[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