   Filer's sources of compensation exceeding $5,000 in a 
year

    (a) In general. A public filer required to file a report as a New 
Entrant or a Nominee, pursuant to Sec.  2634.201(b) or (c), must 
identify the filer's sources of compensation which exceed $5,000 in any 
one calendar year. This requirement includes compensation paid to 
another person, such as an employer, in exchange for the filer's 
services (e.g., payments to a law firm exceeding $5,000 in any one 
calendar year in exchange for the services of a partner or associate 
attorney). The filer must also briefly describe the nature of the 
duties performed or services rendered (e.g., ``legal services'').
    (b) Exceptions. (1) The name of a source of compensation may be 
excluded only if that information is specifically determined to be 
confidential as a result of a privileged relationship established by 
law and if the disclosure is specifically prohibited by law or 
regulation, by a rule of a professional licensing organization, or by a 
client agreement that at the time of engagement of the filer's services 
expressly provided that the client's name would not be disclosed 
publicly to any person. If the filer excludes the name of any source, 
the filer must indicate in the report that such information has been 
excluded, the number of sources excluded, and, if applicable, a 
citation to the statute, regulation, rule of professional conduct, or 
other authority pursuant to which disclosure of the information is 
specifically prohibited.
    (2) The report need not contain any information with respect to any 
person for whom services were provided by any firm or association of 
which the filer was a member, partner, or employee, unless the filer 
was directly involved in the provision of such services.
    (3) The President, the Vice President, and a candidate referred to 
in Sec.  2634.201(d) are not required to report this information.

    Example: A nominee who is a partner or employee of a law firm 
and who has worked on a matter involving a client from which the 
firm received over $5,000 in fees during a calendar year must report 
the name of the client only if the value of the services rendered by 
the nominee exceeded $5,000. The name of the client would not 
normally be considered confidential, unless the matter potentially 
involved an investigation or enforcement action involving the client 
by the government and the client's name has never been disclosed 
publicly in connection with the representation. As a result, the 
nominee must disclose the client's identity unless it is protected 
by statute, a court order, is under seal, or is considered 
confidential because: (1) The client is the subject of a non-public 
proceeding or investigation and the client has not been identified 
in a public filing, statement, appearance, or official report; (2) 
disclosure of the client's name is specifically prohibited by a rule 
of professional conduct that can be enforced by a professional 
licensing body; or (3) a privileged relationship was established by 
a written confidentiality agreement, entered into at the time that 
the filer's services were retained, that expressly prohibits 
disclosure of the client's identity.


Sec.  2634.309   Periodic Reporting of Transactions.

    (a) In general. Each financial disclosure report filed pursuant to 
Sec.  2634.201(f) must include a brief description, the date, and value 
(using the categories of value in Sec.  2634.301(d)(2) through (9)) of 
any purchase, sale, or exchange of stocks, bonds, commodity futures, 
and other forms of securities by the filer during the reporting period, 
in which the amount involved in the transaction exceeds $1,000.
    (b) Exceptions. The following transactions need not be reported 
under paragraph (a) of this section:
    (1) Transactions solely by and between the reporting individual, 
the reporting individual's spouse, or the reporting individual's 
dependent children;
    (2) Transactions of excepted investment funds as defined in Sec.  
2634.312(c);
    (3) Transactions involving Treasury bills, notes, and bonds; money 
market mutual funds or accounts; and bank accounts (as defined in Sec.  
2634.301(c)(2)), provided they occur at rates, terms, and conditions 
available generally to members of the public;
    (4) Transactions involving holdings of trusts and investment funds 
described in Sec.  2634.312(b) and (c); and
    (5) Transactions which occurred at a time when the reporting 
individual was not a public financial disclosure filer or was not a 
Federal Government officer or employee.


Sec.  2634.310   Reporting periods.

    (a) Incumbents. Each financial disclosure report filed pursuant to 
Sec.  2634.201(a) must include a full and complete statement of the 
information required to be reported under this

[[Page 69216]]

subpart, for the preceding calendar year (except for Sec. Sec.  
2634.303 and 2634.304, relating to transactions and gifts/
reimbursements, for which the reporting period does not include any 
portion of the previous calendar year during which the filer was not a 
Federal employee). In the case of Sec. Sec.  2634.306 and 2634.307, the 
reporting period also includes the current calendar year up to the date 
of filing.
    (b) New entrants, nominees, and candidates. Each financial 
disclosure report filed pursuant to Sec.  2634.201(b) through (d) must 
include a full and complete statement of the information required to be 
reported under this subpart, except for Sec.  2634.303 (relating to 
purchases, sales, and exchanges of certain property) and Sec.  2634.304 
(relating to gifts and reimbursements). The following special rules 
apply:
    (1) Interests in property. For purposes of Sec.  2634.301, the 
report must include all interests in property specified by that section 
which are held on or after a date which is fewer than 31 days before 
the date on which the report is filed.
    (2) Income. For purposes of Sec.  2634.302, the report must include 
all income items specified by that section which are received during 
the period beginning on January 1 of the preceding calendar year and 
ending on the date on which the report is filed, except as otherwise 
provided by Sec.  2634.606 relating to updated disclosure for nominees.
    (3) Liabilities. For purposes of Sec.  2634.305, the report must 
include all liabilities specified by that section which are owed during 
the period beginning on January 1 of the preceding calendar year and 
ending fewer than 31 days before the date on which the report is filed.
    (4) Agreements and arrangements. For purposes of Sec.  2634.306, 
the report will include only those agreements and arrangements which 
still exist at the time of filing.
    (5) Outside positions. For purposes of Sec.  2634.307, the report 
must include all such positions held during the preceding two calendar 
years and the current calendar year up to the date of filing.
    (6) Certain sources of compensation. For purposes of Sec.  
2634.308, the report must also identify the filer's sources of 
compensation which exceed $5,000 during either of the preceding two 
calendar years or during the current calendar year up to the date of 
filing.
    (c) Termination reports. Each financial disclosure report filed 
under Sec.  2634.201(e) must include a full and complete statement of 
the information required to be reported under this subpart, covering 
the preceding calendar year if an incumbent report required by Sec.  
2634.201(a) has not been filed and covering the portion of the calendar 
year in which such termination occurs up to the date the individual 
left such office or position.
    (d) Periodic reporting of transactions. Each financial disclosure 
report filed under Sec.  2634.201(f) must include a full and complete 
statement of the information required to be reported according to the 
provisions of Sec.  2634.309. The report must be filed within 30 days 
of receiving notification of a covered transaction, but not later than 
45 days after the date such transaction was executed.

    Example: A filer receives a statement on October 10 notifying 
her of all of the covered transactions executed by her broker on her 
behalf in September. Although each transaction may have a different 
due date, if the filer reports all the covered transactions from 
September on a report filed on or before October 15, the filer will 
ensure that all transactions have been timely reported.


Sec.  2634.311   Spouses and dependent children.

    (a) Special disclosure rules. Each report required by the 
provisions of subpart B of this part must also include the following 
information with respect to the spouse or dependent children of the 
reporting individual:
    (1) Income. For purposes of Sec.  2634.302:
    (i) With respect to a spouse, the source but not the amount of 
earned income (other than honoraria) which exceeds $1,000 from any one 
source; and if earned income is derived from a spouse's self-employment 
in a business or profession, the nature of the business or profession 
but not the amount of the earned income;
    (ii) With respect to a spouse, the source and the actual amount or 
value of any honoraria received by the spouse (or payments made or to 
be made to charity on the spouse's behalf in lieu of honoraria) which 
exceed $200 from any one source, and the date on which the services 
were provided; and
    (iii) With respect to a spouse or dependent child, the type and 
source, and the amount or value (category or actual amount, in 
accordance with Sec.  2634.302), of all other income exceeding $200 
from any one source, such as investment income from interests in 
property (if the property itself is reportable according to Sec.  
2634.301).

    Example 1: The spouse of a filer is employed as a teller at Bank 
X and earns $50,000 per year. The report must disclose that the 
spouse is employed by Bank X. The amount of the spouse's earnings 
need not be disclosed.
    Example 2: The spouse of a reporting individual is self-employed 
as a pediatrician. The report must disclose her self-employment as a 
physician, but need not disclose the amount of income.

    (2) Gifts and reimbursements. For purposes of Sec.  2634.304, gifts 
and reimbursements received by a spouse or dependent child, unless the 
gift was given to the spouse or dependent child totally independent of 
their relationship to the filer.
    (3) Interests in property, transactions, and liabilities. For 
purposes of Sec. Sec.  2634.301, 2634.303, 2634.305, and 2634.309, all 
information concerning property interests, transactions, or liabilities 
referred to by those sections of a spouse or dependent child.
    (b) Exception. For reports filed as a new entrant, nominee, or 
candidate under Sec.  2634.201(b) through (d), no information regarding 
gifts and reimbursements or transactions is required for a spouse or 
dependent child.
    (c) Divorce and separation. A reporting individual need not report 
any information about:
    (1) A spouse living separate and apart from the reporting 
individual with the intention of terminating the marriage or providing 
for permanent separation;
    (2) A former spouse or a spouse from whom the reporting individual 
is permanently separated; or
    (3) Any income or obligations of the reporting individual arising 
from dissolution of the reporting individual's marriage or permanent 
separation from a spouse.
    (d) Unusual circumstances. In very rare cases, certain interests in 
property, transactions, and liabilities of a spouse or a dependent 
child are excluded from reporting requirements, provided that each 
requirement of this paragraph is strictly met.
    (1) The filer must certify without qualification that the item 
represents the spouse's or dependent child's sole financial interest or 
responsibility, and that the filer has no knowledge regarding that 
item;
    (2) The item must not be in any way, past or present, derived from 
the income, assets or activities of the filer; and
    (3) The filer must not derive, or expect to derive, any financial 
or economic benefit from the item.

    Note to paragraph (d): The exception described in paragraph (d) 
is not available to most filers. A filer who files a joint tax 
return with a spouse will normally be deemed to derive a financial 
or economic benefit from every financial interest of the spouse, and 
the

[[Page 69217]]

filer will not be able to rely on this exception. If a filer and the 
filer's spouse cohabitate, share any expenses, or are jointly 
responsible for the care of children, the filer will be deemed to 
derive an economic benefit from every financial interest of the 
spouse.

    Example: The spouse of a filer shares in paying expenses or 
taxes of the marriage or family (for example, any such item as: a 
household item, food, clothing, vacation, automobile maintenance or 
fuel, any child-related expense, income tax, or real estate tax, 
etc.). The spouse of a filer has a brokerage account. The spouse 
does not share any information about the holdings and does not want 
the information disclosed on a financial disclosure statement. The 
filer must disclose the holdings in the spouse's brokerage account 
because the filer is deemed to derive a financial or economic 
benefit from any asset of the filer's spouse who shares in paying 
expenses or taxes of the marriage or family.


Sec.  2634.312   Trusts, estates, and investment funds.

    (a) In general. (1) Except as otherwise provided in this section, 
each financial disclosure report must include the information required 
by this subpart about the holdings of and income from the holdings of 
any trust, estate, investment fund or other financial arrangement from 
which income is received by, or with respect to which a beneficial 
interest in principal or income is held by, the filer, the filer's 
spouse, or dependent child.
    (2) Information about the underlying holdings of a trust is 
required if the filer, filer's spouse, or dependent child currently is 
entitled to receive income from the trust or is entitled to access the 
principal of the trust. If a filer, filer's spouse, or dependent child 
has a beneficial interest in a trust that either will provide income or 
the ability to access the principal in the future, the filer should 
determine whether there is a vested interest in the trust under 
controlling state law. However, no information about the underlying 
holdings of the trust is required for a nonvested beneficial interest 
in the principal or income of a trust.

    Note to paragraph (a): Nothing in this section requires the 
reporting of the holdings or income of a revocable inter vivos trust 
(also known as a ``living trust'') with respect to which the filer, 
the filer's spouse, or dependent child has only a remainder 
interest, whether or not vested, provided that the grantor of the 
trust is neither the filer, the filer's spouse, nor the filer's 
dependent child. Furthermore, nothing in this section requires the 
reporting of the holdings or income of a revocable inter vivos trust 
from which the filer, the filer's spouse, or dependent child 
receives any discretionary distribution, provided that the grantor 
of the trust is neither the filer, the filer's spouse, nor the 
filer's dependent child.

    (b) Qualified trusts and excepted trusts. (1) A filer should not 
report information about the holdings of or income from holdings of, 
any qualified blind trust (as defined in Sec.  2634.402) or any 
qualified diversified trust (as defined in Sec.  2634.402). For a 
qualified blind trust, a public financial disclosure report must 
disclose the category of the aggregate amount of the trust's income 
attributable to the beneficial interest of the filer, the filer's 
spouse, or dependent child in the trust. For a qualified diversified 
trust, a public financial disclosure report must disclose the category 
of the aggregate amount of income with respect to such a trust which is 
actually received by the filer, the filer's spouse, or dependent child, 
or applied for the benefit of any of them.
    (2) In the case of an excepted trust, a filer should indicate the 
general nature of its holdings, to the extent known, but will not 
otherwise need to report information about the trust's holdings or 
income from holdings. The category of the aggregate amount of income 
from an excepted trust which is received by the filer, the filer's 
spouse, or dependent child must be reported on public financial 
disclosure reports. For purposes of this part, the term ``excepted 
trust'' means a trust:
    (i) Which was not created directly by the filer, spouse, or 
dependent child; and
    (ii) The holdings or sources of income of which the filer, spouse, 
or dependent child have no specific knowledge through a report, 
disclosure, or constructive receipt, whether intended or inadvertent.
    (c) Excepted investment funds. (1) No information is required under 
paragraph (a) of this section about the underlying holdings of or 
income from underlying holdings of an excepted investment fund as 
defined in paragraph (c)(2) of this section, except that the fund 
itself must be identified as an interest in property and/or a source of 
income. Filers must also disclose the category of value of the fund 
interest held; aggregate amount of income from the fund which is 
received by the filer, the filer's spouse, or dependent child; and 
value of any transactions involving shares or units of the fund.
    (2) For purposes of financial disclosure reports filed under the 
provisions of this part, an ``excepted investment fund'' means a widely 
held investment fund (whether a mutual fund, regulated investment 
company, common trust fund maintained by a bank or similar financial 
institution, pension or deferred compensation plan, or any other pooled 
investment fund), if:
    (i)(A) The fund is publicly traded or available; or
    (B) The assets of the fund are widely diversified; and
    (ii) The filer neither exercises control over nor has the ability 
to exercise control over the financial interests held by the fund.
    (3) A fund is widely diversified if it does not have a stated 
policy of concentrating its investments in any industry, business, or 
single country other than the United States or bonds of a single state 
within the United States.

    Note to paragraph (c): The fact that an investment fund 
qualifies as an excepted investment fund is not relevant to a 
determination as to whether the investment qualifies for an 
exemption to the criminal conflict of interest statute at 18 U.S.C. 
208(a), pursuant to part 2640 of this chapter. Some excepted 
investment funds qualify for exemptions pursuant to part 2640, while 
other excepted investment funds do not qualify for such exemptions. 
If an employee holds an excepted investment fund that is not exempt 
from 18 U.S.C. 208(a), the ethics official may need additional 
information from the filer to determine if the holdings of the fund 
create a conflict of interest and should advise the employee to 
monitor the fund's holdings for potential conflicts of interest.

Sec.  2634.313   Special rules.

    (a) Political campaign funds. Political campaign funds, including 
campaign receipts and expenditures, need not be included in any report 
filed under this part. However, if the individual has authority to 
exercise control over the fund's assets for personal use rather than 
campaign or political purposes, that portion of the fund over which 
such authority exists must be reported.
    (b) Reporting standards. (1) A filer may attach to the financial 
disclosure report, a copy of a statement which, in a clear and concise 
fashion, readily discloses all information that the filer would 
otherwise have been required to enter, but only if authorized by the 
designated agency ethics official or for reports that are reviewed by 
the Office of Government Ethics, the Director. The filer must annotate 
the report clearly to the extent necessary to identify information 
required by this part, including, when required, the identification of 
assets as excepted investment funds and the identification of income 
types. In addition, the statement must identify all income required to 
be disclosed for the entire reporting period. Any statement attached to 
a financial disclosure report and its contents may be subject to public 
release. A filer who attaches a statement to a reporting form is solely 
responsible for redacting personal

[[Page 69218]]

information not otherwise subject to disclosure prior to filing the 
financial disclosure report (e.g., account numbers, addresses, etc.).
    (2) In lieu of reporting the category of amount or value of any 
item listed in any report filed pursuant to this subpart, a filer may 
report the actual dollar amount of such item.

Subpart D--Qualified Trusts


Sec.  2634.401  Overview.

    (a) Purpose. The Ethics in Government Act of 1978 created two types 
of qualified trusts, the qualified blind trust and the qualified 
diversified trust, that may be used by employees to reduce real or 
apparent conflicts of interest. The primary purpose of an executive 
branch qualified trust is to confer on an independent trustee and any 
other designated fiduciary the sole responsibility to administer the 
trust and to manage trust assets without participation by, or the 
knowledge of, any interested party or any representative of an 
interested party. This responsibility includes the duty to decide when 
and to what extent the original assets of the trust are to be sold or 
disposed of, and in what investments the proceeds of sale are to be 
reinvested. Because the requirements set forth in the Ethics in 
Government Act and this regulation assure true ``blindness,'' employees 
who have a qualified trust cannot be influenced in the performance of 
their official duties by their financial interests in the trust assets. 
Their official actions, under these circumstances, should be free from 
collateral attack arising out of real or apparent conflicts of 
interest.
    (b) Scope. Two characteristics of the qualified trust assure that 
true ``blindness'' exists: The independence of the trustee and the 
restriction on communications between the independent trustee and the 
interested parties. In order to serve as a trustee for an executive 
branch qualified trust, an entity must meet the strict requirements for 
independence set forth in the Ethics in Government Act and this 
regulation. Restrictions on communications also reinforce the 
independence of the trustee from the interested parties. During both 
the establishment of the trust and the administration of the trust, 
communications are limited to certain reports that are required by the 
Act and to written communications that are pre-screened by the Office 
of Government Ethics. No other communications, even about matters not 
connected to the trust, are permitted between the independent trustee 
and the interested parties.


Sec.  2634.402   Definitions.

    As used in this subpart:
    (a) Director means the Director of the Office of Government Ethics.
    (b) Employee means an officer or employee of the executive branch 
of the United States.
    (c) Independent trustee means a trustee who meets the requirements 
of Sec.  2634.405 and who is approved by the Director under this 
subpart.
    (d) Interested party means the President, the Vice President, an 
employee, a nominee or candidate as described in Sec.  2634.201, and 
the spouse and any minor or dependent child of the President, Vice 
President, employee, or a nominee or candidate as described in Sec.  
2634.201, in any case in which the employee, spouse, or minor or 
dependent child has a beneficial interest in the principal or income of 
a trust proposed for certification under this subpart or certified 
under this subpart.
    (e) Qualified blind trust means a trust in which the interested 
party has a beneficial interest and which:
    (1) Is certified pursuant to Sec.  2634.407 by the Director;
    (2) Has a portfolio as specified in Sec.  2634.406(a);
    (3) Follows the model trust document prepared by the Office of 
Government Ethics; and
    (4) Has an independent trustee as defined in Sec.  2634.405.
    (f) Qualified diversified trust means a trust in which the 
interested party has a beneficial interest and which:
    (1) Is certified pursuant to Sec.  2634.407 by the Director;
    (2) Has a portfolio as specified in Sec.  2634.406(b);
    (3) Follows the model trust document prepared by the Office of 
Government Ethics; and
    (4) Has an independent trustee as defined in Sec.  2634.405.
    (g) Qualified trust means a trust described in the Ethics in 
Government Act of 1978 and this regulation and certified by the 
Director under this subpart. There are two types of qualified trusts, 
the qualified blind trust and the qualified diversified trust.


Sec.  2634.403   General description of trusts.

    (a) Qualified blind trust. (1) The qualified blind trust is the 
most universally adaptable qualified trust. An interested party may put 
most types of assets (such as cash, stocks, bonds, mutual funds, or 
real estate) into a qualified blind trust.
    (2) In the case of a qualified blind trust, 18 U.S.C. 208 and other 
Federal conflict of interest statutes and regulations apply to the 
assets that an interested party transfers to the trust until such time 
as he or she is notified by the independent trustee that such asset has 
been disposed of or has a value of less than $1,000. Because the 
interested party knows what assets he or she placed in the trust and 
there is no requirement that these assets be diversified, the 
possibility still exists that the interested party could be influenced 
in the performance of official duties by those interests.
    (b) Qualified diversified trust. (1) An interested party may put 
only readily marketable securities into a qualified diversified trust. 
In addition, the portfolio must meet the diversification requirements 
of Sec.  2634.406(b)(2).
    (2) In the case of a qualified diversified trust, the conflict of 
interest laws do not apply to the assets that an interested party 
transfers to the trust. Because the assets that an interested party 
puts into this trust must meet the diversification requirements set 
forth in this regulation, the diversification achieves ``blindness'' 
with regard to the initial assets.
    (3) Special notice for Presidential appointees--(i) In general. In 
any case in which the establishment of a qualified diversified trust is 
contemplated with respect to an individual whose nomination is being 
considered by a Senate committee, that individual must inform the 
committee of the intention to establish a qualified diversified trust 
at the time of filing a financial disclosure report with the committee.
    (ii) Applicability. Paragraph (b)(3)(i) of this section is not 
applicable to members of the uniformed services or Foreign Service 
officers. The special notice requirement of this section will not 
preclude an individual from seeking the certification of a qualified 
blind trust or qualified diversified trust after the Senate has given 
its advice and consent to a nomination.
    (c) Conflict of interest laws. In the case of each type of trust, 
the conflict of interest laws do not apply to the assets that the 
independent trustee or any other designated fiduciary adds to the 
trust.


Sec.  2634.404   Summary of procedures for creation of a qualified 
trust.

    (a) Consultation with the Office of Government Ethics. Any 
interested party (or that party's representative) who is considering 
setting up a qualified blind or qualified diversified trust must 
contact the Office of Government Ethics prior to beginning the process 
of creating the trust. The Office of Government Ethics is the only 
entity that has the authority to certify a qualified trust. Because an 
interested

[[Page 69219]]

party must propose, for the approval of the Office of Government 
Ethics, an entity to serve as the independent trustee, the Office of 
Government Ethics will explain the requirements that an entity must 
meet in order to qualify as an independent trustee. Such information is 
essential in order for the interested party to interview entities for 
the position of independent trustee. The Office of Government Ethics 
will also explain the restrictions on the communications between the 
interested parties and the proposed trustee.
    (b) Selecting an independent trustee. After consulting with the 
Office of Government Ethics, the interested party may interview 
entities who meet the requirements of Sec.  2634.405(a) in order to 
find one to serve as an independent trustee. At an interview, the 
interested party may ask general questions about the institution, such 
as how long it has been in business, its policies and philosophy in 
managing assets, the types of clients it serves, its prior performance 
record, and the qualifications of the personnel who would be handling 
the trust. Because the purpose of a qualified trust is to give an 
independent trustee the sole responsibility to manage the trust assets 
without the interested party having any knowledge of the identity of 
the assets in the trust, the interested party may communicate his or 
her general financial interests and needs to any institution which he 
or she interviews. For example, the interested party may communicate a 
preference for maximizing income or long-term capital gain or for 
balancing safety of capital with growth. The interested party may not 
give more specific instructions to the proposed trustee, such as 
instructing it to maintain a specific allocation between stocks and 
bonds, or choosing stocks in a particular industry.
    (c) The proposed independent trustee. (1) The entity selected by an 
interested party as a possible trustee must contact the Office of 
Government Ethics to receive guidance on the qualified trust program. 
The Office of Government Ethics will ask the proposed trustee to submit 
a letter describing its past and current contacts, including banking 
and client relationships, with the interested party, spouse, and minor 
or dependent children. The extent of these contacts will determine 
whether the proposed trustee is independent under the Act and this 
regulation.
    (2) In addition, an interested party may select an investment 
manager or other fiduciary. Other proposed fiduciaries selected by an 
interested party, such as an investment manager, must meet the 
independence requirements.
    (d) Approval of the independent trustee. If the Director determines 
that the proposed trustee meets the requirements of independence, the 
Director will approve, in writing, that entity as the trustee for the 
qualified trust.
    (e) Confidentiality agreement. If any person other than the 
independent trustee or designated fiduciary has access to information 
that may not be shared with an interested party or that party's 
representative, that person must file a Confidentiality Agreement with 
the Office of Government Ethics. Persons filing a Confidentiality 
Agreement must certify that they will not make prohibited contacts with 
an interested party or that party's representative.
    (f) Drafting the trust instrument. The representative of the 
interested party will use the model documents provided by the Office of 
Government Ethics to draft the trust instrument. There are two annexes 
to the model trust document: An annex describing any current, 
permissible banking or client relationships between any interested 
parties and the independent trustee or other fiduciaries and an annex 
listing the initial assets that the interested party transfers to the 
trust. Any deviations from the model trust documents must be approved 
by the Director.
    (g) Certification of the trust. The representative then presents 
the unexecuted trust instrument to the Office of Government Ethics for 
review. If the Director finds that the instrument conforms to one of 
the model documents, the Director will certify the qualified trust. 
After certification, the interested party and the independent trustee 
will sign the trust instrument. They will submit a copy of the executed 
instrument to the Office of Government Ethics within 30 days of 
execution. The interested party will then transfer the assets to the 
trust.

    Note to paragraph (g): Existing qualified trusts approved under 
any State law or by the legislative or judicial branches of the 
Federal Government of the United States will not be recertified by 
the Director. Individuals with existing qualified trusts who are 
required to file a financial disclosure report upon entering the 
executive branch, becoming a nominee for a position appointed by the 
President and subject to confirmation by the Senate, or becoming a 
candidate for President or Vice President must file a complete 
financial disclosure form that includes a full disclosure of items 
in the trust. After filing a complete form, the individual may 
establish a qualified trust under the policies and provisions of 
this rule.

Sec.  2634.405   Standards for becoming an independent trustee or other 
fiduciary.

    (a) Eligible entities. An interested party must select an entity 
that meets the requirements of this regulation to serve as an 
independent trustee or other fiduciary. The type of entity that is 
allowed to serve as an independent trustee is a financial institution, 
not more than 10 percent of which is owned or controlled by a single 
individual, which is:
    (1) A bank, as defined in 12 U.S.C. 1841(c); or
    (2) An investment adviser, as defined in 15 U.S.C. 80b-2(a)(11).

    Note to paragraph (a):  By the terms of paragraph (3)(A)(i) of 
section 102(f) of the Act, an individual who is an attorney, a 
certified public accountant, a broker, or an investment advisor is 
also eligible to serve as an independent trustee. However, 
experience of the Office of Government Ethics over the years 
dictates the necessity of limiting service as a trustee or other 
fiduciary to the financial institutions referred to in this 
paragraph, to maintain effective administration of trust 
arrangements and preserve confidence in the Federal qualified trust 
program. Accordingly, under its authority pursuant to paragraph 
(3)(D) of section 102(f) of the Act, the Office of Government Ethics 
will not approve proposed trustees or other fiduciaries who are not 
financial institutions, except in unusual cases where compelling 
necessity is demonstrated to the Director, in his or her sole 
discretion.

    (b) Orientation. After the interested party selects a proposed 
trustee, that proposed trustee should contact the Office of Government 
Ethics for an orientation about the qualified trust program.
    (c) Independence requirements. The Director will determine that a 
proposed trustee is independent if:
    (1) The entity is independent of and unassociated with any 
interested party so that it cannot be controlled or influenced in the 
administration of the trust by any interested party;
    (2) The entity is not and has not been affiliated with any 
interested party, and is not a partner of, or involved in any joint 
venture or other investment or business with, any interested party; and
    (3) Any director, officer, or employee of such entity:
    (i) Is independent of and unassociated with any interested party so 
that such director, officer, or employee cannot be controlled or 
influenced in the administration of the trust by any interested party;
    (ii) Is not and has not been employed by any interested party, not 
served as a director, officer, or employee of any organization 
affiliated with any interested party, and is not and has not

[[Page 69220]]

been a partner of, or involved in any joint venture or other investment 
with, any interested party; and
    (iii) Is not a relative of any interested party.
    (d) Required documents. In order to make this determination, the 
proposed trustee must submit the following documentation to the 
Director:
    (1) A letter describing its past and current contacts, including 
banking and client relationships, with the interested party, spouse, or 
minor or dependent child; and
    (2) A Certificate of Independence, which follows the model 
Certificate of Independence prepared by the Office of Government 
Ethics. Any variation from the model document must be approved by the 
Director.
    (e) Determination. If the Director determines that the current 
relationships, if any, between the interested party and the independent 
trustee do not violate the independence requirements, these 
relationships will be disclosed in an annex to the trust instrument. No 
additional relationships with the independent trustee may be 
established unless they are approved by the Director.
    (f) Approval of the trustee. If the Director determines that the 
proposed trustee meets applicable requirements, the Office of 
Government Ethics will send the interested parties and their 
representatives a letter indicating its approval of a proposed trustee.
    (g) Revocation. The Director may revoke the approval of a trustee 
or any other designated fiduciary pursuant to the rules of subpart E of 
this part.
    (h) Adding fiduciaries. An independent trustee may employ or 
consult other entities, such as investment counsel, investment 
advisers, accountants, and tax preparers, to assist in any capacity to 
administer the trust or to manage and control the trust assets, if all 
of the following conditions are met:
    (1) When any interested party or any representative of an 
interested party learns about such employment or consultation, the 
person must sign the trust instrument as a party, subject to the prior 
approval of the Director;
    (2) Under all the facts and circumstances, the person is determined 
pursuant to the requirements for eligible entities under paragraphs (a) 
through (f) of this section to be independent of an interested party 
with respect to the trust arrangement;
    (3) The person is instructed by the independent trustee or other 
designated fiduciary not to disclose publicly or to any interested 
party information which might specifically identify current trust 
assets or those assets which have been sold or disposed of from trust 
holdings, other than information relating to the sale or disposition of 
original trust assets in the case of the blind trust; and
    (4) The person is instructed by the independent trustee or other 
designated fiduciary to have no direct communication with respect to 
the trust with any interested party or any representative of an 
interested party, and to make all indirect communications with respect 
to the trust only through the independent trustee, pursuant to Sec.  
2634.408(a).


Sec.  2634.406   Initial portfolio.

    (a) Qualified blind trust. (1) An interested party may not place 
any asset in the blind trust that any interested party would be 
prohibited from holding by the Act, by the implementing regulations, or 
by any other applicable Federal law, Executive order, or regulation.
    (2) Except as described in paragraph (a)(1) of this section, an 
interested party may put most types of assets (such as cash, stocks, 
bonds, mutual funds, or real estate) into a qualified blind trust.
    (b) Qualified diversified trust. (1) The initial portfolio may not 
contain securities of entities having substantial activities in an 
employee's primary area of Federal responsibility. If requested by the 
Director, the designated agency ethics official for the employee's 
agency must certify whether the proposed portfolio meets this standard.
    (2) The initial assets of a diversified trust must comprise a well-
diversified portfolio of readily marketable securities.
    (i) A portfolio will be well diversified if:
    (A) The value of the securities concentrated in any particular or 
limited economic or geographic sector is no more than 20 percent of the 
total; and
    (B) The value of the securities of any single entity (other than 
the United States Government) is no more than five percent of the 
total.
    (ii) A security will be readily marketable if:
    (A) Daily price quotations for the security appear regularly in 
media, including Web sites, that publish the information; and
    (B) The trust holds the security in a quantity that does not unduly 
impair liquidity.
    (iii) The interested party or the party's representative must 
provide the Director with a detailed list of the securities proposed 
for inclusion in the portfolio, specifying their fair market value and 
demonstrating that these securities meet the requirements of this 
paragraph. The Director will determine whether the initial assets of 
the trust proposed for certification comprise a widely diversified 
portfolio of readily marketable securities.
    (c) Hybrid qualified trust. A qualified trust may contain both a 
blind portfolio of assets and a diversified portfolio of assets. The 
Office of Government Ethics refers to this arrangement as a hybrid 
qualified trust.


Sec.  2634.407  Certification of qualified trust by the Office of 
Government Ethics.

    (a) General. After the Director approves the independent trustee, 
the interested party or a representative will prepare the trust 
instrument for review by the Director. The representative of the 
interested party will use the model documents provided by the Office of 
Government Ethics to draft the trust instrument. Any deviations from 
the model trust documents must be approved by the Director. No trust 
will be considered qualified for purposes of the Act until the Office 
of Government Ethics certifies the trust prior to execution.
    (b) Certification procedures. (1) After the Director has approved 
the trustee, the interested party or the party's representative must 
submit the following documents to the Office of Government Ethics for 
review:
    (i) A copy of the proposed, unexecuted trust instrument;
    (ii) A list of the assets which the interested party proposes to 
place in the trust; and
    (iii) In the case of a pre-existing trust as described in Sec.  
2634.409 which the interested party asks the Office of Government 
Ethics to certify, a copy of the pre-existing trust instrument and a 
list of that trust's assets categorized as to value in accordance with 
Sec.  2634.301(d).
    (2) In order to assure timely trust certification, the interested 
parties and their representatives will be responsible for the 
expeditious submission to the Office of Government Ethics of all 
required documents and responses to requests for information.
    (3) The Director will indicate that he or she has certified the 
trust in a letter to the interested parties or their representatives. 
The interested party and the independent trustee may then execute the 
trust instrument.
    (4) Within 30 days after the trust is certified under this section 
by the Director, the interested party or that party's representative 
must file with the Director a copy of the executed trust instrument and 
all annexed schedules (other than those provisions which

[[Page 69221]]

relate to the testamentary disposition of the trust assets), including 
a list of the assets which were transferred to the trust, categorized 
as to value of each asset in accordance with Sec.  2634.301(d).
    (5) Once a trust is classified as a qualified blind or qualified 
diversified trust in the manner discussed in this section, Sec.  
2634.312(b) applies less inclusive financial disclosure requirements to 
the trust assets.
    (c) Certification standard. A trust will be certified for purposes 
of this subpart only if:
    (1) It is established to the Director's satisfaction that the 
requirements of section 102(f) of the Act and this subpart have been 
met; and
    (2) The Director determines that approval of the trust arrangement 
as a qualified trust is appropriate to assure compliance with 
applicable laws and regulations.
    (d) Revocation. The Director may revoke certification of a trust 
pursuant to the rules of subpart E of this part.


Sec.  2634.408   Administration of a qualified trust.

    (a) General rules on communications between the independent 
fiduciaries and the interested parties. (1) There must be no direct or 
indirect communications with respect to the qualified trust between an 
interested party or the party's representative and the independent 
trustee or any other designated fiduciary with respect to the trust 
unless:
    (i) In the case of the blind trust, the proposed communication is 
approved in advance by the Director and it relates to:
    (A) A distribution of cash or other unspecified assets of the 
trust;
    (B) The general financial interest and needs of the interested 
party including, but not limited to, a preference for maximizing income 
or long-term capital gain;
    (C) Notification to the independent trustee by the employee that 
the employee is prohibited by a subsequently applicable statute, 
Executive order, or regulation from holding an asset, and to direction 
to the independent trustee that the trust may not hold that asset; or
    (D) Instructions to the independent trustee to sell all of an asset 
which was initially placed in the trust by an interested party, and 
which in the determination of the employee creates a real or apparent 
conflict due to duties the employee subsequently assumed (but nothing 
herein requires such instructions); or
    (ii) In the case of the diversified trust, the proposed 
communication is approved in advance by the Director and it relates to:
    (A) A distribution of cash or other unspecified assets of the 
trust;
    (B) The general financial interest and needs of the interested 
party including, but not limited to, a preference for maximizing income 
or long-term capital gain; or
    (C) Information, documents, and funds concerning income tax 
obligations arising from sources other than the property held in trust 
that are required by the independent trustee to enable him to file, on 
behalf of an interested party, the personal income tax returns and 
similar tax documents which may contain information relating to the 
trust.
    (2) The person initiating a communication approved under paragraphs 
(a)(1)(i) or (a)(1)(ii) of this section must file a copy of the 
communication with the Director within five days of the date of its 
transmission.

    Note to paragraph (a):  By the terms of paragraph (3)(C)(vi) of 
section 102(f) of the Act, communications which solely consist of 
requests for distributions of cash or other unspecified assets of 
the trust are not required to be in writing. Further, there is no 
statutory mechanism for pre-screening of proposed communications. 
However, experience of the Office of Government Ethics over the 
years dictates the necessity of prohibiting any oral communications 
between the trustee and an interested party with respect to the 
trust and pre-screening all proposed written communications, to 
prevent inadvertent prohibited communications and preserve 
confidence in the Federal qualified trust program. Accordingly, 
under its authority pursuant to paragraph (3)(D) of section 102(f) 
of the Act, the Office of Government Ethics will not approve 
proposed trust instruments that do not contain language conforming 
to this policy, except in unusual cases where compelling necessity 
is demonstrated to the Director, in his or her sole discretion.

    (b) Required reports from the independent trustee to the interested 
parties--(1) Quarterly reports. The independent trustee must, without 
identifying specifically an asset or holding, report quarterly to the 
interested parties and their representatives the aggregate market value 
of the assets representing the interested party's interest in the 
trust. The independent trustee must follow the model document for this 
report and must file a copy of the report, within five days of the date 
of its transmission, with the Director.
    (2) Annual report. In the case of a qualified blind trust, the 
independent trustee must, without identifying specifically an asset or 
holding, report annually to the interested parties and their 
representatives the aggregate amount of the trust's income attributable 
to the interested party's beneficial interest in the trust, categorized 
in accordance with Sec.  2634.302(b) to enable the employee to complete 
the public financial disclosure form. In the case of a qualified 
diversified trust, the independent trustee must, without identifying 
specifically an asset or holding, report annually to the interested 
parties and their representatives the aggregate amount actually 
distributed from the trust to the interested party or applied for the 
party's benefit. Additionally, in the case of the blind trust, the 
independent trustee must report on Schedule K-1 the net income or loss 
of the trust and any other information necessary to enable the 
interested party to complete an individual tax return. The independent 
trustee must follow the model document for each report and must file a 
copy of the report, within five days of the date of its transmission, 
with the Director.
    (3) Report of sale of asset. In the case of the qualified blind 
trust, the independent trustee must promptly notify the employee and 
the Director when any particular asset transferred to the trust by an 
interested party has been completely disposed of or when the value of 
that asset is reduced to less than $1,000. The independent trustee must 
file a copy of the report, within five days of the date of its 
transmission, with the Director.
    (c) Communications regarding trust and beneficiary taxes. The Act 
establishes special tax filing procedures to be used by the independent 
trustee and the trust beneficiaries in order to maintain the 
substantive separation between trust beneficiaries and trust 
administrators.
    (1) Trust taxes. Because a trust is a separate entity distinct from 
its beneficiaries, an independent trustee must file an annual fiduciary 
tax return for the trust (IRS Form 1041). The independent trustee is 
prohibited from providing the interested parties and their 
representatives with a copy of the trust tax return.
    (2) Beneficiary taxes. The trust beneficiaries must report income 
received from the trust on their individual tax returns.
    (i) For beneficiaries of qualified blind trusts, the independent 
trustee sends a modified K-1 summarizing trust income in appropriate 
categories to enable the beneficiaries to file individual tax returns. 
The independent trustee is prohibited from providing the interested 
parties or their representatives with the identity of the assets.
    (ii) For beneficiaries of qualified diversified trusts, the Act 
requires the independent trustee to file the

[[Page 69222]]

individual tax returns on behalf of the trust beneficiaries. The 
interested parties must give the independent trustee a power of 
attorney to prepare and file, on their behalf, the personal income tax 
returns and similar tax documents which may contain information 
relating to the trust. Appropriate Internal Revenue Service power of 
attorney forms will be used for this purpose. The beneficiaries must 
transmit to the trustee materials concerning taxable transactions and 
occurrences outside of the trust, pursuant to the requirements in each 
trust instrument which detail this procedure. This communication must 
be approved in advance by the Director in accordance with paragraph (a) 
of this section.
    (iii) Some qualified trust beneficiaries may pay estimated income 
taxes.
    (A) In order to pay the proper amount of estimated taxes each 
quarter, the beneficiaries of a qualified blind trust will need to 
receive information about the amount of income, if any, generated by 
the trust each quarter. To assist the beneficiaries, the independent 
trustee is permitted to send, on a quarterly basis, information about 
the amount of income generated by the trust in that quarter. This 
communication must be approved in advance by the Director in accordance 
with paragraph (a) of this section.
    (B) In order to pay the proper amount of estimated taxes each 
quarter, the independent trustee of a qualified diversified trust will 
need to receive information about the amount of income, if any, earned 
by the beneficiaries on assets that are not in the trust. To assist the 
independent trustee, the beneficiaries are permitted to send, on a 
quarterly basis, information about the amount of income they earned in 
that quarter on assets that are outside of the trust. This 
communication must be approved in advance by the Director in accordance 
with paragraph (a) of this section.
    (d) Responsibilities of the independent trustee and other 
fiduciaries. (1) Any independent trustee or any other designated 
fiduciary of a qualified trust may not knowingly and willfully, or 
negligently:
    (i) Disclose any information to an interested party or that party's 
representative with respect to the trust that may not be disclosed 
under title I of the Act, the implementing regulations, or the trust 
instrument;
    (ii) Acquire any holding:
    (A) Directly from an interested party or that party's 
representative without the prior written approval of the Director; or
    (B) The ownership of which is prohibited by, or not in accordance 
with, title I of the Act, the implementing regulations, the trust 
instrument, or with other applicable statutes and regulations;
    (iii) Solicit advice from any interested party or any 
representative of that party with respect to such trust, which 
solicitation is prohibited by title I of the Act, the implementing 
regulations, or the trust instrument; or
    (iv) Fail to file any document required by the implementing 
regulations or the trust instrument.
    (2) The independent trustee and any other designated fiduciary, in 
the exercise of their authority and discretion to manage and control 
the assets of the trust, may not consult or notify any interested party 
or that party's representative.
    (3) The independent trustee may not acquire by purchase, grant, 
gift, exercise of option, or otherwise, without the prior written 
approval of the Director, securities, cash, or other property from any 
interested party or any representative of an interested party.
    (4) Certificate of Compliance. An independent trustee and any other 
designated fiduciary must file, with the Director by May 15 following 
any calendar year during which the trust was in existence, a properly 
executed Certificate of Compliance that follows the model Certificate 
of Compliance prepared by the Office of Government Ethics. Any 
variation from the model must be approved by the Director.
    (5) In addition, the independent trustee and such fiduciary must 
maintain and make available for inspection by the Office of Government 
Ethics, as it may from time to time direct, the trust's books of 
account and other records and copies of the trust's tax returns for 
each taxable year of the trust.
    (e) Responsibilities of the interested parties and their 
representatives. (1) Interested parties to a qualified trust and their 
representatives may not knowingly and willfully, or negligently:
    (i) Solicit or receive any information about the trust that may not 
be disclosed under title I of the Act, the implementing regulations or 
the trust instrument; or
    (ii) Fail to file any document required by this subpart or the 
trust instrument.
    (2) The interested parties and their representatives may not take 
any action to obtain, and must take reasonable action to avoid 
receiving, information with respect to the holdings and the sources of 
income of the trust, including a copy of any trust tax return filed by 
the independent trustee, or any information relating to that return, 
except for the reports and information specified in paragraphs (b) and 
(c) of this section.
    (3) In the case of any qualified trust, the interested party must, 
within 30 days of transferring an asset, other than cash, to a 
previously established qualified trust, file a report with the 
Director, which identifies each asset, categorized as to value in 
accordance with Sec.  2634.301(d).
    (4) Any portfolio asset transferred to the trust by an interested 
party must be free of any restriction with respect to its transfer or 
sale, except as fully described in schedules attached to the trust 
instrument, and as approved by the Director.
    (5) During the term of the trust, the interested parties may not 
pledge, mortgage, or otherwise encumber their interests in the property 
held by the trust.
    (f) Amendment of the trust. The independent trustee and the 
interested parties may amend the terms of a qualified trust only with 
the prior written approval of the Director and upon a showing of 
necessity and appropriateness.


Sec.  2634.409   Pre-existing trusts.

    An interested party may place a pre-existing irrevocable trust into 
a qualified trust, which may then be certified by the Office of 
Government Ethics. This arrangement should be considered in the case of 
a pre-existing trust whose terms do not permit amendments that are 
necessary to satisfy the rules of this subpart. All of the relevant 
parties (including the employee, any other interested parties, the 
trustee of the pre-existing trust, and all of the other parties and 
beneficiaries of the pre-existing trust) will be required pursuant to 
section 102(f)(7) of the Act to enter into an umbrella trust agreement. 
The umbrella trust agreement will specify that the pre-existing trust 
will be administered in accordance with the provisions of this subpart. 
A parent or guardian may execute the umbrella trust agreement on behalf 
of a required participant who is a minor child. The Office of 
Government Ethics has prepared model umbrella trust agreements that the 
interested party can use in this circumstance. The umbrella trust 
agreement will be certified as a qualified trust if all of the 
requirements of this subpart are fulfilled under conditions where 
required confidentiality with respect to the trust can be assured.

[[Page 69223]]

Sec.  2634.410   Dissolution.

    Within 30 days of dissolution of a qualified trust, the interested 
party must file a report of the dissolution with the Director and a 
list of assets of the trust at the time of the dissolution, categorized 
as to value in accordance with Sec.  2634.301(d).


Sec.  2634.411   Reporting on financial disclosure reports.

    An employee who files a public or confidential financial disclosure 
report must report the trust on the financial disclosure report.
    (a) Public financial disclosure report. If the employee files a 
public financial disclosure report, the employee must report the trust 
as an asset, including the overall category of value of the trust. 
Additionally, in the case of a qualified blind trust, the employee must 
disclose the category of value of income earned by the trust. In the 
case of a qualified diversified trust, the employee must report the 
category of value of income received from the trust by the employee, 
the employee's spouse, or dependent child, or applied for the benefit 
of any of them.
    (b) Confidential financial disclosure report. In the case of a 
confidential financial disclosure report, the employee must report the 
trust as an asset.


Sec.  2634.412   Sanctions and enforcement.

    Section 2634.702 sets forth civil sanctions, as provided by 
sections 102(f)(6)(C)(i) and (ii) of the Act and as adjusted in 
accordance with the Federal Civil Penalties Inflation Adjustment Act, 
which apply to any interested party, independent trustee, or other 
trust fiduciary who violates the obligations under the Act, its 
implementing regulations, or the trust instrument. Subpart E of this 
part delineates the procedure which must be followed with respect to 
the revocation of trust certificates and trustee approvals.


Sec.  2634.413   Public access.

    (a) Documents subject to public disclosure requirements. The 
following qualified trust documents filed by a public filer, nominee, 
or candidate are subject to the public disclosure requirements of Sec.  
2634.603:
    (1) The executed trust instrument and any amendments (other than 
those provisions which relate to the testamentary disposition of the 
trust assets), and a list of the assets which were transferred to the 
trust, categorized as to the value of each asset;
    (2) The identity of each additional asset (other than cash) 
transferred to a qualified trust by an interested party during the life 
of the trust, categorized as to the value of each asset;
    (3) The report of the dissolution of the trust and a list of the 
assets of the trust at the time of the dissolution, categorized as to 
the value of each asset;
    (4) In the case of a blind trust, the lists provided by the 
independent trustee of initial assets placed in the trust by an 
interested party which have been sold or whose value is reduced to less 
than $1,000; and
    (5) The Certificates of Independence and Compliance.
    (b) Documents exempt from public disclosure requirements. The 
following documents are exempt from the public disclosure requirements 
of Sec.  2634.603 and also may not be disclosed to any interested 
party:
    (1) Any document (and the information contained therein) filed 
under the requirements of Sec.  2634.408(a) and (c); and
    (2) Any document (and the information contained therein) inspected 
under the requirements of Sec.  2634.408(d)(4) (other than a 
Certificate of Compliance).


Sec.  2634.414   OMB control number.

    The various model trust documents and Certificates of Independence 
and Compliance referenced in this subpart, together with the underlying 
regulatory provisions, are all approved by the Office of Management and 
Budget under control number 3209-0007.

Subpart E--Revocation of Trust Certificates and Trustee Approvals


Sec.  2634.501   Purpose and scope.

    (a) Purpose. This subpart establishes the procedures of the Office 
of Government Ethics for enforcement of the qualified blind trust, 
qualified diversified trust, and independent trustee provisions of 
title I of the Ethics in Government Act of 1978, as amended, and the 
regulation issued thereunder (subpart D of this part).
    (b) Scope. This subpart applies to all trustee approvals and trust 
certifications pursuant to Sec. Sec.  2634.405 and 2634.407, 
respectively.


Sec.  2634.502   Definitions.

    For purposes of this subpart (unless otherwise indicated), the term 
``trust restrictions'' means the applicable provisions of title I of 
the Ethics in Government Act of 1978, subpart D of this part, and the 
trust instrument.


Sec.  2634.503   Determinations.

    (a) Violations. If the Office of Government Ethics learns that 
violations or apparent violations of the trust restrictions exist that 
may warrant revocations of trust certification or trustee approval 
previously granted under Sec.  2634.407 or Sec.  2634.405, the Director 
may, pursuant to the procedure specified in paragraph (b) of this 
section, appoint an attorney on the staff of the Office of Government 
Ethics to review the matter. After completing the review, the attorney 
will submit findings and recommendations to the Director.
    (b) Review procedure. (1) In the review of the matter, the attorney 
will perform such examination and analysis of violations or apparent 
violations as the attorney deems reasonable.
    (2) The attorney will provide an independent trustee and, if 
appropriate, the interested parties, with:
    (i) Notice that revocation of trust certification or trustee 
approval is under consideration pursuant to the procedures in this 
subpart;
    (ii) A summary of the violation or apparent violations that will 
state the preliminary facts and circumstances of the transactions or 
occurrences involved with sufficient particularity to permit the 
recipients to determine the nature of the allegations; and
    (iii) Notice that the recipients may present evidence and submit 
statements on any matter in issue within 10 business days of the 
recipient's actual receipt of the notice and summary.
    (c) Determination. (1) In making determinations with respect to the 
violations or apparent violations under this section, the Director will 
consider the findings and recommendations submitted by the attorney, as 
well as any written statements submitted by the independent trustee or 
interested parties.
    (2) The Director may take one of the following actions upon finding 
a violation or violations of the trust restrictions:
    (i) Issue an order revoking trust certification or trustee 
approval;
    (ii) Resolve the matter through any other remedial action within 
the Director's authority;
    (iii) Order further examination and analysis of the violation or 
apparent violation; or
    (iv) Decline to take further action.
    (3) If the Director issues an order of revocation, parties to the 
trust instrument will receive prompt written notification. The notice 
will state the basis for the revocation and will inform the parties of 
the consequence of the revocation, which will be either of the 
following:
    (i) The trust is no longer a qualified blind or qualified 
diversified trust for any purpose under Federal law; or

[[Page 69224]]

    (ii) The independent trustee may no longer serve the trust in any 
capacity and must be replaced by a successor, who is subject to the 
prior written approval of the Director.

Subpart F--Procedure


Sec.  2634.601   Report forms.

    (a) This section prescribes the required forms for financial 
disclosure made pursuant to this part.
    (1) New entrant, annual, and termination public financial 
disclosure reports. The Office of Government Ethics provides a form for 
publicly disclosing the information described in subpart B of this part 
in connection with new entrant, nominee, incumbent, and termination 
reports filed pursuant to Sec.  2634.201(a) through (e). That form is 
the OGE Form 278e (Executive Branch Personnel Public Financial 
Disclosure Report) or any successor form.
    (2) Periodic transaction public financial disclosure reports. The 
Office of Government Ethics provides a form for publicly disclosing the 
information described in subpart B of this part in connection with 
periodic transaction public financial disclosure reports filed pursuant 
to Sec.  2634.201(f). That form is the OGE Form 278-T (Periodic 
Transaction Report), or any successor form.
    (3) Confidential financial disclosure reports. The Office of 
Government Ethics also provides a form for confidentially disclosing 
information described in subpart I of this part in connection with 
confidential financial disclosure reports filed pursuant to Sec.  
2634.903. That form is the OGE Form 450 (Confidential Financial 
Disclosure Report), or any successor form.
    (b) Supplies of the OGE Form 278e, OGE Form 278-T, and OGE Form 450 
are to be reproduced locally by each agency. The Office of Government 
Ethics has published copies on its official Web site.
    (c) Subject to the prior written approval of the Director of the 
Office of Government Ethics, an agency may require employees to file 
additional confidential financial disclosure forms which supplement the 
standard form referred to in paragraph (a)(3) of this section, if 
necessary because of special or unique agency circumstances. The 
Director may approve such agency forms when, in his opinion, the 
supplementation is shown to be necessary for a comprehensive and 
effective agency ethics program to identify and resolve conflicts of 
interest. See Sec. Sec.  2634.103 and 2634.901.
    (d) The information collection and recordkeeping requirements have 
been approved by the Office of Management and Budget under control 
number 3209-0001 for the OGE Form 278e, and control number 3209-0006 
for OGE Form 450. OGE Form 278-T has been determined not to require an 
OMB paperwork control number, as the form is used exclusively by 
current Government employees.


Sec.  2634.602   Filing of reports.

    (a) Except as otherwise provided in this section, the reporting 
individual will file financial disclosure reports required under this 
part with the designated agency ethics official or the delegate at the 
agency where the individual is employed, or was employed immediately 
prior to termination of employment, or in which the individual will 
serve, unless otherwise directed by the employee's home agency. 
Detailees will file with their home agency. Reports are due at the 
times indicated in Sec.  2634.201 (public disclosure) or Sec.  2634.903 
(confidential disclosure), unless an extension is granted pursuant to 
the provisions of subparts B or I of this part. Filers must certify 
that the information contained in the report is true, correct, and 
complete to their best knowledge.
    (b) The President, the Vice President, any independent counsel, and 
persons appointed by independent counsel under 28 U.S.C. chapter 40, 
will file the public financial disclosure reports required under this 
part with the Director of the Office of Government Ethics.
    (c)(1) Each agency receiving the public financial disclosure 
reports required to be filed under this part by the following 
individuals must transmit copies to the Director of the Office of 
Government Ethics:
    (i) The Postmaster General;
    (ii) The Deputy Postmaster General;
    (iii) The Governors of the Board of Governors of the United States 
Postal Service;
    (iv) The designated agency ethics official;
    (v) Employees of the Executive Office of the President who are 
appointed under 3 U.S.C. 105(a)(2)(A) or (B) or 3 U.S.C. 107(a)(1)(A) 
or (b)(1)(A)(i), and employees of the Office of Vice President who are 
appointed under 3 U.S.C. 106(a)(1)(A) or (B); and
    (vi) Officers and employees in, and nominees to, offices or 
positions which require confirmation by the Senate, other than members 
of the uniformed services.
    (2) Prior to transmitting a copy of a report to the Director of the 
Office of Government Ethics, the designated agency ethics official or 
the delegate must review that report in accordance with Sec.  2634.605, 
except for the designated agency ethics official's own report, which 
must be reviewed by the agency head or by a delegate of the agency 
head.
    (3) For nominee reports, the Director of the Office of Government 
Ethics must forward a copy to the Senate committee that is considering 
the nomination. See Sec.  2634.605(c) for special procedures regarding 
the review of such reports.
    (d) The Director of the Office of Government Ethics must file the 
Director's financial disclosure report with the Office of Government 
Ethics, which will make it immediately available to the public in 
accordance with this part.
    (e) Candidates for President and Vice President identified in Sec.  
2634.201(d), other than an incumbent President or Vice President, must 
file their financial disclosure reports with the Federal Election 
Commission, which will review and send copies of such reports to the 
Director of the Office of Government Ethics.
    (f) Members of the uniformed services identified in Sec.  
2634.202(c) must file their financial disclosure reports with the 
Secretary concerned, or the Secretary's delegate.


Sec.  2634.603   Custody of and access to public reports.

    (a) Each agency must make available to the public in accordance 
with the provisions of this section those public reports filed with the 
agency by reporting individuals described under subpart B of this part.
    (b) This section does not require public availability of those 
reports filed by:
    (1) Any individual in the Office of the Director of National 
Intelligence, the Central Intelligence Agency, the Defense Intelligence 
Agency, the National Geospatial-Intelligence Agency, or the National 
Security Agency, or any individual engaged in intelligence activities 
in any agency of the United States, if the President finds or has found 
that, due to the nature of the office or position occupied by that 
individual, public disclosure of the report would, by revealing the 
identity of the individual or other sensitive information, compromise 
the national interest of the United States. Individuals referred to in 
this paragraph who are exempt from the public availability requirement 
may also be authorized, notwithstanding Sec.  2634.701, to file any 
additional reports necessary to protect their identity from public 
disclosure, if the President finds or has found that

[[Page 69225]]

such filings are necessary in the national interest; or
    (2) An independent counsel whose identity has not been disclosed by 
the Court under 28 U.S.C. chapter 40, or any person appointed by that 
independent counsel under such chapter.
    (c) Each agency will, within 30 days after any public report is 
received by the agency, permit inspection of the report by, or furnish 
a copy of the report to, any person who makes written application as 
provided by agency procedure. Agency reviewing officials and the 
support staffs who maintain the files, the staff of the Office of 
Government Ethics, and Special Agents of the Federal Bureau of 
Investigation who are conducting a criminal inquiry into possible 
conflict of interest violations need not submit an application. The 
agency may utilize Office of Government Ethics Form 201 for such 
applications. An application must state:
    (1) The requesting person's name, occupation, and address;
    (2) The name and address of any other person or organization on 
whose behalf the inspection or copy is requested; and
    (3) That the requesting person is aware of the prohibitions on 
obtaining or using the report set forth in paragraph (f) of this 
section.
    (d) Applications for the inspection of or copies of public reports 
will also be made available to the public throughout the period during 
which the report itself is made available, utilizing the procedures in 
paragraph (c) of this section.
    (e) The agency may require a reasonable fee, established by agency 
regulation, to recover the direct cost of reproduction or mailing of a 
public report, excluding the salary of any employee involved. A copy of 
the report may be furnished without charge or at a reduced charge if 
the agency determines that waiver or reduction of the fee is in the 
public interest. The criteria used by an agency to determine when a fee 
will be reduced or waived will be established by regulation. Agency 
regulations contemplated by paragraph (e) of this section do not 
require approval pursuant to Sec.  2634.103.
    (f) It is unlawful for any person to obtain or use a public report:
    (1) For any unlawful purpose;
    (2) For any commercial purpose, other than by news and 
communications media for dissemination to the general public;
    (3) For determining or establishing the credit rating of any 
individual; or
    (4) For use, directly or indirectly, in the solicitation of money 
for any political, charitable, or other purpose.

    Example 1: The deputy general counsel of Agency X is responsible 
for reviewing the public financial disclosure reports filed by 
persons within that agency. The agency personnel director, who does 
not exercise functions within the ethics program, wishes to review 
the disclosure report of an individual within the agency. The 
personnel director must file an application to review the report. 
However, the supervisor of an official with whom the deputy general 
counsel consults concerning matters arising in the review process 
need not file such an application.
    Example 2: A state law enforcement agent is conducting an 
investigation which involves the private financial dealings of an 
individual who has filed a public financial disclosure report. The 
agent must complete a written application in order to inspect or 
obtain a copy.
    Example 3:  A financial institution has received an application 
for a loan from an official which indicates her present financial 
status. The official has filed a public financial disclosure 
statement with her agency. The financial institution cannot be given 
access to the disclosure form for purposes of verifying the 
information contained on the application.

    (g)(1) Any public report filed with an agency or transmitted to the 
Director of the Office of Government Ethics under this section will be 
retained by the agency, and by the Office of Government Ethics when it 
receives a copy. The report will be made available to the public for a 
period of six years after receipt. After the six-year period, the 
report must be destroyed unless needed in an ongoing investigation, 
except that in the case of an individual who filed the report pursuant 
to Sec.  2634.201(c) as a nominee and was not subsequently confirmed by 
the Senate, or who filed the report pursuant to Sec.  2634.201(d) as a 
candidate and was not subsequently elected, the report, unless needed 
in an ongoing investigation, must be destroyed one year after the 
individual either is no longer under consideration by the Senate or is 
no longer a candidate for nomination or election to the Office of 
President or Vice President. See also the OGE/GOVT-1 Governmentwide 
executive branch Privacy Act system of records (available for 
inspection at the Office of Government Ethics or on OGE's Web site, 
www.oge.gov), as well as any applicable agency system of records.
    (2) For purposes of paragraph (g)(1) of this section, in the case 
of a reporting individual with respect to whom a trust has been 
certified under subpart D of this part, a copy of the qualified trust 
agreement, the list of assets initially placed in the trust, and all 
other publicly available documents relating to the trust will be 
retained and made available to the public until the periods for 
retention of all other reports of the individual have lapsed under 
paragraph (g)(1) of this section.

Approved by the Office of Management and Budget under control 
numbers 3209-0001 and 3209-0002)


Sec.  2634.604   Custody of and denial of public access to confidential 
reports.

    (a) Any report filed with an agency under subpart I of this part 
will be retained by the agency for a period of six years after receipt. 
After the six-year period, the report must be destroyed unless needed 
in an ongoing investigation. See also the OGE/GOVT-2 Governmentwide 
executive branch Privacy Act system of records (available for 
inspection at the Office of Government Ethics or on OGE's Web site, 
www.oge.gov), as well as any applicable agency system of records.
    (b) The reports filed pursuant to subpart I of this part are 
confidential. No member of the public will have access to such reports, 
except pursuant to the order of a Federal court or as otherwise 
provided under the Privacy Act. See 5 U.S.C. 552a and the OGE/GOVT-2 
Privacy Act system of records (and any applicable agency system); 5 
U.S.C. app. (Ethics in Government Act of 1978, section 107(a)); 
sections 201(d) and 502(b) of Executive Order 12674, as modified by 
Executive Order 12731; and Sec.  2634.901(d).


Sec.  2634.605   Review of reports.

    (a) In general. The designated agency ethics official will normally 
serve as the reviewing official for reports submitted to the official's 
agency. That responsibility may be delegated, except in the case of 
certification of nominee reports required by paragraph (c) of this 
section. See also Sec.  2634.105(q). The designated agency ethics 
official will note on any report or supplemental report the date on 
which it is received. Except as indicated in paragraph (c) of this 
section, all reports must be reviewed within 60 days after the date of 
filing. Reports that are reviewed by the Director of the Office of 
Government Ethics must be forwarded promptly by the designated agency 
ethics official to the Director. The Director will review the reports 
within 60 days from the date on which they are received by the Office 
of Government Ethics. If additional information is needed, the Director 
will notify the agency. In the event that additional information must 
be obtained from the filer, the agency will require that the filer 
provide that information as promptly as is practical but not more than 
30 days after the request. Final certification in accordance with

[[Page 69226]]

paragraph (b)(3) of this section may, of necessity, occur later, when 
additional information is being sought or remedial action is being 
taken under this section.
    (b) Responsibilities of reviewing official--(1) Initial review. As 
a part of the initial review, the reviewing official may request an 
intermediate review by the filer's supervisor or another reviewer. In 
the case of a filer who is detailed to another agency for more than 60 
days during the reporting period, the reviewing official will 
coordinate with the ethics official at the agency at which the employee 
is serving the detail if the report reveals a potential conflict of 
interest.
    (2) Standards of Review. The reviewing official must examine the 
report to determine, to the reviewing official's satisfaction, that:
    (i) Each required part of the report is completed; and
    (ii) No interest or position disclosed on the report violates or 
appears to violate:
    (A) Any applicable provision of chapter 11 of title 18, United 
States Code;
    (B) The Act, as amended, and the implementing regulations;
    (C) Executive Order 12674, as modified by Executive Order 12731, 
and the implementing regulations;
    (D) Any other applicable Executive Order in force at the time of 
the review; or
    (E) Any other agency-specific statute or regulation which governs 
the filer.
    (3) Signature by reviewing official. If the reviewing official is 
of the opinion that the report meets the requirements of paragraph 
(b)(2) of this section, the reviewing official will certify it by 
signature and date. The reviewing official need not audit the report to 
ascertain whether the disclosures are correct. Disclosures will be 
taken at ``face value'' as correct, unless there is a patent omission 
or ambiguity or the official has independent knowledge of matters 
outside the report. However, a report which is signed by a reviewing 
official certifies that the filer's agency has reviewed the report, 
that the reviewing official is of the opinion that each required part 
of the report has been completed, and that on the basis of information 
contained in such report the filer is in compliance with applicable 
laws and regulations noted in paragraph (b)(2)(ii) of this section.
    (4) Requests for, and review based on, additional information. If 
the reviewing official believes that additional information is required 
to be reported, the reviewing official will request that any additional 
information be submitted within 30 days from the date of the request, 
unless the reviewing official grants an extension in writing. This 
additional information will be incorporated into the report. If the 
reviewing official concludes, on the basis of the information disclosed 
in the report and any additional information submitted, that the report 
fulfills the requirements of paragraph (b)(2) of this section, the 
reviewing official will sign and date the report.
    (5) Compliance with applicable laws and regulations. If the 
reviewing official concludes that information disclosed in the report 
may reveal a violation of applicable laws and regulations as specified 
in paragraph (b)(2)(ii) of this section, the official must:
    (i) Notify the filer of that conclusion;
    (ii) Afford the filer a reasonable opportunity for an oral or 
written response; and
    (iii) Determine, after considering any response, whether or not the 
filer is then in compliance with applicable laws and regulations 
specified in paragraph (b)(2)(ii) of this section. If the reviewing 
official concludes that the report does fulfill the requirements, the 
reviewing official will sign and date the report. If the reviewing 
official determines that it does not and additional remedial actions 
are required, the reviewing official must:
    (A) Notify the filer of the conclusion;
    (B) Afford the filer an opportunity for personal consultation if 
practicable;
    (C) Determine what remedial action under paragraph (b)(6) of this 
section should be taken to bring the report into compliance with the 
requirements of paragraph (b)(2)(ii) of this section; and
    (D) Notify the filer in writing of the remedial action which is 
needed, and the date by which such action should be taken.
    (6) Remedial action. (i) Except in unusual circumstances, which 
must be fully documented to the satisfaction of the reviewing official, 
remedial action must be completed not later than three months from the 
date on which the filer received notice that the action is required.
    (ii) Remedial action may include, as appropriate:
    (A) Divestiture of a conflicting interest (see subpart J of this 
part);
    (B) Resignation from a position with a non-Federal business or 
other entity;
    (C) Restitution;
    (D) Establishment of a qualified blind or diversified trust under 
the Act and subpart D of this part;
    (E) Procurement of a waiver under 18 U.S.C. 208(b)(1) or (b)(3);
    (F) Recusal; or
    (G) Voluntary request by the filer for transfer, reassignment, 
limitation of duties, or resignation.
    (7) Compliance or referral. (i) If the filer complies with a 
written request for remedial action under paragraph (b)(6) of this 
section, the reviewing official will memorialize what remedial action 
has be taken. The official will also sign and date the report.
    (ii) If the filer does not comply by the designated date with the 
written request for remedial action transmitted under paragraph (b)(6) 
of this section, the reviewing official must, in the case of a public 
filer under subpart B of this part, notify the head of the agency and 
the Office of Government Ethics for appropriate action. Where the filer 
is in a position in the executive branch (other than in the uniformed 
services or the Foreign Service), appointment to which requires the 
advice and consent of the Senate, the Director of the Office of 
Government Ethics shall refer the matter to the President. In the case 
of the Postmaster General or Deputy Postmaster General, the Director of 
the Office of Government Ethics shall recommend to the Governors of the 
Board of Governors of the United States Postal Service the action to be 
taken. For confidential filers, the reviewing official will follow 
agency procedures.
    (c) Expedited procedure in the case of individuals appointed by the 
President and subject to confirmation by the Senate. In the case of a 
report filed by an individual described in Sec.  2634.201(c) who is 
nominated by the President for appointment to a position that requires 
the advice and consent of the Senate:
    (1) In most cases, the Executive Office of the President will 
furnish the applicable financial disclosure report form to the nominee. 
It will forward the completed report to the designated agency ethics 
official at the agency where the nominee is serving or will serve, or 
it may direct the nominee to file the completed report directly with 
the designated agency ethics official.
    (2) The designated agency ethics official will complete an 
accelerated review of the report, in accordance with the standards and 
procedures in paragraph (b) of this section. If that official concludes 
that the report reveals no unresolved conflict of interest under 
applicable laws and regulations, the official will:
    (i) Personally certify the report by signature, and date the 
certification;
    (ii) Write an opinion letter to the Director of the Office of 
Government Ethics, personally certifying that there is no unresolved 
conflict of interest under applicable laws and regulations;
    (iii) Provide a copy of any commitment, agreement, or other 
undertaking which is reduced to writing

[[Page 69227]]

in accordance with subpart H of this part; and
    (iv) Transmit the letter and the report to the Director of the 
Office of Government Ethics, within three working days after the 
designated agency ethics official receives the report.

    Note to paragraph (c)(2): The designated agency ethics 
official's certification responsibilities in Sec.  2634.605(c) are 
nondelegable and must be accomplished by him personally, or by the 
agency's alternate designated agency ethics official, in his 
absence. See part 2638 of this chapter.

    (3) The Director of the Office of Government Ethics will review the 
report and the letter from the designated agency ethics official. If 
the Director is satisfied that no unresolved conflicts of interest 
exist, then the Director will sign and date the report form. The 
Director will then submit the report with a letter to the appropriate 
Senate committee, expressing the Director's opinion whether, on the 
basis of information contained in the report, the nominee has complied 
with all applicable conflict laws and regulations.
    (4) If, in the case of any nominee or class of nominees, the 
expedited procedure specified in this paragraph cannot be completed 
within the time set forth in paragraph (c)(2)(iv) of this section, the 
designated agency ethics official must inform the Director. When 
necessary and appropriate, the Director may modify the rule of that 
paragraph for a nominee or a class of nominees with respect to a 
particular department or agency.


Sec.  2634.606   Updated disclosure of advice-and-consent nominees.

    (a) General rule. Each individual described in Sec.  2634.201(c) 
who is nominated by the President for appointment to a position that 
requires advice and consent of the Senate must submit a letter updating 
the information in the report previously filed under Sec.  2634.201(c) 
through the period ending no more than five days prior to the 
commencement of the first hearing of a Senate Committee considering the 
nomination to all Senate Committees considering the nomination. The 
letter must update the information required with respect to receipt of:
    (1) Outside earned income; and
    (2) Honoraria, as defined in Sec.  2634.105(i).
    (b) Timing. The nominee's letter must be submitted to the Senate 
committees considering the nomination by the agency at or before the 
commencement of the first committee hearing to consider the nomination. 
The agency must also transmit copies of the nominee's letter to the 
designated agency ethics official referred to in Sec.  2634.605(c)(1) 
and to the Office of Government Ethics.
    (c) Additional certification. In each case to which this section 
applies, the Director of the Office of Government Ethics will, at the 
request of the committee considering the nomination, submit to the 
committee an opinion letter of the nature described in Sec.  
2634.605(c)(3) concerning the updated disclosure. If the committee 
requests such a letter, the expedited procedure provided by Sec.  
2634.605(c) will govern review of the updated disclosure, which will be 
deemed a report filed for purposes of that paragraph.


Sec.  2634.607   Advice and opinions.

    To assist employees in avoiding situations in which they might 
violate applicable financial disclosure laws and regulations:
    (a) The Director of the Office of Government Ethics will render 
formal advisory opinions and informal advisory letters on generally 
applicable matters, or on important matters of first impression. See 
also part 2638 of this chapter. The Director will ensure that these 
advisory opinions and letters are compiled, published, and made 
available to agency ethics officials and the public.
    (b) Designated agency ethics officials will offer advice and 
guidance to employees as needed, to assist them in complying with the 
requirements of the Act and this part on financial disclosure.
    (c) Employees who have questions about the application of this part 
or any supplemental agency regulations to particular situations should 
seek advice from an agency ethics official. Disciplinary action for 
violating this part will not be taken against an employee who has 
engaged in conduct in good faith reliance upon the advice of an agency 
ethics official, provided that the employee, in seeking such advice, 
has made full disclosure of all relevant circumstances. Where the 
employee's conduct violates a criminal statute, reliance on the advice 
of an agency ethics official cannot ensure that the employee will not 
be prosecuted under that statute. However, good faith reliance on the 
advice of an agency ethics official is a factor that may be taken into 
account by the Department of Justice in the selection of cases for 
prosecution. Disclosures made by an employee to an agency ethics 
official are not protected by an attorney-client privilege. An agency 
ethics official is required by 28 U.S.C. 535 to report any information 
he receives relating to a violation of the criminal code, title 18 of 
the United States Code.

Subpart G--Penalties


Sec.  2634.701   Failure to file or falsifying reports.

    (a) Referral of cases. The head of each agency, each Secretary 
concerned, or the Director of the Office of Government Ethics, as 
appropriate, must refer to the Attorney General the name of any 
individual when there is reasonable cause to believe that such 
individual has willfully failed to file a public report or information 
required on such report, or has willfully falsified any information 
(public or confidential) required to be reported under this part.
    (b) Civil action. The Attorney General may bring a civil action in 
any appropriate United States district court against any individual who 
knowingly and willfully falsifies or who knowingly and willfully fails 
to file or report any information required by filers of public reports 
under subpart B of this part. The court in which the action is brought 
may assess against the individual a civil monetary penalty in any 
amount, not to exceed the amounts set forth in Table 1 to this section, 
as provided by section 104(a) of the Act, as amended, and as adjusted 
in accordance with the inflation adjustment procedures prescribed in 
the Federal Civil Penalties Inflation Adjustment Act of 1990, as 
amended:

                       Table 1 to Sec.   2634.701
------------------------------------------------------------------------
                Date of violation or assessment                  Penalty
------------------------------------------------------------------------
Violation occurring before Sept. 29, 1999.....................   $10,000
Violation occurring between Sept. 29, 1999 and Sept. 13, 2007.    11,000
Violation occurring between Sept. 14, 2007 and Nov. 2, 2015...    50,000
Violation occurring after Nov. 2, 2015 and penalty assessed on    50,000
 or before Aug. 1, 2016.......................................
Violation occurring after Nov. 2, 2015 and penalty assessed       56,916
 after Aug. 1, 2016...........................................
------------------------------------------------------------------------

    (c) Criminal action. An individual may also be prosecuted under 
criminal statutes for supplying false information on any financial 
disclosure report.
    (d) Administrative remedies. The President, the Vice President, the 
Director of the Office of Government Ethics, the Secretary concerned, 
the head of each agency, and the Office of Personnel Management may 
take appropriate personnel or other action in accordance with 
applicable law or regulation against any individual for failing to file 
public or confidential reports required by this part, for filing

[[Page 69228]]

such reports late, or for falsifying or failing to report required 
information. This may include adverse action under 5 CFR part 752, if 
applicable.


Sec.  2634.702   Breaches by trust fiduciaries and interested parties.

    (a) The Attorney General may bring a civil action in any 
appropriate United States district court against any individual who 
knowingly and willfully violates the provisions of Sec.  2634.407. The 
court in which the action is brought may assess against the individual 
a civil monetary penalty in any amount, not to exceed the amounts set 
forth in Table 1 to this section, as provided by section 
102(f)(6)(C)(i) of the Act and as adjusted in accordance with the 
inflation adjustment procedures prescribed in the Federal Civil 
Penalties Inflation Adjustment Act of 1990, as amended.

                       Table 1 to Sec.   2634.702
------------------------------------------------------------------------
                Date of violation or assessment                  Penalty
------------------------------------------------------------------------
Violation occurring before Sept. 29, 1999.....................   $10,000
Violation occurring between Sept. 29, 1999 and Nov. 2, 2015...    11,000
Violation occurring after Nov. 2, 2015 and penalty assessed on    11,000
 or before Aug. 1, 2016.......................................
Violation occurring after Nov. 2, 2015 and penalty assessed       18,936
 after Aug. 1, 2016...........................................
------------------------------------------------------------------------

    (b) The Attorney General may bring a civil action in any 
appropriate United States district court against any individual who 
negligently violates the provisions of Sec.  2634.407. The court in 
which the action is brought may assess against the individual a civil 
monetary penalty in any amount, not to exceed the amounts set forth in 
Table 2 to this section, as provided by section 102(f)(6)(C)(ii) of the 
Act and as adjusted in accordance with the inflation adjustment 
procedures of the Federal Civil Penalties Inflation Adjustment Act of 
1990, as amended.

                       Table 2 to Sec.   2634.702
------------------------------------------------------------------------
                Date of violation or assessment                  Penalty
------------------------------------------------------------------------
Violation occurring before Sept. 29, 1999.....................    $5,000
Violation occurring between Sept. 29, 1999 and Nov. 2, 2015...     5,500
Violation occurring after Nov. 2, 2015 and penalty assessed on     5,500
 or before Aug. 1, 2016.......................................
Violation occurring after Nov. 2, 2015 and penalty assessed        9,468
 after Aug. 1, 2016...........................................
------------------------------------------------------------------------

Sec.  2634.703   Misuse of public reports.

    The Attorney General may bring a civil action against any person 
who obtains or uses a report filed under this part for any purpose 
prohibited by section 105(c)(1) of the Act, as incorporated in Sec.  
2634.603(f). The court in which the action is brought may assess 
against the person a civil monetary penalty in any amount, not to 
exceed the amounts set forth in Table 1 to this section, as provided by 
section 105(c)(2) of the Act and as adjusted in accordance with the 
inflation adjustment procedures prescribed in the Federal Civil 
Penalties Inflation Adjustment Act of 1990, as amended.

                       Table 1 to Sec.   2634.703
------------------------------------------------------------------------
                Date of violation or assessment                  Penalty
------------------------------------------------------------------------
Violation occurring before Sept. 29, 1999.....................   $10,000
Violation occurring between Sept. 29, 1999 and Nov. 2, 2015...    11,000
Violation occurring after Nov. 2, 2016 and penalty assessed on    11,000
 or before Aug. 1, 2016.......................................
Violation occurring after Nov. 2, 2015 and penalty assessed       18,936
 after Aug. 1, 2016...........................................
------------------------------------------------------------------------

    This remedy will be in addition to any other remedy available under 
statutory or common law.


Sec.  2634.704   Late filing fee.

    (a) In general. In accordance with section 104(d) of the Act, any 
reporting individual who is required to file a public financial 
disclosure report by the provisions of this part must remit a late 
filing fee of $200 to the appropriate agency, payable to the U.S. 
Treasury, if such report is filed more than 30 days after the later of:
    (1) The date such report is required to be filed pursuant to the 
provisions of this part; or
    (2) The last day of any filing extension period granted pursuant to 
Sec.  2634.201(g).
    (b) Exceptions. (1) The designated agency ethics official may waive 
the late filing fee if the designated agency ethics official determines 
that the delay in filing was caused by extraordinary circumstances. 
These circumstances include, but are not limited to, the agency's 
failure to notify a filer of the requirement to file the public 
financial disclosure report, which made the delay reasonably necessary.
    (2) Employees requesting a waiver of the late filing fee from the 
designated agency ethics official must request the waiver in writing. 
The designated agency ethics official's determination must be made in 
writing to the employee with a copy maintained by the agency. The 
designated agency ethics official may consult with the Office of 
Government Ethics prior to approving any waiver of the late filing fee.
    (c) Procedure. (1) Each report received by the agency must be 
marked with the date of receipt. For any report which has not been 
received by the end of the period specified in paragraph (a) of this 
section, the agency will advise the delinquent filer, in writing, that:
    (i) Because the financial disclosure report is more than 30 days 
overdue, a $200 late filing fee will become due at the time of filing, 
by reason of section 104(d) of the Act and Sec.  2634.704;
    (ii) The filer is directed to remit to the agency, with the 
completed report, the $200 fee, payable to the United States Treasury;
    (iii) If the filer fails to remit the $200 fee when filing a late 
report, it will be subject to agency debt collection procedures; and
    (iv) If extraordinary circumstances exist that would justify a 
request for a fee waiver, pursuant to paragraph (b) of this section, 
such request and any supporting documentation must be submitted 
immediately.
    (2) Upon receipt from the reporting individual of the $200 late 
filing fee, the collecting agency will note the payment in its records, 
and will then forward the money to the U.S. Treasury for deposit as 
miscellaneous receipts, in accordance with 31 U.S.C. 3302 and Part 5 of 
Volume 1 of the Treasury Financial Manual. If payment is not 
forthcoming, agency debt collection procedures may be utilized, which 
may include salary or administrative offset, initiation of a tax refund 
offset, or other authorized action.
    (d) Late filing fee not exclusive remedy. The late filing fee is in 
addition to other sanctions which may be imposed for late filing. See 
Sec.  2634.701.
    (e) Confidential filers. The late filing fee does not apply to 
confidential filers. Late filing of confidential reports will be 
handled administratively under Sec.  2634.701(d).
    (f) Date of filing. The date of filing for purposes of determining 
whether a public financial disclosure report is filed more than 30 days 
late under this section will be the date of receipt by the agency, 
which should be noted on the report in accordance with Sec.  
2634.605(a). The 30-day grace period on imposing a late filing fee is 
adequate allowance for administrative delays in the receipt of reports 
by an agency.

[[Page 69229]]

Subpart H--Ethics Agreements


Sec.  2634.801   Scope.

    This subpart applies to ethics agreements made by any reporting 
individual under either subpart B or I of this part, to resolve 
potential or actual conflicts of interest.


Sec.  2634.802   Requirements.

    (a) Ethics agreement defined. The term ethics agreement will 
include, for the purposes of this subpart, any oral or written promise 
by a reporting individual to undertake specific actions in order to 
alleviate an actual or apparent conflict of interest, such as:
    (1) Recusal;
    (2) Divestiture of a financial interest;
    (3) Resignation from a position with a non-Federal business or 
other entity;
    (4) Procurement of a waiver pursuant to 18 U.S.C. 208(b)(1) or 
(b)(3); or
    (5) Establishment of a qualified blind or diversified trust under 
the Act and subpart D of this part.
    (b) Time limit. The ethics agreement will specify that the 
individual must complete the action which he or she has agreed to 
undertake within a period not to exceed three months from the date of 
the agreement (or of Senate confirmation, if applicable). Exceptions to 
the three-month deadline can be made in cases of unusual hardship, as 
determined by the Office of Government Ethics, for those ethics 
agreements which are submitted to it (see Sec.  2634.803), or by the 
designated agency ethics official for all other ethics agreements.

    Example: An official of the ABC Aircraft Company is nominated to 
a Department of Defense position requiring the advice and consent of 
the Senate. As a condition of assuming the position, the individual 
has agreed to divest himself of his ABC Aircraft stock which he 
recently acquired while he was an officer with the company. However, 
the Securities and Exchange Commission prohibits officers of public 
corporations from deriving a profit from the sale of stock in the 
corporation in which they hold office within six months of acquiring 
the stock, and directs that any such profit must be returned to the 
issuing corporation or its stock holders. Since meeting the usual 
three-month time limit specified in this subpart for satisfying an 
ethics agreement might entail losing any profit that could be 
realized on the sale of this stock, the nominee requests that the 
limit be extended beyond the six-month period imposed by the 
Commission. Written approval must be obtained from the Office of 
Government Ethics to extend the three-month period.


Sec.  2634.803   Notification of ethics agreements.

    (a) Nominees to positions requiring the advice and consent of the 
Senate. (1) In the case of a nominee referred to in Sec.  2634.201(c), 
the designated agency ethics official will include with the report 
submitted to the Office of Government Ethics any ethics agreement which 
the nominee has made.
    (2) A designated agency ethics official must immediately notify the 
Office of Government Ethics of any ethics agreement of a nominee which 
is made or becomes known to the designated agency ethics official after 
the submission of the nominee's report to the Office of Government 
Ethics. This requirement includes an ethics agreement made between a 
nominee and the Senate confirmation committee. The nominee must 
immediately report to the designated agency ethics official any ethics 
agreement made with the committee.
    (3) The Office of Government Ethics must immediately apprise the 
designated agency ethics official and the Senate confirmation committee 
of any ethics agreements made directly between the nominee and the 
Office of Government Ethics.
    (4) Any ethics agreement approved by the Office of Government 
Ethics during its review of a nominee's financial disclosure report may 
not be modified without prior approval from the Office of Government 
Ethics.
    (b) Incumbents and other reporting individuals. Incumbents and 
other reporting individuals may be required to enter into an ethics 
agreement with the designated agency ethics official for the employee's 
agency. Where an ethics agreement has been made with someone other than 
the designated agency ethics official, the officer or employee involved 
must promptly apprise the designated agency ethics official of the 
agreement.


Sec.  2634.804   Evidence of compliance.

    (a) Requisite evidence of action taken. (1) For ethics agreements 
of nominees to positions requiring the advice and consent of the 
Senate, evidence of any action taken to comply with the terms of such 
ethics agreements must be submitted to the designated agency ethics 
official. The designated agency ethics official will promptly notify 
the Office of Government Ethics of actions taken to comply with the 
ethics agreement.
    (2) In the case of incumbents and all other reporting individuals, 
evidence of any action taken to comply with the terms of an ethics 
agreement must be sent promptly to the designated agency ethics 
official.
    (b) The following materials and any other appropriate information 
constitute evidence of the action taken:
    (1) Recusal. A copy of a recusal statement listing and describing 
the specific matters or subjects to which the recusal applies, a 
statement of the method by which the agency will enforce the recusal. A 
recusal statement is not required for a general affirmation that the 
filer will comply with ethics laws.

    Example: A new employee of a Federal safety board owns stock in 
Nationwide Airlines. She has entered into an ethics agreement to 
recuse herself from participating in any accident investigations 
involving that company's aircraft until such time as she can 
complete a divestiture of the asset. She sends an email to the 
designated agency ethics official recusing herself from Nationwide 
Airline matters. She sends an email to her supervisor and 
subordinates to notify them of the recusal and to request that they 
do not refer matters involving Nationwide Airlines to her. She also 
sends a copy of that email to the designated agency ethics official.

    (2) Divestiture or resignation. Written notification that the 
divestiture or resignation has occurred.
    (3) Waivers. A copy of any waivers issued pursuant to 18 U.S.C. 
208(b)(1) or (b)(3) and signed by the appropriate supervisory official.
    (4) Blind or diversified trusts. Information required by subpart D 
of this part to be submitted to the Office of Government Ethics for its 
certification of any qualified trust instrument. If the Office of 
Government Ethics does not certify the trust, the designated agency 
ethics official and, as appropriate, the Senate confirmation committee 
should be informed immediately.


Sec.  2634.805   Retention.

    Records of ethics agreements and actions described in this subpart 
will be maintained by the agency. In addition, copies of such record 
will be maintained by the Office of Government Ethics with respect to 
filers whose reports are certified by the Office of Government Ethics.

Subpart I--Confidential Financial Disclosure Reports


Sec.  2634.901   Policies of confidential financial disclosure 
reporting.

    (a) The confidential financial reporting system set forth in this 
subpart is designed to complement the public reporting system 
established by title I of the Act. High-level officials in the 
executive branch are required to report certain financial interests 
publicly to ensure that every citizen can have confidence in the 
integrity of the

[[Page 69230]]

Federal Government. It is equally important in order to guarantee the 
efficient and honest operation of the Government that other, less 
senior, executive branch employees, whose Government duties involve the 
exercise of significant discretion in certain sensitive areas, report 
their financial interests and outside business activities to their 
employing agencies, to facilitate the review of possible conflicts of 
interest. These reports assist an agency in administering its ethics 
program and counseling its employees. Such reports are filed on a 
confidential basis.
    (b) The confidential reporting system seeks from employees only 
that information which is relevant to the administration and 
application of criminal conflict of interest laws, administrative 
standards of conduct, and agency-specific statutory and program-related 
restrictions. The basic content of the reports required by Sec.  
2634.907 reflects that certain information is generally relevant to all 
agencies. However, depending upon an agency's authorized activities and 
any special or unique circumstances, additional information may be 
necessary. In these situations, and subject to the prior written 
approval of the Director of the Office of Government Ethics, agencies 
may formulate supplemental reporting requirements by following the 
procedures of Sec. Sec.  2634.103 and 2634.601(b).
    (c) This subpart also allows an agency to request, on a 
confidential basis, additional information from persons who are already 
subject to the public reporting requirements of this part. The public 
reporting requirements of the Act address Governmentwide concerns. The 
reporting requirements of this subpart allow agencies to confront 
special or unique agency concerns. If those concerns prompt an agency 
to seek more extensive reporting from employees who file public 
reports, it may proceed on a confidential, nonpublic basis, with prior 
written approval from the Director of the Office of Government Ethics, 
under the procedures of Sec. Sec.  2634.103 and 2634.601(b).
    (d) The reports filed pursuant to this subpart are specifically 
characterized as ``confidential,'' and are required to be withheld from 
the public, pursuant to section 107(a) of the Act. Section 107(a) 
leaves no discretion on this issue with the agencies. See also Sec.  
2634.604. Further, Executive Order 12674 as modified by Executive Order 
12731 provides, in section 201(d), for a system of nonpublic 
(confidential) executive branch financial disclosure to complement the 
Act's system of public disclosure. The confidential reports provided 
for by this subpart contain sensitive commercial and financial 
information, as well as personal privacy-protected information. These 
reports and the information which they contain are, accordingly, exempt 
from being released to the public, under exemptions 3(A) and (B), 4, 
and 6 of the Freedom of Information Act (FOIA), 5 U.S.C. 552(b)(3)(A) 
and (B), (b)(4), and (b)(6). Additional FOIA exemptions may apply to 
particular reports or portions of reports. Agency personnel will not 
publicly release the reports or the information which these reports 
contain, except pursuant to an order issued by a Federal court, or as 
otherwise provided under applicable provisions of the Privacy Act (5 
U.S.C. 552a), and in the OGE/GOVT-2 Governmentwide executive branch 
Privacy Act system of records, as well as any applicable agency records 
system. If an agency statute requires the public reporting of certain 
information and, for purposes of convenience, an agency chooses to 
collect that information on the confidential report form filed under 
this subpart, only the special statutory information may be released to 
the public, pursuant to the terms of the statute under which it was 
collected.
    (e) Executive branch agencies hire or use the paid and unpaid 
services of many individuals on an advisory or other less than full-
time basis as special Government employees. These employees may include 
experts and consultants to the Government, as well as members of 
Government advisory committees. It is important for those agencies that 
utilize such services, and for the individuals who provide the 
services, to anticipate and avoid real or apparent conflicts of 
interest. The confidential financial disclosure system promotes that 
goal, with special Government employees among those required to file 
confidential reports.
    (f) For additional policies and definitions of terms applicable to 
both the public and confidential reporting systems, see Sec. Sec.  
2634.104 and 2634.105.


Sec.  2634.902   [Reserved]


Sec.  2634.903   General requirements, filing dates, and extensions.

    (a) Incumbents. A confidential filer who holds a position or office 
described in Sec.  2634.904(a) and who performs the duties of that 
position or office for a period in excess of 60 days during the 
calendar year (including more than 60 days in an acting capacity) must 
file a confidential report as an incumbent, containing the information 
prescribed in Sec. Sec.  2634.907 and 2634.908 on or before February 15 
of the following year. This requirement does not apply if the employee 
has left Government service or has left a covered position prior to the 
due date for the report. No incumbent reports are required of special 
Government employees described in Sec.  2634.904(a)(2), but who must 
file new entrant reports under Sec.  2634.903(b) upon each appointment 
or reappointment. For confidential filers under Sec.  2634.904(a)(3), 
consult agency supplemental regulations.
    (b) New entrants. (1) Not later than 30 days after assuming a new 
position or office described in Sec.  2634.904(a) (which also 
encompasses the reappointment or redesignation of a special Government 
employee, including one who is serving on an advisory committee), a 
confidential filer must file a confidential report containing the 
information prescribed in Sec. Sec.  2634.907 and 2634.908. For 
confidential filers under Sec.  2634.904(a)(3), consult agency 
supplemental regulations.
    (2) However, no report will be required if the individual:
    (i) Has, within 30 days prior to assuming the position, left 
another position or office referred to in Sec.  2634.904(a) or in Sec.  
2634.202, and has previously satisfied the reporting requirements 
applicable to that former position, but a copy of the report filed by 
the individual while in that position should be made available to the 
appointing agency, and the individual must comply with any agency 
requirement for a supplementary report for the new position;
    (ii) Has already filed such a report in connection with 
consideration for appointment to the position. The agency may request 
that the individual update such a report if more than six months has 
expired since it was filed; or
    (iii) Is not reasonably expected to perform the duties of an office 
or position referred to in Sec.  2634.904(a) for more than 60 days in 
the following 12-month period, as determined by the designated agency 
ethics official or delegate. That may occur most commonly in the case 
of an employee who temporarily serves in an acting capacity in a 
position described by Sec.  2634.904(a)(1). If the individual actually 
performs the duties of such position for more than 60 days in the 12-
month period, then a confidential financial disclosure report must be 
filed within 15 calendar days after the sixtieth day of such service in 
the position. Paragraph (b)(2)(iii) of Sec.  2634.903 does not apply to 
new entrants filing as special Government employees under Sec.  
2634.904(a)(2).

[[Page 69231]]

    (3) Notwithstanding the filing deadline prescribed in paragraph 
(b)(1) of this section, agencies may at their discretion, require that 
prospective entrants into positions described in Sec.  2634.904(a) file 
their new entrant confidential financial disclosure reports prior to 
serving in such positions, to ensure that there are no insurmountable 
ethics concerns. Additionally, a special Government employee who has 
been appointed to serve on an advisory committee must file the required 
report before any advice is rendered by the employee to the agency, or 
in no event, later than the first committee meeting.
    (c) Advisory committee definition. For purposes of this subpart, 
the term advisory committee will have the meaning given to that term 
under section 3 of the Federal Advisory Committee Act (5 U.S.C. app). 
Specifically, it means any committee, board, commission, council, 
conference, panel, task force, or other similar group which is 
established by statute or reorganization plan, or established or 
utilized by the President or one or more agencies, in the interest of 
obtaining advice or recommendations for the President or one or more 
agencies or officers of the Federal Government. Such term includes any 
subcommittee or other subgroup of any advisory committee, but does not 
include the Advisory Commission on Intergovernmental Relations, the 
Commission on Government Procurement, or any committee composed wholly 
of full-time officers or employees of the Federal Government.
    (d) Extensions--(1) Agency extensions. The agency reviewing 
official may, for good cause shown, grant to any employee or class of 
employees a filing extension or several extensions totaling not more 
than 90 days.
    (2) Certain service during period of national emergency. In the 
case of an active duty military officer or enlisted member of the Armed 
Forces, a Reserve or National Guard member on active duty under orders 
issued pursuant to title 10 or title 32 of the United States Code, a 
commissioned officer of the Uniformed Services (as defined in 10 U.S.C. 
101), or any other employee, who is deployed or sent to a combat zone 
or required to perform services away from the employee's permanent duty 
station in support of the Armed Forces or other governmental entities 
following a declaration by the President of a national emergency, the 
date of filing will be extended to 90 days after the last day of:
    (i) The employee's service in the combat zone or away from the 
employee's permanent duty station; or
    (ii) The employee's hospitalization as a result of injury received 
or disease contracted while serving during the national emergency.
    (3) Agency procedures. Each agency may prescribe procedures to 
provide for the implementation of the extensions provided for by this 
paragraph.
    (e) Termination reports not required. An employee who is required 
to file a confidential financial disclosure report is not required to 
file a termination report upon leaving the filing position.


Sec.  2634.904   Confidential filer defined.

    (a) The term confidential filer includes:
    (1) Each officer or employee in the executive branch whose position 
is classified at GS-15 or below of the General Schedule prescribed by 5 
U.S.C. 5332, or the rate of basic pay for which is fixed, other than 
under the General Schedule, at a rate which is less than 120% of the 
minimum rate of basic pay for GS-15 of the General Schedule; each 
officer or employee of the United States Postal Service or Postal Rate 
Commission whose basic rate of pay is less than 120% of the minimum 
rate of basic pay for GS-15 of the General Schedule; each member of a 
uniformed service whose pay grade is less than 0-7 under 37 U.S.C. 201; 
and each officer or employee in any other position determined by the 
designated agency ethics official to be of equal classification; if:
    (i) The agency concludes that the duties and responsibilities of 
the employee's position require that employee to participate personally 
and substantially (as defined in Sec. Sec.  2635.402(b)(4) and 
2640.103(a)(2) of this chapter) through decision or the exercise of 
significant judgment, and without substantial supervision and review, 
in taking a Government action regarding:
    (A) Contracting or procurement;
    (B) Administering or monitoring grants, subsidies, licenses, or 
other federally conferred financial or operational benefits;
    (C) Regulating or auditing any non-Federal entity; or
    (D) Other activities in which the final decision or action will 
have a direct and substantial economic effect on the interests of any 
non-Federal entity; or
    (ii) The agency concludes that the duties and responsibilities of 
the employee's position require the employee to file such a report to 
avoid involvement in a real or apparent conflict of interest, or to 
carry out the purposes behind any statute, Executive order, rule, or 
regulation applicable to or administered by the employee. Positions 
which might be subject to a reporting requirement under this 
subparagraph include those with duties which involve investigating or 
prosecuting violations of criminal or civil law.

    Example 1: A contracting officer develops the requests for 
proposals for data processing equipment of significant value which 
is to be purchased by his agency. He works with substantial 
independence of action and exercises significant judgment in 
developing the requests. By engaging in this activity, he is 
participating personally and substantially in the contracting 
process. The contracting officer should be required to file a 
confidential financial disclosure report.
    Example 2: An agency environmental engineer inspects a 
manufacturing plant to ascertain whether the plant complies with 
permits to release a certain effluent into a nearby stream. Any 
violation of the permit standards may result in civil penalties for 
the plant, and in criminal penalties for the plant's management 
based upon any action which they took to create the violation. If 
the agency engineer determines that the plant does not meet the 
permit requirements, he can require the plant to terminate release 
of the effluent until the plant satisfies the permit standards. 
Because the engineer exercises substantial discretion in regulating 
the plant's activities, and because his final decisions will have a 
substantial economic effect on the plant's interests, the engineer 
should be required to file a confidential financial disclosure 
report.
    Example 3: A GS-13 employee at an independent grant making 
agency conducts the initial agency review of grant applications from 
nonprofit organizations and advises the Deputy Assistant Chairman 
for Grants and Awards about the merits of each application. Although 
the process of reviewing the grant applications entails significant 
judgment, the employee's analysis and recommendations are reviewed 
by the Deputy Assistant Chairman, and the Assistant Chairman, before 
the Chairman decides what grants to award. Because his work is 
subject to ``substantial supervision and review,'' the employee is 
not required to file a confidential financial disclosure report 
unless the agency determines that filing is necessary under Sec.  
2634.904(a)(1)(ii).
    Example 4: As a senior investigator for a criminal law 
enforcement agency, an employee often leads investigations, with 
substantial independence, of suspected felonies. The investigator 
usually decides what information will be contained in the agency's 
report of the suspected misconduct. Because he participates 
personally and substantially through the exercise of significant 
judgment in investigating violations of criminal law, the 
investigator should be required to file a confidential financial 
disclosure report.

    (2) Unless required to file public financial disclosure reports by 
subpart B of this part, all executive branch special Government 
employees who:

[[Page 69232]]

    (i) Have a substantial role in the formulation of agency policy;
    (ii) Serve on a Federal Advisory Committee; or
    (iii) Meet the requirements of section Sec.  2634.904(a)(1).

    Example 1: A consultant to an agency periodically advises the 
agency regarding important foreign policy matters. The consultant 
must file a confidential report if he is retained as a special 
Government employee and not an independent contractor.
    Example 2:  A special Government employee serving as a member of 
an advisory committee (who is not a private group representative) 
attends four committee meetings every year to provide advice to an 
agency about pharmaceutical matters. No compensation is received by 
the committee member, other than travel expenses. The advisory 
committee member must file a confidential disclosure report because 
she is a special Government employee.

    (3) Each public filer referred to in Sec.  2634.202 on public 
disclosure who is required by agency regulations and forms issued in 
accordance with Sec. Sec.  2634.103 and 2634.601(b) to file a 
supplemental confidential financial disclosure report which contains 
information that is more extensive than the information required in the 
reporting individual's public financial disclosure report under this 
part.
    (4) Any employee who, notwithstanding the employee's exclusion from 
the public financial reporting requirements of this part by virtue of a 
determination under Sec.  2634.203, is covered by the criteria of 
paragraph (a)(1) of this section.
    (b) Any individual or class of individuals described in paragraph 
(a) of this section, including special Government employees unless 
otherwise noted, may be excluded from all or a portion of the 
confidential reporting requirements of this subpart, when the agency 
head or designee determines that the duties of a position make remote 
the possibility that the incumbent will be involved in a real or 
apparent conflict of interest.

    Example 1:  A special Government employee who is a draftsman 
prepares the drawings to be used by an agency in soliciting bids for 
construction work on a bridge. Because he is not involved in the 
contracting process associated with the construction, the likelihood 
that this action will create a conflict of interest is remote. As a 
result, the special Government employee is not required to file a 
confidential financial disclosure report.
    Example 2:  An agency has just hired a GS-5 Procurement 
Assistant who is responsible for typing and processing procurement 
documents, answering status inquiries from the public, performing 
office support duties such as filing and copying, and maintaining an 
on-line contract database. The Assistant is not involved in 
contracting and has no other actual procurement responsibilities. 
Thus, the possibility that the Assistant will be involved in a real 
or apparent conflict of interest is remote, and the Assistant is not 
required to file.


Sec.  2634.905   Use of alternative procedures.

    Agencies are encouraged to consider whether an alternative 
procedure would allow the agency to more effectively assess possible 
conflicts of interest. With the prior written approval of OGE, an 
agency may use an alternative procedure in lieu of filing the OGE Form 
450. The alternative procedure may be an agency-specific form to be 
filed in place thereof. An agency must submit for approval a 
description of its proposed alternative procedure to OGE.

    Example 1:  A nonsupervisory auditor at an agency is regularly 
assigned to cases involving possible loan improprieties by financial 
institutions. Prior to undertaking each enforcement review, the 
auditor reviews the file to determine if she has a conflict of 
interest. After determining that she has no conflict of interest, 
she signs and dates a certification which verifies that she has 
reviewed the file and has made such a determination. She then files 
the certification with the head of her auditing division at the 
agency. On the other hand, if she cannot execute the certification, 
she informs the head of her auditing division. In response, the 
division will either reassign the case or review the conflicting 
interest to determine whether a waiver would be appropriate. This 
alternative procedure, if approved by the Office of Government 
Ethics in writing, may be used in lieu of requiring the auditor to 
file a confidential financial disclosure report.
    Example 2:  To reduce its workload, an agency proposes that 
employees may file a statement certifying there has been no change 
in reportable information and no change in the filer's position and 
duties and attaching the most recent OGE Form 450. This alternative 
procedure, if approved by the Office of Government Ethics in 
writing, may be used in lieu of requiring the filer to complete an 
OGE Form 450.


Sec.  2634.906  Review of confidential filer status.

    The head of each agency, or an officer designated by the head of 
the agency for that purpose, will review any complaint by an individual 
that the individual's position has been improperly determined by the 
agency to be one which requires the submission of a confidential 
financial disclosure report pursuant to this subpart. A decision by the 
agency head or designee regarding the complaint will be final.


Sec.  2634.907   Report contents.

    (a) Other than the reports described in Sec.  2634.904(a)(3), each 
confidential financial disclosure report must comply with instructions 
issued by the Office of Government Ethics and include on the 
standardized form prescribed by OGE (see Sec.  2634.601) the 
information described in paragraphs (b) through (g) of this section for 
the filer. Each report must also include the information described in 
paragraph (h) of this section for the filer's spouse and dependent 
children.
    (b) Noninvestment income. Each financial disclosure report must 
disclose the source of earned or other noninvestment income in excess 
of $1,000 received by the filer from any one source during the 
reporting period, including:
    (1) Salaries, fees, commissions, wages and any other compensation 
for personal services (other than from United States Government 
employment);
    (2) Any honoraria, including payments made or to be made to 
charitable organizations on behalf of the filer in lieu of honoraria; 
and

    Note to paragraph (b)(2):  In determining whether an honorarium 
exceeds the $1,000 threshold, subtract any actual and necessary 
travel expenses incurred by the filer and one relative, if the 
expenses are paid or reimbursed by the filer. If such expenses are 
paid or reimbursed by the honorarium source, they will not be 
counted as part of the honorarium payment.

    (3) Any other noninvestment income, such as prizes, scholarships, 
awards, gambling income or discharge of indebtedness.

    Example to paragraphs (b)(1) and (b)(3):  A filer teaches a 
course at a local community college, for which she receives a salary 
of $3,000 per year. She also received, during the previous reporting 
period, a $1,250 award for outstanding local community service. She 
must disclose both.

    (c) Assets and investment income. Each financial disclosure report 
must disclose separately:
    (1) Each item of real and personal property having a fair market 
value in excess of $1,000 held by the filer at the end of the reporting 
period in a trade or business, or for investment or the production of 
income, including but not limited to:
    (i) Real estate;
    (ii) Stocks, bonds, securities, and futures contracts;
    (iii) Sector mutual funds, sector exchange-traded funds, and other 
pooled investment funds;
    (iv) Pensions and annuities;
    (v) Vested beneficial interests in trusts;
    (vi) Ownership interest in businesses and partnerships; and
    (vii) Accounts receivable.
    (2) The source of investment income (dividends, rents, interest, 
capital gains, or the income from qualified or

[[Page 69233]]

excepted trusts or excepted investment funds (see paragraph (i) of this 
section)), which is received by the filer during the reporting period, 
and which exceeds $1,000 in amount or value from any one source, 
including but not limited to income derived from:
    (i) Real estate;
    (ii) Collectible items;
    (iii) Stocks, bonds, and notes;
    (iv) Copyrights;
    (v) Vested beneficial interests in trusts and estates;
    (vi) Pensions;
    (vii) Sector mutual funds (see definition at Sec.  2640.102(q) of 
this chapter);
    (viii) The investment portion of life insurance contracts;
    (ix) Loans;
    (x) Gross income from a business;
    (xi) Distributive share of a partnership;
    (xii) Joint business venture income; and
    (xiii) Payments from an estate or an annuity or endowment contract.

    Note to paragraphs (c)(1) and (c)(2):  For Individual Retirement 
Accounts (IRAs), brokerage accounts, trusts, mutual or pension 
funds, and other entities with portfolio holdings, each underlying 
asset must be separately disclosed, unless the entity qualifies for 
special treatment under paragraph (i) of this section.

    (3) Exceptions. The following assets and investment income are 
excepted from the reporting requirements of paragraphs (c)(1) and 
(c)(2) of this section:
    (i) A personal residence, as defined in Sec.  2634.105(l);
    (ii) Accounts (including both demand and time deposits) in 
depository institutions, including banks, savings and loan 
associations, credit unions, and similar depository financial 
institutions;
    (iii) Money market mutual funds and accounts;
    (iv) U.S. Government obligations, including Treasury bonds, bills, 
notes, and savings bonds;
    (v) Government securities issued by U.S. Government agencies;
    (vi) Financial interests in any retirement system of the United 
States (including the Thrift Savings Plan) or under the Social Security 
Act;
    (vii) Financial interest in any diversified fund held in any 
pension plan established or maintained by State government or any 
political subdivision of a State government for its employees;
    (viii) A diversified fund in an employee benefit plan; and
    (ix) Diversified mutual funds and unit investment trusts.

    Note to paragraphs (c)(3)(vii) through (ix):  For purposes of 
this section, ``diversified'' means that the fund does not have a 
stated policy of concentrating its investments in any industry, 
business, single country other than the United States, or bonds of a 
single State within the United States and, in the case of an 
employee benefit plan, means that the plan's independent trustee has 
a written policy of varying plan investments. Whether a fund meets 
this standard may be determined by checking the fund's prospectus or 
by calling a broker or the manager of the fund.

    Example 1: A filer owns a beach house which he rents out for 
several weeks each summer, receiving annual rental income of 
approximately $5,000. He must report the rental property, as well as 
the city and state in which it is located.
    Example 2: A filer's investment portfolio consists of several 
stocks, U.S. Treasury bonds, several cash bank deposit accounts, an 
account in the Government's Thrift Savings Plan, and shares in 
sector mutual funds and diversified mutual funds. He must report the 
name of each sector mutual fund in which he owns shares, and the 
name of each company in which he owns stock, valued at over $1,000 
at the end of the reporting period or from which he received income 
of more than $1,000 during the reporting period. He need not report 
his diversified mutual funds, U.S. Treasury bonds, bank deposit 
accounts, or Thrift Savings Plan holdings.

    (d) Liabilities. Each financial disclosure report filed pursuant to 
this subpart must identify liabilities in excess of $10,000 owed by the 
filer at any time during the reporting period, and the name and 
location of the creditors to whom such liabilities are owed, except:
    (1) Personal liabilities owed to a spouse or to the parent, 
brother, sister, or child of the filer, spouse, or dependent child;
    (2) Any mortgage secured by a personal residence of the filer or 
the filer's spouse;
    (3) Any loan secured by a personal motor vehicle, household 
furniture, or appliances, provided that the loan does not exceed the 
purchase price of the item which secures it;
    (4) Any revolving charge account;
    (5) Any student loan; and
    (6) Any loan from a bank or other financial institution on terms 
generally available to the public.

    Example:  A filer owes $2,500 to his mother-in-law and $12,000 
to his best friend. He also has a $15,000 balance on his credit 
card, a $200,000 mortgage on his personal residence, and a car loan. 
Under the financial disclosure reporting requirements, he need not 
report the debt to his mother-in-law, his credit card balance, his 
mortgage, or his car loan. He must, however, report the debt of over 
$10,000 to his best friend.

    (e) Positions with non-Federal organizations--(1) In general. Each 
financial disclosure report filed pursuant to this subpart must 
identify all positions held at any time by the filer during the 
reporting period, other than with the United States, as an officer, 
director, trustee, general partner, proprietor, representative, 
executor, employee, or consultant of any corporation, company, firm, 
partnership, trust, or other business enterprise, any nonprofit 
organization, any labor organization, or any educational or other 
institution.
    (2) Exceptions. The following positions are excepted from the 
reporting requirements of paragraph (e)(1) of this section:
    (i) Positions held in religious, social, fraternal, or political 
entities; and
    (ii) Positions solely of an honorary nature, such as those with an 
emeritus designation.

    Example 1:  A filer holds outside positions as the trustee of 
his family trust, the secretary of a local political party 
committee, and the ``Chairman'' of his town's Lions Club. He also is 
a principal of a tutoring school on weekends. The individual must 
report his outside positions as trustee of the family trust and as 
principal of the school. He does not need to report his positions as 
secretary of the local political party committee or ``Chairman'' 
because each of these positions is excepted from disclosure.
    Example 2: An official recently terminated her role as the 
managing member of a limited liability corporation upon appointment 
to a position in the executive branch. The managing member position 
must be disclosed in the official's new entrant financial disclosure 
report pursuant to this section.
    Example 3:  An official is a member of the board of his church. 
The official does not need to disclose the position in his financial 
disclosure report.
    Example 4:  An official is an officer in a fraternal 
organization that exists for the purpose of performing service work 
in the community. The official does not need to disclose this 
position in her financial disclosure report.
    Example 5:  An official is the ceremonial Parade Marshal for a 
local town's annual Founders' Day event and, in that capacity, leads 
a parade and serves as Master of Ceremonies for an awards ceremony 
at the town hall. The official does not need to disclose this 
position in her financial disclosure report.
    Example 6: An official recently terminated his role as a 
campaign manager for a candidate for the Office of the President of 
the United States upon appointment to a noncareer position in the 
executive branch. The official does not need to disclose the 
campaign manager position in his financial disclosure report.
    Example 7:  Immediately prior to her recent appointment to a 
position in an agency, an official terminated her employment as a 
corporate officer. In connection with her employment, she served for 
several years as the corporation's

[[Page 69234]]

representative to an incorporated association that represents 
members of the industry in which the corporation operates. She does 
not need to disclose her role as her employer's representative to 
the association because she performed her representative duties in 
her capacity as a corporate officer.
    Example 8: An official holds a position on the board of 
directors of a local food bank. The official must disclose the 
position in his financial disclosure report.

    (f) Agreements and arrangements. Each financial disclosure report 
filed pursuant to this subpart must identify the parties to, and must 
briefly describe the terms of, any agreement or arrangement of the 
filer in existence at any time during the reporting period with respect 
to:
    (1) Future employment (including the date on which the filer 
entered into the agreement for future employment);
    (2) A leave of absence from employment during the period of the 
filer's Government service;
    (3) Continuation of payments by a current or former employer other 
than the United States Government; and
    (4) Continuing participation in an employee welfare or benefit plan 
maintained by a current or former employer other than the United States 
Government. Confidential filers are not required to disclose continuing 
participation in a defined contribution plan, such as a 401(k) plan, to 
which a former employer is no longer making contributions.

    Note to paragraph (f)(4):  Even if the agreement is not 
reportable, the filer must disclose any reportable asset, such as a 
sector fund or a stock, held in the account.

    Example 1: A filer plans to retire from Government service in 
eight months. She has negotiated an arrangement for part-time 
employment with a private-sector company, to commence upon her 
retirement. On her financial disclosure report, she must identify 
the future employer, and briefly describe the terms of, this 
agreement and disclose the date on which she entered into the 
agreement.
    Example 2: A new employee has entered a position which requires 
the filing of a confidential form. During his Government tenure, he 
will continue to receive deferred compensation from his former 
employer and will continue to participate in its pension plan. He 
must report the receipt of deferred compensation and the 
participation in the defined benefit plan.
    Example 3:  An employee has a defined contribution plan with a 
former employer. The employer no longer makes contributions to the 
plan. In the account, the employee holds shares worth $15,000 in an 
S&P 500 Index fund and shares worth $7,000 in an U.S. Financial 
Services fund. The employee does not need to disclose either the 
agreement to continue to participate in the plan or the S&P 500 
Index Fund. The employee must disclose the U.S. Financial Services 
Fund sector fund.

    (g) Gifts and travel reimbursements. (1) Each annual financial 
disclosure report filed pursuant to this subpart must contain a brief 
description of all gifts and travel reimbursements aggregating more 
than $375 in value which are received by the filer during the reporting 
period from any one source, as well as the identity of the source. For 
travel-related items, the report must include a travel itinerary, the 
dates, and the nature of expenses provided. Special government 
employees are not required to report the travel reimbursements received 
from their non-Federal employers.
    (2) Aggregation exception. Any gift or travel reimbursement with a 
fair market value of $150 or less need not be aggregated for purposes 
of the reporting rules of this section. However, the acceptance of 
gifts, whether or not reportable, is subject to the restrictions 
imposed by Executive Order 12674, as modified by Executive Order 12731, 
and the implementing regulations on standards of ethical conduct.

    Note to paragraph (g)(2):  The Office of Government Ethics sets 
these amounts every 3 years using the same disclosure thresholds as 
those for public financial disclosure filers. In 2014, the reporting 
threshold was set at $375 and the aggregation threshold was set at 
$150. The Office of Government Ethics will update this regulation in 
2017 and every three years thereafter to reflect the new amount.

    (3) Valuation of gifts and travel reimbursements. The value to be 
assigned to a gift or travel reimbursement is its fair market value. 
For most reimbursements, this will be the amount actually received. For 
gifts, the value should be determined in one of the following manners:
    (i) If the gift is readily available in the market, the value will 
be its retail price. The filer need not contact the donor, but may 
contact a retail establishment selling similar items to determine the 
present cost in the market.
    (ii) If the item is not readily available in the market, such as a 
piece of art, the filer may make a good faith estimate of the value of 
the item.
    (iii) The term ``readily available in the market'' means that an 
item generally is available for retail purchase.
    (4) New entrants, as described in Sec.  2634.903(b), need not 
report any information on gifts and travel reimbursements.
    (5) Exceptions. Reports need not contain any information about 
gifts and travel reimbursements received from relatives (see Sec.  
2634.105(o)) or during a period in which the filer was not an officer 
or employee of the Federal Government. Additionally, any food, lodging, 
or entertainment received as ``personal hospitality of any 
individual,'' as defined in Sec.  2634.105(k), need not be reported. 
See also exclusions specified in the definitions of ``gift'' and 
``reimbursement'' at Sec.  2634.105(h) and (n).

    Example: A filer accepts a laptop bag, a t-shirt, and a cell 
phone from a community service organization he has worked with 
solely in his private capacity. He determines that the value of 
these gifts is:
Gift 1--Laptop bag: $200
Gift 2--T-shirt: $20
Gift 3--Cell phone: $275
    The filer must disclose Gift 1 and Gift 3 because, together, 
they aggregate more than $375 in value from the same source. He need 
not aggregate or report Gift 2 because the gift's value does not 
exceed $150.

    (h) Disclosure rules for spouses and dependent children--(1) 
Noninvestment income. (i) Each financial disclosure report required by 
the provisions of this subpart must disclose the source of earned 
income in excess of $1,000 from any one source, which is received by 
the filer's spouse during the reporting period. If earned income is 
derived from a spouse's self-employment in a business or profession, 
the report must disclose the nature of the business or profession. The 
filer is not required to report other noninvestment income received by 
the spouse such as prizes, scholarships, awards, gambling income, or a 
discharge of indebtedness.
    (ii) Each report must disclose the source of any honoraria received 
by the spouse (or payments made or to be made to charity on the 
spouse's behalf in lieu of honoraria) in excess of $1,000 from any one 
source during the reporting period.

    Example to paragraph (h)(1):  A filer's husband has a seasonal 
part-time job as a sales clerk at a department store, for which he 
receives a salary of $1,000 per year, and an honorarium of $1,250 
from the state university. The filer need not report her husband's 
outside earned income because it did not exceed $1,000. She must, 
however, report the source of the honorarium because it exceeded 
$1,000.

    (2) Assets and investment income. Each confidential financial 
disclosure report must disclose the assets and investment income 
described in paragraph (c) of this section and held by the spouse or 
dependent child of the filer.
    (3) Liabilities. Each confidential financial disclosure report must 
disclose all information concerning liabilities described in paragraph 
(d) of this section and owed by a spouse or dependent child.
    (4) Gifts and travel reimbursements. (i) Each annual confidential 
financial

[[Page 69235]]

disclosure report must disclose gifts and reimbursements described in 
paragraph (g) of this section and received by a spouse or dependent 
child which are not received totally independently of their 
relationship to the filer.
    (ii) A filer who is a new entrant as described in Sec.  2634.903(b) 
is not required to report information regarding gifts and 
reimbursements received by a spouse or dependent child.
    (5) Divorce and separation. A filer need not report any information 
about:
    (i) A spouse living separate and apart from the filer with the 
intention of terminating the marriage or providing for permanent 
separation;
    (ii) A former spouse or a spouse from whom the filer is permanently 
separated; or
    (iii) Any income or obligations of the filer arising from 
dissolution of the filer's marriage or permanent separation from a 
spouse.

    Example: A filer and her husband are living apart in 
anticipation of divorcing. The filer need not report any information 
about her spouse's sole assets and liabilities, but she must 
continue to report their joint assets and liabilities.

    (6) Unusual circumstances. In very rare cases, certain interests in 
property, transactions, and liabilities of a spouse or a dependent 
child are excluded from reporting requirements, provided that each 
requirement of this paragraph is strictly met.
    (i) The filer must certify without qualification that the item 
represents the spouse's or dependent child's sole financial interest or 
responsibility, and that the filer has no knowledge regarding that 
item;
    (ii) The item must not be in any way, past or present, derived from 
the income, assets or activities of the filer; and
    (iii) The filer must not derive, or expect to derive, any financial 
or economic benefit from the item.

    Note to paragraph (h)(6): The exception described in paragraph 
(6) of this section is not available to most filers. One who 
prepares or files a joint tax return with a spouse will normally 
derive a financial or economic benefit from assets held by the 
spouse, and will also be presumed to have knowledge of such items; 
therefore one could not avail oneself of this exception after 
preparing or filing a joint tax return. If the filer and the spouse 
cohabitate and share household expenses, the filer will be deemed to 
derive an economic benefit from the item, unless the item is beyond 
the filer's control.

    Example:  The spouse of a filer has a managed account with a 
brokerage firm. The filer knows the account exists but the spouse 
does not share any information about the holdings and does not want 
the information disclosed on a financial disclosure statement. The 
filer must disclose the holdings in the spouse's managed account 
because the spouse shares in paying expenses (for example, 
household, vacation, or child related).

    (i) Trusts, estates, and investment funds--(1) In general. (i) 
Except as otherwise provided in this section, each confidential 
financial disclosure report must include the information required by 
this subpart about the holdings of any trust, estate, investment fund 
or other financial arrangement from which income is received by, or 
with respect to which a beneficial interest in principal or income is 
held by, the filer, the filer's spouse, or dependent child.
    (ii) Information about the underlying holdings of a trust is 
required if the filer, filer's spouse, or dependent child currently is 
entitled to receive income from the trust or is entitled to access the 
principal of the trust. If a filer, filer's spouse, or dependent child 
has a beneficial interest in a trust that either will provide income or 
the ability to access the principal in the future, the filer should 
determine whether there is a vested interest in the trust under 
controlling state law. However, no information about the underlying 
holdings of the trust is required for a nonvested beneficial interest 
in the principal or income of a trust.

    Note to paragraph (i)(1):  Nothing in this section requires the 
reporting of the holdings of a revocable inter vivos trust (also 
known as a ``living trust'') with respect to which the filer, the 
filer's spouse or dependent child has only a remainder interest, 
whether or not vested, provided that the grantor of the trust is 
neither the filer, the filer's spouse, nor the filer's dependent 
child. Furthermore, nothing in this section requires the reporting 
of the holdings of a revocable inter vivos trust from which the 
filer, the filer's spouse or dependent child receives any 
discretionary distribution, provided that the grantor of the trust 
is neither the filer, the filer's spouse, nor the filer's dependent 
child.

    (2) Qualified trusts and excepted trusts. (i) A filer should not 
report information about the holdings of any qualified blind trust (as 
defined in Sec.  2634.402) or any qualified diversified trust (as 
defined in Sec.  2634.402).
    (ii) In the case of an excepted trust, a filer should indicate the 
general nature of its holdings, to the extent known, but does not 
otherwise need to report information about the trust's holdings. For 
purposes of this part, the term ``excepted trust'' means a trust:
    (A) Which was not created directly by the filer, spouse, or 
dependent child; and
    (B) The holdings or sources of income of which the filer, spouse, 
or dependent child have no specific knowledge through a report, 
disclosure, or constructive receipt, whether intended or inadvertent.
    (3) Excepted investment funds. (i) No information is required under 
paragraph (i)(1) of this section about the underlying holdings of an 
excepted investment fund as defined in paragraph (i)(3)(ii) of this 
section, except that the fund itself must be identified as an interest 
in property and/or a source of income.
    (ii) For purposes of financial disclosure reports filed under the 
provisions of this subpart, an ``excepted investment fund'' means a 
widely held investment fund (whether a mutual fund, regulated 
investment company, common trust fund maintained by a bank or similar 
financial institution, pension or deferred compensation plan, or any 
other investment fund), if:
    (A)(1) The fund is publicly traded or available; or
    (2) The assets of the fund are widely diversified; and
    (B) The filer neither exercises control over nor has the ability to 
exercise control over the financial interests held by the fund.
    (iii) A fund is widely diversified if it does not have a stated 
policy of concentrating its investments in any industry, business, 
single country other than the United States, or bonds of a single State 
within the United States.

    Note to paragraph (i)(3):  The fact that an investment fund 
qualifies as an excepted investment fund is not relevant to a 
determination as to whether the investment qualifies for an 
exemption to the criminal conflict of interest statute at 18 U.S.C. 
208(a), pursuant to part 2640 of this chapter. Some excepted 
investment funds qualify for exemptions pursuant to part 2640, while 
other excepted investment funds do not qualify for such exemptions. 
If an employee holds an excepted investment fund that is not exempt 
from 18 U.S.C. 208(a), the ethics official may need additional 
information from the filer to determine if the holdings of the fund 
create a conflict of interest and should advise the employee to 
monitor the fund's holdings for potential conflicts of interest.

    (j) Special rules. (1) Political campaign funds, including campaign 
receipts and expenditures, need not be included in any report filed 
under this subpart. However, if the individual has authority to 
exercise control over the fund's assets for personal use rather than 
campaign or political purposes, that portion of the fund over which 
such authority exists must be reported.
    (2) With permission of the designated agency ethics official, a 
filer may attach to the reporting form a copy of a statement which, in 
a clear and concise fashion, readily discloses all information which 
the filer would

[[Page 69236]]

otherwise have been required to enter on the concerned part of the 
report form.
    (k) For reports of confidential filers described in Sec.  
2634.904(a)(3), each supplemental confidential financial disclosure 
report will include only the supplemental information:
    (1) Which is more extensive than that required in the reporting 
individual's public financial disclosure report under this part; and
    (2) Which has been approved by the Office of Government Ethics for 
collection by the agency concerned, as set forth in supplemental agency 
regulations and forms, issued under Sec. Sec.  2634.103 and 2634.601(b) 
(see Sec.  2634.901(b) and (c)).


Sec.  2634.908   Reporting periods.

    (a) Incumbents. Each confidential financial disclosure report filed 
under Sec.  2634.903(a) must include the information required to be 
reported under this subpart for the preceding calendar year, or for any 
portion of that period not covered by a previous confidential or public 
financial disclosure report filed under this part.
    (b) New entrants. Each confidential financial disclosure report 
filed under Sec.  2634.903(b) must include the information required to 
be reported under this subpart for the following reporting periods:
    (1) Noninvestment income for the preceding 12 months;
    (2) Assets held on the date of filing. New entrant filers are not 
required to report assets no longer held at the time of appointment, 
even if the assets previously produced income before the filers were 
appointed to their confidential positions;
    (3) Liabilities owed on the date of filing;
    (4) Positions with non-Federal organizations for the preceding 12 
months; and
    (5) Agreements and arrangements held on the date of filing.


Sec.  2634.909   Procedures, penalties, and ethics agreements.

    (a) The provisions of subpart F of this part govern the filing 
procedures and forms for, and the custody and review of, confidential 
disclosure reports filed under this subpart.
    (b) For penalties and remedial action which apply in the event that 
the reporting individual fails to file, falsifies information, or files 
late with respect to confidential financial disclosure reports, see 
subpart G of this part.
    (c) Subpart H of this part on ethics agreements applies to both the 
public and confidential reporting systems under this part.

Subpart J--Certificates of Divestiture


Sec.  2634.1001   Overview.

    (a) Scope. 26 U.S.C. 1043 and the rules of this subpart allow an 
eligible person to defer paying capital gains tax on property sold to 
comply with conflict of interest requirements. To defer the gains, an 
eligible person must obtain a Certificate of Divestiture from the 
Director of the Office of Government Ethics before selling the 
property. This subpart describes the circumstances when an eligible 
person may obtain a Certificate of Divestiture and establishes the 
procedure that the Office of Government Ethics uses to issue 
Certificates of Divestiture.
    (b) Purpose. The purpose of section 1043 and this subpart is to 
minimize the burden that would result from paying capital gains tax on 
the sale of assets to comply with conflict of interest requirements. 
Minimizing this burden aids in attracting and retaining highly 
qualified personnel in the executive branch and ensures the confidence 
of the public in the integrity of Government officials and decision-
making processes.


Sec.  2634.1002   Role of the Internal Revenue Service.

    The Internal Revenue Service (IRS) has jurisdiction over the tax 
aspects of a divestiture made pursuant to a Certificate of Divestiture. 
Eligible persons seeking to defer capital gains:
    (a) Must follow IRS requirements for reporting dispositions of 
property and electing under section 1043 not to recognize capital 
gains; and
    (b) Should consult a personal tax advisor or the IRS for guidance 
on these matters.


Sec.  2634.1003   Definitions.

    For purposes of this subpart:
    (a) Eligible person means:
    (1) Any officer or employee of the executive branch of the Federal 
Government, except a person who is a special Government employee as 
defined in 18 U.S.C. 202;
    (2) The spouse or any minor or dependent child of the individual 
referred to in paragraph (1) of this definition; and
    (3) Any trustee holding property in a trust in which an individual 
referred to in paragraph (1) or (2) of this definition has a beneficial 
interest in principal or income.
    (b) Permitted property means:
    (1) An obligation of the United States; or
    (2) A diversified investment fund. A diversified investment fund is 
a diversified mutual fund (including diversified exchange-traded funds) 
or a diversified unit investment trust, as defined in 5 CFR 
2640.102(a), (k) and (u);
    (3) Provided, however, a permitted property cannot be any holding 
prohibited by statute, regulation, rule, or Executive order. As a 
result, requirements applicable to specific agencies and positions may 
limit an eligible person's choices of permitted property. An employee 
seeking a Certificate of Divestiture should consult the appropriate 
designated agency ethics official to determine whether a statute, 
regulation, rule, or Executive order may limit choices of permitted 
property.


Sec.  2634.1004   General rule.

    (a) The Director of the Office of Government Ethics may issue a 
Certificate of Divestiture for specific property in accordance with the 
procedures of Sec.  2634.1005 if:
    (1) The Director determines that divestiture of the property by an 
eligible person is reasonably necessary to comply with 18 U.S.C. 208, 
or any other Federal conflict of interest statute, regulation, rule, or 
Executive order; or
    (2) A congressional committee requires divestiture as a condition 
of confirmation.
    (b) The Director of the Office of Government Ethics cannot issue a 
Certificate of Divestiture for property that already has been sold.

    Example 1: An employee is directed to divest shares of stock, a 
limited partnership interest, and foreign currencies. If the sale of 
these assets will result in capital gains under the Internal Revenue 
Code, the employee may request and receive a Certificate of 
Divestiture.
    Example 2:  An employee of the Department of Commerce is 
directed to divest his shares of XYZ stock acquired through the 
exercise of options held in an employee benefit plan. The employee 
explains that the gain from the sale of the stock will be treated as 
ordinary income. Because only capital gains realized under Federal 
tax law are eligible for deferral under section 1043, a Certificate 
of Divestiture cannot be issued for the sale of the XYZ stock.
    Example 3: During her Senate confirmation hearing, a nominee to 
a Department of Defense (DOD) position is directed to divest stock 
in a DOD contractor as a condition of her confirmation. Eager to 
comply with the order to divest, the nominee sells her stock 
immediately after the hearing and prior to being confirmed by the 
Senate. Once she is a DOD employee, she requests a Certificate of 
Divestiture for the stock. Because the Office of Government Ethics 
cannot issue a Certificate of Divestiture for property that has 
already been divested, the employee's request for a Certificate of 
Divestiture must be denied.

[[Page 69237]]

Sec.  2634.1005   How to obtain a Certificate of Divestiture.

    (a) Employee's request to the designated agency ethics official. An 
employee seeking a Certificate of Divestiture must submit a written 
request to the designated agency ethics official at his or her agency. 
The request must contain:
    (1) A full and specific description of the property that will be 
divested. For example, if the property is corporate stock, the request 
must include the number of shares for which the eligible person seeks a 
Certificate of Divestiture;
    (2) A brief description of how the eligible person acquired the 
property;
    (3) A statement that the eligible person holding the property has 
agreed to divest the property; and
    (4)(i) The date that the requirement to divest first applied; or
    (ii) The date the employee first agreed that the eligible person 
would divest the property in order to comply with conflict of interest 
requirements.
    (b) Designated agency ethics official's submission to the Office of 
Government Ethics. The designated agency ethics official must forward 
to the Director of the Office of Government Ethics the employee's 
written request described in paragraph (a) of this section. In 
addition, the designated agency ethics official must submit:
    (1) A copy of the employee's most recent Incumbent financial 
disclosure report, or New Entrant report, if an Incumbent report has 
not been filed, and any subsequent Periodic Transaction reports, as 
required by this part. If the employee is not required to file a 
financial disclosure report, the designated agency ethics official must 
obtain from the employee, and submit to the Office of Government 
Ethics, a listing of the employee's interests that would be required to 
be disclosed on a confidential financial disclosure report excluding 
gifts and travel reimbursements. For purposes of this listing, the 
reporting period is the preceding 12 months from the date the 
requirement to divest first applied or the date the employee first 
agreed that the eligible person would divest the property;
    (2) An opinion that describes why divestiture of the property is 
reasonably necessary to comply with 18 U.S.C. 208, or any other Federal 
conflict of interest statute, regulation, rule, or Executive order;
    (3) If applicable, a statement identifying any factors that, in the 
opinion of the designated agency ethics official, weigh against the 
issuance of a certificate of divestiture; and
    (4) A brief description of the employee's position or a citation to 
a statute that sets forth the duties of the position.
    (c) Divestitures required by a congressional committee. In the case 
of a divestiture required by a congressional committee as a condition 
of confirmation, the designated agency ethics official must submit 
appropriate evidence that the committee requires the divestiture. A 
transcript of congressional testimony or a written statement from the 
designated agency ethics official concerning the committee's custom 
regarding divestiture are examples of evidence of the committee's 
requirements.
    (d) Divestitures for property held in a trust. In the case of 
divestiture of property held in a trust, the employee must submit a 
copy of the trust instrument, as well as a list of the trust's current 
holdings, unless the holdings are listed on the employee's most recent 
financial disclosure report. In certain cases involving divestiture of 
property held in a trust, the Director may not issue a Certificate of 
Divestiture unless the parties take actions which, in the opinion of 
the Director, are appropriate to exclude, to the extent practicable, 
parties other than eligible persons from benefitting from the deferral 
of capital gains. Such actions may include, as permitted by applicable 
State law, division of the trust into separate portfolios, special 
distributions, dissolution of the trust, or anything else deemed 
feasible by the Director, in his or her sole discretion.

    Example: An employee has a 90% beneficial interest in an 
irrevocable trust created by his grandfather. His four adult 
children have the remaining 10% beneficial interest in the trust. A 
number of the assets held in the trust must be sold to comply with 
conflicts of interest requirements. Due to State law, no action can 
be taken to separate the trust assets. Because the adult children 
have a small interest in the trust and the assets cannot be 
separated, the Director may consider issuing a Certificate of 
Divestiture to the trustee for the sale of all of the conflicting 
assets.

    (e) Time requirements. A request for a Certificate of Divestiture 
does not extend the time in which an employee otherwise must divest 
property required to be divested pursuant to an ethics agreement, or 
prohibited by statute, regulation, rule, or Executive order. Therefore, 
an employee must submit his or her request for a Certificate of 
Divestiture as soon as possible once the requirement to divest becomes 
applicable. The Office of Government Ethics will consider requests 
submitted beyond the applicable time period for divestiture. If the 
designated agency ethics official submits a request to the Office of 
Government Ethics beyond the applicable time period for divestiture, he 
must explain the reason for the delay. See Sec. Sec.  2634.802 and 
2635.403 for rules relating to the time requirements for divestiture.
    (f) Response by the Office of Government Ethics. After reviewing 
the materials submitted by the employee and the designated agency 
ethics official, and making a determination that all requirements have 
been met, the Director will issue a Certificate of Divestiture. The 
certificate will be sent to the designated agency ethics official who 
will then forward it to the employee.


Sec.  2634.1006   Rollover into permitted property.

    (a) Reinvestment of proceeds. In order to qualify for deferral of 
capital gains, an eligible person must reinvest the proceeds from the 
sale of the property divested pursuant to a Certificate of Divestiture 
into permitted property during the 60-day period beginning on the date 
of the sale. The proceeds may be reinvested into one or more types of 
permitted property.

    Example 1:  A recently hired employee of the Department of 
Transportation receives a Certificate of Divestiture for the sale of 
a large block of stock in an airline. He may split the proceeds of 
the sale and reinvest them in an S&P Index Fund, a diversified 
Growth Stock Fund, and U.S. Treasury bonds.
    Example 2:  The Secretary of Treasury sells certain stock after 
receiving a Certificate of Divestiture and is considering 
reinvesting the proceeds from the sale into U.S. Treasury 
securities. However, because the Secretary of the Treasury is 
prohibited by 31 U.S.C. 329 from being involved in buying 
obligations of the United States Government, the Secretary cannot 
reinvest the proceeds in such securities. However, she may invest 
the proceeds in a diversified mutual fund. See the definition of 
permitted property at Sec.  2634.1003(b).

    (b) Internal Revenue Service reporting requirements. An eligible 
person who elects to defer the recognition of capital gains from the 
sale of property pursuant to a Certificate of Divestiture must follow 
Internal Revenue Service rules for reporting the sale of the property 
and the reinvestment transaction.


Sec.  2634.1007   Cases in which Certificates of Divestiture will not 
be issued.

    The Director of the Office of Government Ethics, in his or her sole 
discretion, may deny a request for a Certificate of Divestiture in 
cases where an unfair or unintended benefit would result. Examples of 
such cases include:
    (a) Employee benefit plans. The Director will not issue a 
Certificate of

[[Page 69238]]

Divestiture if the property is held in a pension, profit-sharing, stock 
bonus, or other employee benefit plan and can otherwise be rolled over 
into an eligible tax-deferred retirement plan within the 60-day 
reinvestment period.
    (b) Tax-Deferred and Tax-Advantaged Accounts. The Director will not 
issue a Certificate of Divestiture if the property is held in an 
Individual Retirement Account, college savings plan (529 plan), or 
other tax-deferred or tax-advantaged account (e.g., 401(k), 403(b), 457 
plans, etc.), which allow the account holder to exchange the property 
for permissible property without incurring a capital gain.
    (c) Complete divestiture. The Director will not issue a Certificate 
of Divestiture unless the employee agrees to divest all of the property 
that presents a conflict of interest, as well as other similar or 
related property that presents a conflict of interest under a Federal 
conflict of interest statute, regulation, rule, or Executive order. 
However, any property that qualifies for a regulatory exemption at part 
2640 of this chapter need not be divested for a Certificate of 
Divestiture to be issued.

    Example: A Department of Agriculture employee owns shares of 
stock in Better Workspace, Inc. valued at $25,000. As part of his 
official duties, the employee is assigned to evaluate bids for a 
contract to renovate office space at his agency. The Department's 
designated agency ethics official discovers that Better Workspace is 
one of the companies that has submitted a bid and directs the 
employee to sell his stock in the company. Because Better Workspace 
is a publicly traded security, the employee could retain up to 
$15,000 of the stock under the regulatory exemption for interests in 
securities at Sec.  2640.202(a) of this chapter. He would be able to 
request a Certificate of Divestiture for the $10,000 of Better 
Workspace stock that is not covered by the exemption. Alternatively, 
he could request a Certificate of Divestiture for the entire $25,000 
worth of stock. If he chooses to sell his stock down to an amount 
permitted under the regulatory exemption, the Office of Government 
Ethics will not issue additional Certificates of Divestiture if the 
value of the stock goes above $15,000 again.

    (d) Property acquired under improper circumstances. The Director 
will not issue a Certificate of Divestiture:
    (1) If the eligible person acquired the property at a time when its 
acquisition was prohibited by statute, regulation, rule, or Executive 
order; or
    (2) If circumstances would otherwise create the appearance of a 
conflict with the conscientious performance of Government 
responsibilities.


Sec.  2634.1008   Public access to a Certificate of Divestiture.

    A Certificate of Divestiture issued pursuant to the provisions of 
this subpart is available to the public in accordance with the rules of 
Sec.  2634.603.

[FR Doc. 2016-22958 Filed 10-4-16; 8:45 am]
 BILLING CODE 6345-03-P