Complete Home & Office Legal Guide/Complete Home and Office Legal Guide (Chestnut) (1993).ISO/stat/fed/cfr2634d.asc

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2634.606 Updated disclosure of advice-and-consent nominees.

 (a) General rule. Each individual described in 2634.201(c)
who is nominated by the President for appointment to a position
that requires advice and consent of the Senate, shall, at or
before the commencement of the first Senate committee hearing to
consider the nomination, submit to the committee an amendment to
the report previously filed under 2634.201(c) and transmit copies
of the amendment to the designated agency ethics official
referred to in 2634.605(c)(1) of this subpart and to the Office
of Government Ethics, which shall update, through the period
ending no more than five days prior to the commencement of the
hearing, the disclosure of information required with respect to
receipt of:

 (1) Outside earned income; and

 (2) Honoraria, as defined in 2634.105(i).

 (b) Additional certification. In each case to which this
section applies, the Director of the Office of Government Ethics
shall, at the request of the committee considering the
nomination, submit to the committee an opinion letter of the
nature described in 2634.605(c)(3) of this subpart concerning the
updated disclosure. If the committee requests such a letter, the
expedited procedure provided by 2634.605(c) of this subpart shall
govern review of the updated disclosure, which shall be deemed a
report filed for purposes of that paragraph.

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 shall
render formal advisory opinions and informal advisory letters on
generally applicable matters, or on important matters of first
impression. See also subpart C of part 2638 of this chapter. The
Director shall insure that these advisory opinions and letters
are compiled, published, and made available to agency ethics
officials and the public. Good faith reliance on such opinions
shall provide a defense to any penalty or sanction provided by
this part for fact situations indistinguishable in all material
aspects from those in the opinion.

 (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.

Subpart G -- Penalties

Source: 57 FR 11824, Apr. 7, 1992, unless otherwise noted.

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, shall 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 penalty in any amount, not to exceed
$10,000, as provided by section 104 of the Act.

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

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 2634.407
of this part. The court in which the action is brought may assess
against the individual a civil penalty in any amount, not to
exceed $10,000, as provided by section 102(f)(6)(C)(i) of the
Act.

 (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 2634.407. The court in
which the action is brought may assess against the individual a
civil penalty in any amount, not to exceed $5,000, as provided by
section 102(f)(6)(C)(ii) of the Act.

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 2634.603(f). The court in which the action is
brought may assess against the person a penalty in any amount,
not to exceed $10,000, as provided by section 105 of the Act.
This remedy shall be in addition to any other remedy available
under statutory or common law.

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 shall
remit a late filing fee of $200 to the appropriate agency,
payable to the U.S. Treasury, if such report is filed more than
thirty 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 2634.201(f).

 (b) Exceptions. (1) The Director of the Office of
Government Ethics may waive the late filing fee if he determines
that the delay in filing was caused by extraordinary
circumstances which made the delay reasonably necessary.

 (2) Any request for a waiver of this filing fee provision
must be made in writing and submitted with supporting
documentation to the designated agency ethics official. That
official shall review the request, and then forward it, with an
opinion on the merits, to the Office of Government Ethics.

 (c) Procedure. (1) The designated agency ethics official
shall maintain a record of the due dates for all public reports
which the employees of that agency must file, along with the new
filing dates under extensions which have been granted. Each
report received by the agency shall 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
shall advise the delinquent filer, in writing, that:

 (i) Because his financial disclosure report is more than
thirty 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
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 his late report, it shall 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 supporting documentation must be
submitted immediately.

 (2) Upon receipt from the reporting individual of the $200
late filing fee, the collecting agency shall note the payment in
its records, and shall then forward the money to the U.S.
Treasury for deposit as miscellaneous receipts, in accordance
with 31 U.S.C. 3302 and section 8030.30 of Volume 1 of the
Treasury Financial Manual. If payment is not forthcoming, agency
debt collection procedures shall 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 2634.701 of this subpart.

 (e) Confidential filers. The late filing fee does not
apply to confidential filers. Late filing of confidential reports
will be handled administratively under 2634.701(d) of this
subpart.

Subpart H -- Ethics Agreements

Source: 57 FR 11825, Apr. 7, 1992, unless otherwise noted.

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.

2634.802 Requirements.

 (a) Ethics agreement defined. The term ethics agreement
shall 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) Preparation of a written instrument for recusing
(disqualifying) the individual from one or more particular
matters or categories of official action;

 (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 shall 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 2634.803 (a), (b), or (c) of this subpart),
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 would have to be obtained from the Office of Government
Ethics to extend the customary three-month period.

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
2634.201(c), the designated agency ethics official shall 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 shall 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 shall immediately report to
the designated agency ethics official any ethics agreement made
with the committee.

 (3) The Office of Government Ethics shall 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.

 (b) Incumbents in positions requiring the advice and
consent of the Senate. In the case of a position which required
the advice and consent of the Senate, the designated agency
ethics official shall keep the Office of Government Ethics
apprised of any ethics agreements which the incumbent makes, or
which become known to the designated agency ethics official
during the incumbent's term in his position.

 (c) Designated agency ethics officials not holding
advice-and-consent positions, and employees of the Offices
referred to in 2634.602(c)(1)(v). A designated agency ethics
official who has entered into a ethics agreement, and who is
neither a nominee to, nor an incumbent in, a position which
requires the advice and consent of the Senate, as well as each
employee of the Executive Office of the President or the Office
of the Vice President who is referred to in 2634.602(c)(1)(v),
shall include with his initial financial disclosure report
submitted to the Office of Government Ethics any ethics agreement
undertaken by such official or employee. He shall also apprise
the Office of Government Ethics promptly of any subsequent ethics
agreement.

 (d) Other reporting individuals. Other reporting
individuals desiring to enter into ethics agreement may do so
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 shall promptly apprise the designated agency
ethics official of the agreement.

[57 FR 11825, Apr. 7, 1992; 57 FR 21855, May 22, 1992]

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 shall be submitted by
the designated agency ethics official, upon receipt of the
evidence, to the Office of Government Ethics and to the Senate
confirmation committee.

 (2) For ethics agreements of incumbents in positions which
required the advice and consent of the Senate, evidence of any
action taken to comply with the terms of such ethics agreements
shall be submitted promptly by the designated agency ethics
official to the Office of Government Ethics. A designated agency
ethics official or an employee referred to in 2634.803(c) of this
subpart who is neither a nominee to, nor an incumbent in, an
advice-and-consent position, must also promptly send evidence of
any action taken to comply with the terms of an ethics agreement
to the Office of Government Ethics.

 (3) In the case of 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 any recusal instrument 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, and a list of the positions of those agency
employees involved in the enforcement (i.e., the individual's
immediate subordinates and supervisors).

 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 must give a
copy of the recusal instrument to her immediate subordinates and
supervisors, and to the designated agency ethics official.  The
employee has also agreed to recuse herself from any particular
matter (as that term is used in 18 U.S.C. 208) that might arise
with respect to any of her present or future holdings. There is
no requirement to execute a recusal instrument for this type of
general recusal, because it is simply a promise to abide by the
terms of the statute.

 (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.

[57 FR 11825, Apr. 7, 1992; 57 FR 21855, May 22, 1992]

2634.805 Retention.

 Records of ethics agreements and actions described in
this subpart shall be maintained with the individual's financial
disclosure report at the agency and additionally, in the case of
filers described in paragraphs (a), (b), and (c) of 2634.803 of
this subpart, at the Office of Government Ethics.

[57 FR 11825, Apr. 7, 1992; 57 FR 21855, May 22, 1992]

Subpart I -- Confidential Financial Disclosure Reports

Source: 57 FR 11826, Apr. 7, 1992, unless otherwise noted.

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 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 2634.907 of this subpart 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 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 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 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 shall 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 2634.104 and 2634.105.

2634.902 Transition to the new confidential financial disclosure
reporting system.

 (a) The new confidential financial disclosure reporting
system for executive branch departments and agencies established
by this subpart will become effective on October 5, 1992. Until
this subpart becomes effective, each executive agency shall
continue to comply with its current regulations governing
confidential statements regarding employment and financial
interests, as promulgated under prior Executive Order 11222, and
5 CFR part 735, 735.106 and subpart D, and as preserved by the
savings clause of section 502(a) of Executive Order 12674 as
modified by Executive Order 12731.

 (b) To the extent feasible, agencies should strive to
eliminate overlaps between, or gaps in, reporting periods as the
transition to the new confidential reporting system takes place.
However, the reporting periods prescribed under the new system,
once effective, must be followed.

 (c) Once effective, this new subpart and any other
portions of this part applicable to confidential reports will
supersede 5 CFR 735.106, all of subpart D of part 735 of 5 CFR,
and any implementing agency regulations thereunder. See also
2634.103 and 2634.601 and 2634.901 of this subpart concerning
requests for new special supplemental agency regulations and
forms, where necessary.

 (d) As required by applicable law and Executive order, the
confidential statements regarding employment and financial
interests which were collected and retained under existing
confidential financial disclosure reporting systems shall
continue to be held in confidence. See section 107(a)(2) of the
Act, as effective January 1, 1991 (as well as former section
207(a)(2) thereof, which was effective through December 31,
1990), section 502(b) of Executive Order 12674 as modified by
Executive Order 12731 (and the prior ethics Executive Orders
11222 and 12565), and 2634.901(d) of this subpart.

2634.903 General requirements, filing dates, and extensions.

 (a) Incumbents. A confidential filer who holds a position
or office described in 2634.904 of this subpart and who performs
the duties of that position or office for a period in excess of
60 days during the twelve-month period ending September 30
(including more than 60 days in an acting capacity) shall file a
confidential report containing the information prescribed in
2634.907 and 2634.908 of this subpart on or before October 31
immediately following that period. For confidential filers under
2634.904(c) of this subpart, consult agency supplemental
regulations.

 (b) New entrants. (1) Not later than 30 days after
assuming a new position or office described in 2634.904 of this
subpart (which also encompasses the reappointment or
redesignation of a special Government employee, including one who
is serving on an advisory committee), a confidential filer shall
file a confidential report containing the information prescribed
in 2634.907 and 2634.908 of this subpart. For confidential filers
under 2634.904(c) of this subpart, consult agency supplemental
regulations.

 (2) However, no report shall be required if the
individual:

 (i) Has, within 30 days prior to assuming his position,
left another position or office referred to in 2634.904 of this
subpart or in 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.

 (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 2634.904 of this subpart file their new entrant
confidential financial disclosure reports prior to serving in
such positions, to insure that there are no insurmountable ethics
concerns. Additionally, a special Government employee who has
been appointed to serve on an advisory committee shall 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 shall 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. 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.

2634.904 Confidential filer defined.

 The term confidential filer includes:

 (a) 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 O - 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:

 (1) The agency concludes that the duties and
responsibilities of the employee's position require that employee
to participate personally and substantially through decision or
the exercise of significant judgment, in taking a Government
action regarding:

 (i) Contracting or procurement;

 (ii) Administering or monitoring grants, subsidies,
licenses, or other federally conferred financial or operational
benefits;

(iii) Regulating or auditing any non-Federal entity; or

 (iv) 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

 (2) 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, and to carry out the purposes behind any
statute, Executive order, rule, or regulation applicable to or
administered by that 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 drafts 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. 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
a permit 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.

 (b) Unless required to file public financial disclosure
reports by subpart B of this part, all executive branch special
Government employees as defined in 18 U.S.C 202(a) and
2634.105(s), including those who serve on advisory committees.
The term special Government employees does not include an
advisory committee member who serves only as a representative of
an industry of other outside entity or who is already a Federal
employee.

 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. An advisory committee member (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, since she is a special
Government employee.

 (c) Each public filer referred to in 2634.202 on public
disclosure who is required by agency regulations issued in
accordance with 2634.907(b) of this subpart 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.

 (d) Any employee who, notwithstanding his exclusion from
the public financial reporting requirements of this part by
virtue of a determination under 2634.203, is covered by the
criteria of paragraph (a) of this section.

2634.905 Exclusions from filing requirements.

 Any individual or class of individuals, including special
Government employees, described in 2634.904 of this subpart, may
be excluded from all or a portion of the confidential reporting
requirements of this subpart, when the agency head or designee
determines that:

 (a) The duties of a position make remote the possibility
that the incumbent will be involved in a real or apparent
conflict of interest;

 (b) The duties of a position involve such a low level of
responsibility that the submission of a confidential financial
disclosure report is unnecessary because of:

 (1) The substantial degree of supervision and review over
the position; or

 (2) The inconsequential effect of any potential conflict
on the integrity of the Government; or

 (c) The use of an alternative procedure approved in
writing by the Office of Government Ethics is adequate to prevent
possible conflicts of interest.

 Example 1. An agency 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 his actions will create a
conflict of interest is remote. The draftsman need not be
required by the agency to file a confidential financial
disclosure report.

 Example 2. An investigator is principally assigned as the
field agent to investigate alleged violations of conflict of
interest laws. The investigator works under the direct
supervision of an agent-in-charge. The agent-in-charge reviews
all of the investigator's work product and then uses those
materials to prepare the agency's report which is submitted under
his own name. The agency may decide not to require the
investigator to file a confidential disclosure report.

 Example 3. 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, her
spouse, minor or dependent child, or any general partner,
organization in which she serves as an officer, director,
trustee, employee, or general partner, or organization with which
she is negotiating or has an agreement or an arrangement for
future employment, or a close friend or relative is a subject of
the investigation, or will be in any way affected by the
investigation. Once she determines that there is no such
relationship, she signs and dates a certification which verifies
that she has reviewed the file and has determined that no
conflict of interest exists. 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 alternate
procedure, if approved by the Office of Government Ethics in
writing, will suffice for a conflict of interest review.
Therefore, the agency may exclude the auditor from filing a
confidential disclosure report under this subpart.

[57 FR 11826, Apr. 7, 1992; 57 FR 21855, May 22, 1992]

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, shall review any complaint
by an individual that his 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 shall be final.

2634.907 Report contents.

 (a) Other than the reports of confidential filers
described in 2634.904(c), each confidential financial disclosure
report filed pursuant to 2634.903 of this subpart shall include
on the standard form prescribed by the Office of Government
Ethics (see 2634.601 of subpart F of this part) and in accordance
with instructions issued by the Office, a full and complete
statement of information required to be reported according to the
provisions of subpart C of this part, (except for those
provisions in subpart C requiring the reporting of the amounts or
values of any item), with respect to the following:
 (1) Interests in property. All the interests in property
specified by 2634.301;

 (2) Income. All the income items specified by 2634.302;

 (3) Gifts and reimbursements. All gifts and reimbursements
specified by 2634.304 (except that new entrants, as described in
2634.903(b) of this subpart, need not report any information on
gifts and reimbursements);

 (4) Liabilities. All liabilities specified by 2634.305;

 (5) Agreements and arrangements. All agreements and
arrangements specified by 2634.306; and

 (6) Outside positions. All outside positions specified by
2634.307.

 (b) For reports of confidential filers described in
2634.904(c) of this subpart, each supplemental confidential
financial disclosure report shall 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 2634.103
and 2634.601(b) (see 2634.901 (b) and (c) of this subpart).

2634.908 Reporting periods.

 (a) Incumbents. Each confidential financial disclosure
report filed under 2634.903(a) of this subpart shall include on
the standard form prescribed by the Office of Government Ethics
and in accordance with instructions issued by the Office, a full
and complete statement of the information required to be reported
according to the provisions of this subpart for the preceding
twelve months ending September 30, 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 2634.903(b) of this subpart shall include, on
the standard form prescribed by the Office of Government Ethics
and in accordance with instructions issued by the Office, a full
and complete statement of the information required to be reported
according to the provisions of this subpart for the preceding
twelve months from the date of filing.

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

Source: 55 FR 14408, Apr. 18, 1990, unless otherwise noted.

2634.1001 Nonrecognition for sales to comply with conflict of
interest requirements; general considerations.

 (a) Purpose. This subpart establishes the procedures and
policies of the Office of Government Ethics with respect to the
issuance of Certificates of Divestiture pursuant to section 1043
of the Internal Revenue Code of 1986 (hereinafter in this subpart
referred to as ``section 1043'').

 (b) Scope. Section 1043 and the rules of this subpart
provide for nonrecognition of gain in the case of sales to comply
with conflict of interest requirements. The rules of this subpart
relate to the issuance of Certificates of Divestiture and the
permitted property into which a rollover (as such reinvestments
are called) must be made in order for nonrecognition to be
permitted. The substantive and procedural rules relating to the
tax aspects of such sales and rollovers pursuant to the statutory
scheme are subject to the jurisdiction of the Internal Revenue
Service. Eligible persons should seek the advice of their
personal tax advisors for guidance as to the tax aspects of
divestiture transactions and whether proposed acquisitions meet
the requirements for permitted property. Internal Revenue Service
regulations and other guidance should be consulted as to these
matters.  Internal Revenue Service requirements for reporting
dispositions of property and making an election not to recognize
gain under section 1043 must be followed by eligible persons
wishing to make such an election.

 (c) Policy. The Federal purpose reflected in section 1043
of the Internal Revenue Code and these rules is to minimize the
burden of Government service resulting from gain on the sale of
assets for which divestiture is reasonably necessary because of
the conflict of interest laws, in order to attract and retain
highly qualified personnel in the executive branch and to ensure
the confidence of the public in the integrity of Government
officials and decision-making processes.

2634.1002 Issuance of Certificates of Divestiture.

 (a) General rule. Pursuant to section 1043, a Certificate
of Divestiture with respect to specific property shall be issued
by the Director of the Office of Government Ethics pursuant to
the procedures of paragraph
(b) of this section upon a determination that such divestiture by
an eligible person as defined in paragraph (c) of this section 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 pursuant to the request of a congressional
committee as a condition of confirmation.
 (b) Procedural requirements -- (1) Required submissions. A
determination to issue a Certificate of Divestiture may be made
by the Director of the Office of Government Ethics only upon the
submission by the designated agency ethics official of the agency
of employment or proposed employment of the individual referred
to in paragraph (c)(1) of this section of full and complete case
materials to the Office of Government Ethics. Such case materials
shall include:

 (i) A copy of the written request from such individual to
the designated agency ethics official to pursue certification in
the case of the property to be divested;

 (ii) In the case of an individual referred to in
paragraph (c)(1) of this section who is required by the rules of
this part, or part 735 (subpart D) or part 2633 or this title, to
file a financial disclosure report, a copy of the latest report
which has been filed;

 (iii) A detailed description of the specific property as
to which divestiture is contemplated;

 (iv) Complete statements of: (A) The facts and
circumstances relevant to whether there is a reasonable necessity
for divestiture (including a description of the position or
applicable statutory citation setting forth the duties of the
subject position); and

 (B) Analysis and opinion from such designated agency
ethics official concerning the application of the rules of this
subpart in the case of the proposed certification; and

 (v) In lieu of the materials described in paragraph
(b)(1)(iv) of this section, in the case of the contemplated
divestiture of specific property pursuant to the request of a
congressional committee as a condition of confirmation, such
materials shall include the written acknowledgement of the
Chairman of such committee of such request.

 (2) Standards for issuance. Certification pursuant to the
rules of this subpart relates to the reasonable necessity for the
divestiture of specific property pursuant to section 1043.
Divestiture is one of the standard remedial actions available to
comply with conflict of interest statutes, regulations, rules,
and executive orders (see 2634.604(b)(5)), and certification
ameliorates the impact of a divestiture. In cases in which the
contemplated divestiture is not pursuant to the request of a
congressional committee as a condition of confirmation, a
Certificate of Divestiture will be issued by the Director of the
Office of Government Ethics only if he concurs with the opinion
of the designated agency ethics official referred to in paragraph
(b)(1)(iv)(B) of this section that such divestiture is reasonably
necessary to comply with 18 U.S.C. 208, or any other Federal
conflict of interest statute, regulation, rule, or executive
order. Issues relating to whether the terms of a contemplated
divestiture constitute a sale or other disposition of the
property under Internal Revenue Service Rules and other tax
matters are under the jurisdiction of the Internal Revenue
Service.  See 2634.1001(b).

 (3) Documentation of the certification. Certification
shall be indicated by a letter from the Director to the eligible
party or his representative.

 (c) Eligible person. For purposes of section 1043 and this
subpart, the term ``eligible person'' includes:

 (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; and

 (2) The spouse and any minor or dependent child of an
individual referred to in paragraph (c)(1) of this section whose
ownership of property required to be divested is attributable to
such person by 18 U.S.C. 208, or any other Federal conflict of
interest statute, regulation, rule, or executive order.

2634.1003 Permitted property.

 (a) In general. The categories of permitted property into
which rollovers are permitted to be made have been drawn through
the rules of this section so as to be neutral in respect of the
vast majority of Federal programs and responsibilities. The
Internal Revenue Service has jurisdiction with respect to
determinations concerning the application of the rules of this
section in specific cases (see 2634.1001(b)). However, the ethics
program rules applicable to specific agencies and positions may
further limit an eligible person's choices. The advice of the
designated agency ethics official should be sought in this
regard. For example, there are restrictions on the purchases of
shares in regulated investment companies by some Securities and
Exchange Commission personnel and on purchases of obligations of
the United States by some officials of the Department of the
Treasury.  Additionally, it may not be appropriate for some
officials of agencies having international responsibilities to
invest in mutual funds which exclusively invest in securities
outside of the United States.

 (b) Definition of ``permitted property''. For purposes of
section 1043 and this subpart, the term permitted property means:

 (1) Any obligation of the United States; and

 (2) Any ``diversified investment fund'', as defined in
paragraph
(c) of this section.

 (c) Diversified investment fund -- (1) Definition. The
term diversified investment fund means any open-end mutual fund
(which is a ``regulated investment company'', as defined by
section 851 of the Internal Revenue Code of 1986), which by its
prospectus, or any common trust fund maintained by a bank (which
is a ``common trust fund'', as defined by section 584(a) of the
Internal Revenue Code of 1986), which by the literature it
distributes to prospective and current investors describing its
objectives and practices, does not indicate the objective or
practice of devoting its investments to particular or limited
industrial, economic, or geographic sectors.

 (2) Ownership limitation. Notwithstanding any other rule
of this paragraph (c), a fund may not be considered to be a
diversified investment fund in any case in which the ownership of
more than one percent of the market value of the fund would be
attributable to an individual referred to in 2634.1002(c)(1)
immediately after a rollover.

 Example 1: The Alpha Group is a family of funds which
markets numerous open-end mutual funds which are typical of those
generally available to the general public:

 (i) The following funds of the Alpha Group would be
presumed to be diversified investment funds for purposes of
paragraph (c)(1) of this section, unless their prospectuses
indicated an objective or practice of devoting their investments
to particular or limited industrial, economic, or geographic
sectors: the Common Stock Fund, the Growth Stock Fund, the S&P
Index Fund, the Global Fund (investing in common stocks
world-wide), the Blue Chip Fund, the Corporate Bond Fund, the
Municipal Bond Fund, and the Government Bond Fund (which invests
exclusively in obligations of the United States).

 (ii) The following funds of the Alpha Group would not be
presumed to qualify as diversified investment funds, unless their
prospectuses indicated that they do not have an objective or
practice of devoting their investments to particular or limited
industrial, economic, or geographic sectors for purposes of
paragraph (c)(1) of this section: The Pacific fund, the Mexico
Fund, the New England Fund, the Gold Fund, the Commodity Futures
Fund, the Venture Capital Fund, and the Drug Industry Sector
Fund.

 Example 2: The Omega Fund is a closed-end mutual fund
which is listed on the New York Stock Exchange. The Omega Fund is
not a diversified investment fund, as only open-end mutual funds
are within the definition of that term pursuant to paragraph
(c)(1) of this section.

2634.1004 Special rule.

 Public access to Certificates of Divestiture. The
Certificates of Divestiture issued pursuant to the provisions of
this part shall be available to the public in accordance with the
rules of 2634.603 of this part.

Pt. 2634, App. A

Appendix A to Part 2634 -- Certificate of Independence

 The Certificate of Independence required by 2634.406(b)
shall be executed as follows:

Certificate of Independence

 With respect to the trust of XXXXX (Settlor), which has
been submitted to the Office of Government Ethics for
certification pursuant to the Ethics in Government Act of 1978
(Pub. L. 95 - 521, as amended), the undersigned proposed
[Trustee] [XXXXX] of such trust is a financial institution which
is eligible to serve in such fiduciary capacity in accordance
with section 102(f)(3)(A) of such Act:

 FIRST: The undersigned is (check one) --

( ) a bank, as defined in 12 U.S.C. 1841(c), or

 ( ) an investment adviser, as defined in 15 U.S.C. 80b -
2(a)(11),

 not more than 10 percent of which is owned or controlled
by a single individual.

 SECOND: The undersigned --

 (1) Is independent of and unassociated with any interested
party so that the undersigned cannot be controlled or influenced
in the administration of the trust by any interested party; and

 (2) 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.

THIRD: Any director, officer, or employee of the undersigned --

 (1) 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;

 (2) Is not and has not been employed by any interested
party, nor a director, officer, or employee of any organization
affiliated with any interested party, and is not and has not been
a partner of, or involved in any joint venture or other
investment or business with, any interested party; and

 (3) Is not a relative of any interested party.

 FOURTH: The undersigned certifies that the statements
contained herein are true, complete and correct to the best of
such undersigned's knowledge and belief.

 DateXXXX

 (firm)XXXX

 By:XXXX

 (title)XXXX

Approved byXXXX

 Director, Office of Government Ethics

 DateXXXX

 Note: See Appendix C of this part for Privacy Act and
Paperwork Reduction Act notices.

[57 FR 11829, Apr. 7, 1992]

Pt. 2634, App. B

Appendix B to Part 2634 -- Certificate of Compliance

 The Certificate of Compliance required by 2634.408(b)
shall be executed as follows:

Certificate of Compliance

 With respect to the qualified blind trust (qualified
diversified trust) ofXXXX (Settlor), the undersigned, the
approved [Trustee] [XXXX] of such trust, pursuant to 5 CFR
2634.406, has served in such fiduciary capacity during the
calendar year [or for the period beginningXXXX and endingXXXX]
and is eligible to continue in such capacity by virtue of the
following:

 FIRST: The undersigned (and any director, officer, or
employee) has not knowingly or negligently, and will not --

 (A) disclose any information to an interested party with
respect to the trust that may not be disclosed pursuant to title
I of the Act, the implementing regulations (including 5 CFR
2634.403(b)(12)(i) for a qualified blind trust, and 5 CFR
2634.404(c)(12)(i) for a qualified diversified trust), or the
trust instrument;

 (B) acquire any holding the ownership of which is
prohibited by, or not in accordance with, applicable statute,
regulation, or the terms of the trust instrument;

 (C) solicit advice from any interested party with respect
to such trust, which solicitation is prohibited by title I of the
Act, the implementing regulations (including 5 CFR
2634.403(b)(12)(iii) for a qualified blind trust and 5 CFR
2634.404(c)(12)(iii), for a qualified diversified trust), or the
trust instrument;

 (D) fail to file any document required by title I of the
Act, the implementing regulations (including 5 CFR 2634.408(b)
and (c)), or the trust instrument; or

 (E) violate or fail to comply with any provision or
requirement of title I of the Act, the implementing regulations,
or the trust instrument.

 SECOND: The undersigned (and any director, officer, or
employee) will not knowingly or negligently engage in the
above-mentioned activities.

 THIRD: The undersigned certifies that the statements
contained herein are true, complete and correct to the best of
such undersigned's knowledge and belief.

 DateXXXX

 (firm)XXXX

 By:XXXX

 (title)XXXX

 Note: See appendix C of this part for Privacy Act and
Paperwork Reduction Act notices.

[57 FR 11830, Apr. 7, 1992; 57 FR 21855, May 22, 1992]

Appendix C to Part 2634 -- Privacy Act and Paperwork Reduction
Act Notices for Appendixes A and B

Privacy Act Statement

 Section 102(f) of the Ethics in Government Act of 1978 as
amended (the ``Ethics Act'') (5 U.S.C. App.) and subpart D of 5
CFR part 2634 of the regulations of the Office of Government
Ethics (OGE) require the reporting of this information for the
administration of qualified trusts under the Ethics Act. The
primary use of the information on this certificate is for review
by Government officials of OGE and the agency of the Government
employee for whom the trust is established to determine
compliance with applicable Federal laws and regulations as
regards qualified trusts. Additional disclosures of the
information on this certificate may be made:

 (1) to any requesting person in accordance with the access
provisions of section 105 of the Ethics Act;

 (2) to a Federal, State or local law enforcement agency if
the disclosing agency becomes aware of a violation or potential
violation of law or regulation;

 (3) to a court or party in a court or Federal
administrative proceeding if the Government is a party or in
order to comply with a subpoena;

 (4) to a source when necessary to obtain information
relevant to a conflict of interest issue;

 (5) to the National Archives and Records Administration or
the General Services Administration in records management
inspections;

 (6) to the Office of Management and Budget during
legislative coordination on private relief legislation; and

 (7) in response to a discovery request or for the
appearance of a witness in a pending judicial or administrative
proceeding, if the information is relevant to the subject matter.

Knowing or willful falsification of information on this
certificate or failure to file or report information required to
be reported under title I of the Ethics Act and 5 CFR part 2634
of the OGE regulations may lead to disqualification as a trustee
or other fiduciary as well as possible disqualification of the
underlying trust itself. Knowing and willful falsification of
information required under the Ethics Act and the regulations may
also subject you to criminal prosecution.

Public Burden Information

 This collection of information is estimated to take an
average of twenty minutes per response.

[57 FR 11830, Apr. 7, 1992]